WFH Blow, SpaceX IPO, Droneshield Deckchair Shuffle, GYG Hits Back and CTM Debacle Continues

25:36And I think the thesis is playing out. And so Claude's problem is supply is going to end up probably constrained. And so if this thing really takes off, by take off, I mean, if there's long-term value in these platforms and people keep using them, and there is a bit of a question mark about that as well, but if that is the thesis that plays out, I think that they're going to have to do something on the demand side because their supply side is getting tighter. Well, probably the problem is so many people are now using just that one LLM that it's causing a bit of imbalance, I suspect. So you've got all these other LLMs with potentially lots of capacity and because everybody's just gone to claw because the brand has become so strong in literally the last three months, it's probably not a great result.

26:18So I suspect the pricing will probably balance it out. So people just go back to cursor and people start using this codex stuff from OpenAI, which apparently is very good. So I think it's probably short term and you probably see some backlash. Exactly what you're saying, you're obviously ahead of most people on this stuff. So if you're seeing the backlash, we'll see it from the mainstream in the next month. Well, if you look at – like I've got – basically I've got this. If you go to status.clawed.com, I'll save people a search. You can see what the uptime looks like over the last 90 days. and if you look at something like Claude for government, it's 99.9 % uptime.

26:58So they know where their bread is buttered, right? So they make sure that works. But if you look at Claude API and Claude.ai, both of those are running under 99 % uptime. Now that might sound okay, 98.94, 98.73. But number one, that's not okay. That's a lot of downtime. And number two, if you look at it, they color code it So they have a bar that represents a day and they color the bar green and then all the way like in various shades until it gets to red. And that bar is how much downtime there was. And so two days ago, like Claude.ai had two hours and 37 minutes of downtime. I mean that is a lot of downtime in one day, right?

27:44And so like it's already had 20 minutes of downtime today. Like there's a lot of downtime. The Claude Code has had the same, even more, Claude Codes have even more downtime than that. Like it is problematic. One of my favorite movies ever, The Social Network, when Eduardo Saverin pulled funding from Facebook, when it was called The Facebook at the time, I think. And he pulled funding and I remember Zuckerberg went nuts and he went nuts saying, people use Facebook because I know we don't go down. We never go down. Yeah. Well, that's a good analogy. This is not good. Like, Zach wouldn't be happy with this.

28:15This is a$500 billion business that's down for two hours. It's very bad. Almost three hours. And so I think a question I'm often asked is like which LLM should you go for? Like we often get – I'm sure you ask that question and my answer is always the same. It's always don't pick one. You need fallbacks for a start. I think this is a great example of why if you're building on a platform that uses an LLM as a part of its core, you've got to have fallback LLMs and you've got to have tested the output that's being generated with those different LLMs because it is not the same with different LLMs. What Anthropik's actually been able to achieve is branding power.

28:59So it's become almost like a luxury brand for LLMs. So for what is a relatively similar output to Gemini and probably not a different OpenAI or GBT, it's able to charge two, three, four times as much for tokens. It is the Hermes of LLMs incredibly for now anyway. Well, that's an interesting point. I tell you what's happening in like the world of more sophisticated people in this stuff. So people, so there are, I'm not going to disparage any individual startups, full stop, but I'm going to talk about this in general terms. There are startups that are worth a lot of money. I'm talking about nine digits of valuation.

29:32Yeah. And they are effectively using, they're just plugging in, let's say, Claude, doing some modifications to it, like they might put it through a filter that has like a vector database that will error check outputs or assist in like driving some sophistication on some recognition of concepts. Let's say I'm being a bit vague because I don't want to highlight any individual businesses. but really they're just using an off-the-shelf version of these LLMs. And then there are startups that I've seen and spoken to that are actually getting maybe less sophisticated, lower demand, earlier LLMs can be from Frontier Models or maybe they're using Meta's model, which is LLAMA.

30:16And actually they're training up a lot of that vector space themselves, not just using the standard training vector space of these models. and they are really kind of building their own hyper-customized LLMs that are very specific for their own use cases and then they can run them locally. They don't even need to be connecting them to the internet for lack of a better kind of more sophisticated term. How hard is it? Because that to me has always made a lot more sense. That's hard. And that was DeepSeek, right? So people use – and I think it's like the Chinese call them lightweight models, isn't it, don't they?

30:53Yeah, DeepSeek is a bit more complicated because DeepSeek is effectively reverse engineering what's in vector space of the frontier models to try to create a competing, much cheaper product. And obviously, it's going to be cheaper because most of the cost of these models is not inference, i.e. answering questions. It is training. That's where the cost of these models lies. And so DeepSeek is much cheaper because basically, I don't want to say it steals someone else's training, but it's not far off, right? And so, but no, these models are saying, we've got a particular use case. Again, I don't want to give away what these use cases are, but I've got like, I don't know, like let's say I've got some coffee in front of me.

31:30Let's say my use case is I want to rate coffee. And so maybe I put a probe in the coffee and I'm going to pump those outputs into an LLM because I want it to analyze the data and find patterns in the data. Now, I don't need all of the training that let's say is in like the latest version of Sonnet, which is like one of Claude's models. I don't need all of that. what I want though is a hyper specific model that's been trained on lots and lots and lots of coffee data millions of pieces of data on coffee and so I can just get an earlier or a lighter weight model and I can train up vector space myself I'm flippant in saying that it's not an easy process and then I can put layers and layers and layers and layers of kind of error correction and stuff like that but what I'll end up with is like coffee llm and it is going to be and i can run it locally and it's much more sophisticated and precise for my use case and probably if i just run the same data into claude and i say tell me what you think of this as a coffee but claude will do a pretty bad job of assessing that coffee because it doesn't have all of that data as part of its training it's got a lot of data but it's a something for everyone thing and so that i think that is where we're going to be heading with a lot of this stuff so would you is a lightweight model a model that's had less training essentially yeah generally yeah generally it has less as you know remember i don't want to go into this again because we talk about this a lot but like you know there's how much tokenization you've had in training and how many dimensions you're running in the model which is like how many t-shirts do you have and how many slots do you have in the draw four t-shirts right and so like the more of that you have like that's a heavy workload in kind of training that up and so yeah you often don't need all of that kind of stuff and i think the really sophisticated models will the really sophisticated startups will be trying their own models and there are little things that are problematic in models for example you know nps you know the nps score so nps is net promoter score for those listening net promoter score it's a question it's kind of good for getting a feel for customer love for like the future direction of revenue based on yeah people referring your business it's not very actionable that's a problem with nps but like nps is on a scale of minus 100 to positive 100.

33:42And if you run that into an LLM and say, what do you think of zero as a score? And it has a percentage sign after it. The LLM will look at that and under load, it doesn't matter what you've trained it to do. It will say 0 % is a terrible score. It's the bottom. Why will it say that though? Because you've told it it's NPS. And maybe NPS is an exception because it might have enough training data on NPS to know a scale. But the bottom line is, it's got so much training data where a percentage means 0 to 100, that under load, like with heavy context, it's called lots of prompting, it's trying to work hard, it's basically just going to start ignoring what you've prompted it and just go to its vectors, and vector space will overwhelm it and it will say, zero, that's the bottom of percentages.

34:27And you're like, no, it's not, it's NPS, it doesn't matter. And so there's all sorts of those kind of problems that exist in just using LLMs off the shelf, like what is going on in vector space? That means the natural way that these models think, for lack of a better word, that underload will probably overwhelm whatever prompting you're putting in there to try and guide it to particular outcomes. And so, yeah, I think we're – this is why I say we're in like the super early stages of understanding how to use these things. And people are going to find the more people actually use these as opposed to saying, you know, like write me a nice something to send to someone, which is always amazing, right?

35:08Or tell me about some historical fact, which it knows well. Get me out of a park. Get me out of a speeding fine. Write me a demerit point letter, that kind of stuff. Yeah, like it knows that because there's tons of training data on that, right? But the more people actually start using it for real things, the more there'll be this wave of disappointment that sweeps through on how problematic lots of this LLM activity actually is. So I just wanted to touch on a theme. You know, the big theme of life at the moment is this war in the Middle East. And I just want to say this to you and get your thoughts on this.

35:40So there's this narrative that's emerged, which is yet another war where the US slash Israel also gets this criticism. has a war with no decisive victory at the end of it. I don't know if you've seen that theme. That's a common narrative. It's a narrative of those who don't like Trump and who don't like the US and don't like Israel. Or those who don't like Netanyahu in Israel, which actually is me. But I thought quite heavily about this idea. What does it mean no decisive victory at the end of a war? And I started to think about the wars historically that have had decisive victories. And some of the ones I thought of were the World Wars, they had a decisive victory.

36:17And the Vietnam War that had a decisive victory By the Vietnamese. By the Vietnamese, right? That was decisive. And like historical wars, if you go back to the 1800s, like most of those ended with a decisive loss and a decisive victory. Napoleon had that decisive loss, yeah. Yeah, that's right. And then I thought, what do these things have in common? And I worked out these two things that I feel like they have one or the other, or both, but one or the other. One is the world wars, for example, they could be called total war. What that means is no holds barred. let's just try to destroy everything that the enemy has and kill every single person involved with the enemy.

36:54The US literally dropped two atomic bombs on Japan during that war. And so that's total war. And so you can win a total war because it's no holds barred and you basically go and kill so many people and destroy so much stuff that the enemy is – there's nothing left of them, right? They actually can't keep fighting. So you can win a total war. and then the other group of war seems to be people defending their own country. So those people can win a war. They basically repel an invader so they can win a war but the invader can't win the war unless they engage in total war which is how a lot of these 18th, 17th, 16th centuries wars were won.

37:32And you look at the world today. So the US is definitely in this case. They're not defending their country. They're attacking someone else's country. And so we want to get rid of that regime. But ultimately, that regime is fighting for its life. The US is not fighting for its life. So that regime could decisively win the war by expelling the US. But the US, I think, is not going to be able to win the war because it's not – we, thankfully today, are not prepared to engage in total war. Quite the opposite. The Israelis in Gaza and Lebanon and the US in Iran is saying we don't want to kill civilians.

38:05We're trying to warn civilians to get out of the way. We're trying not to destroy all of the Lebanese slash Iranian infrastructure. no one wants to have a total war thank goodness we do not want total war it's a disaster right and so i think that this idea that a country that a superpower or another strong country that is not prepared to engage in total war and is not defending their own land could achieve this idea of a decisive victory against the enemy it seems completely false and historically i don't know if It's unprecedented but uncommon. And I think the more reasonable, like, objective for the US-Israel is to say we need to make things significantly better for us than they were before this war, i.e.

38:50get rid of a regime or weaken it, stop nuclear weapons, stop firing Hezbollah firing missiles into Israel. That's the best you can hope for. And I think that the success or otherwise of this war should be seen through that prism, not through the prism of is there a decisive victory where you can say mission accomplished? Is that what George W. Bush said on the aircraft carrier? Probably wrongly, but yeah. Wrongly, because there's no mission accomplished in this. Actually, these wars, they will keep bubbling along for another 50 years for as long as this regime is in power in Iran. And I think people are looking at it the wrong way.

39:25I think you're right. I think the other issue, and I can't believe that the entire, well, I can't believe it, because the entire mainstream media is just hopeless. but the mainstream media, the Twittersphere, everyone's forgotten this point. So talk about all the people who hate Trump and neither us are massive Trump fans by any stretch or Netanyahu fans but I think we consider ourselves radically centrist so we don't really take any position as in we don't radically favour any side whatever they do. Well we're in favour of enlightenment based Western liberal values is how I would describe the two of us.

39:54The one thing that maddens me no end is people say oh the US and Israel have lost the war because Iran is now tolling the Strait of Hamus. And it's just taken as a given that Iran's now tolling. We know Iran's not letting - Iran and Oman. Oman is the little secret party. No one is criticising them. What the hell are they doing? Yeah, the other side of it. Well, this goes to my point. So Iran slash Oman are tolling now. So they're letting Iranians through. They're letting allies like China through. They're potentially charging a million bucks or dollar a barrel to go through or whatever it is. but this is ridiculous.

40:29The US could do exactly the same thing. Israel can do exactly the same thing. All that Iran is doing is saying, if you go through the Strait of Hamus and you're not one of our ships, we're going to bomb you with a drone. We're going to kill innocent civilians on this tanker. It could be Chinese, the ally. It could be Indians. It could be, it's very unlikely to be Israelis or Americans. They don't really take ships through there anyway. So what Iran's basically said is, you go through the Strait, we're going to kill innocent people. The Americans could bomb the hell out of those Iranians, oil tankers in two seconds.

40:58So could the Israelis. They could do this. They could easily shut the... Israel could toll the Strait of Hamus they want to do tomorrow. They'd just have to kill innocent civilians, which they won't do, despite what all the far left accused Israel of doing. You don't see the far left jumping up and down over Iran, effectively threatening to kill civilians tomorrow. So the left has continued to disgrace themselves, as they have since COVID. So the left has completely lost the plot here. Mainstream media are so hopeless to not even mention this. Like, nobody even says this. Like, Iran's shutting the Strait.

41:25Oh, well, we're going to kill tens of thousands of innocent sailors. Oh, that's all right. They're Iran. They can do what they want. Like US and Israel are held at such a different stand to these murderous terrorists in Iran that the mainstream media fall over themselves loving. You're totally right. You're totally. Now, just to quickly, I'm trying to get in before you hit me with your run sheet. So there was a big ATO ruling that I thought you might love this week. Is that on your run sheet? It's not. Well, I think I know what you're talking about. Well, you will love this ruling, I think, but you shouldn't love it too much because many people who listen will hate it.

41:55so um so there's not sure we have too many people who are that way inclined listening to the pod to be honest well there has been i'm not sure just sinter's a listener well there have been she should be a listener she probably makes someone there's been a trend um that where people that are employees and are working from home have been claiming and are renting a house like or an apartment have been claiming a portion of that rent because they're working from home. They've been claiming it as an expense. And actually the Administrative Appeals Tribunal, whatever it's called, upheld it and this is what has been going on.

42:32And the ATO is very jittery about this because there's an increasing movement to work from home. And as you constantly remind us, one third of people in Australia are renting. And so this would be a catastrophe for income tax for the ATO in Australia. And so they decided to go and pursue this, I think, into the Supreme Court and appeal it. And actually they won and this is what they won. And so I suspect this will – By that you mean this is the ATO. Yeah, and I mean never – I mean I'm scared to say this on this podcast but I'm never cheering on the ATO. But I think that this is maybe not an unreasonable view but it will be interesting because for sure this is going to be challenged further.

43:14It's such an important test case. And it seems to me that based on the ruling that was just handed down, there's a distinction that has emerged, and this is the distinction. If you are employed, an employee, and you are working from home, the ATO is now within its rights not to accept you claiming any portion of your rent, household utilities, etc. as an offset for that because fundamentally this is your abode and you chose it and you're an employee working for someone else and so you can no longer claim this, which is incredibly problematic for Victoria's push to let people work from home two days a week.

43:58I think part of the incentive… Is it? I'm not sure. Yeah, I'm sure part of the incentive that people saw was that they can claim some of this as a tax deduction working from home. There was… It never made… That whole thing never made any sense in the sense that you already have your house. You're already paying for all this stuff. You're not generally paying anything extra if you're working from home. Like the notion that you should be able to deduct it actually never made any sense to me. Well, this person also deducted stuff they bought to fit out a second bedroom as an office. I think that was also rejected by the court, which I thought that was kind of more surprising.

44:31That's a bit more legitimate if you depreciated it maybe. but like using like depreciating your rent or your utilities, rent is ridiculous because you already have this. Like you already have your house. You're effectively getting a tax break on something you're already paying for is not the purpose of tax office. But there is a flip side to this, which when I say there's a divergence, it seems that people that are genuinely self-employed, they might still be able to make these claims. In fact, I would say it seems to me from the reading of this in the commentary, this ruling is quite specifically applicable to employees and it's not applicable to self-employed people working from home and paying rent.

45:16So it'll be interesting to see how that plays out. I'm not sure I agree with that. I think if you're in your own business, you should be the same rules. You might say it should be the same rules, but I'm saying legally this ruling… Yeah, I'm saying this ruling is wrong. Well, I think it's not wrong. It's just… In that sense. It's just applicable. Like this is the case that was brought before the court, right? And so the ruling was not automatically extended to everyone. It was specifically about – So the primary ruling – I totally agree that employees shouldn't be able to claim, but I also think that business owners also shouldn't be able to claim.

45:47So I feel like you might not be – well, it's hard to know because you're not an employee, but I wonder how many employees just assumed that they could claim and have been claiming. I suspect that like this is, number one, it would be shocking for me if anybody that's an employee is actually aware of this ruling. Like I think people don't realise that this ruling has happened. But also I think it was permitted. I think it was permitted to this ruling and now people won't be able to. But when you say it was permitted, it was neither permitted nor not permitted. There was no ruling on it and the ATO hadn't tested it.

46:23I think they were using this to test it. but I kind of feel like I mean what do you think about this Mike? Quite possibly and but I kind of disagree with Adam I think if you're self-employed and maybe I'm showing my own bias here if you're self-employed and you don't have an office space you should be able to claim some of it. Because your argument Mike would be this would be the good argument that you would make. It would be the reason I rented this house or bought this house is specifically because it has a home office. By the way, if you claim it on your own house, that's bad news because then you're going to be jeopardizing your capital gains tax exemption as a primary residence when you go and sell that property.

47:09But if it's rented, your argument might be, I rented this house specifically because it had space for me to work from home and I'm self-employed. Well, your argument is I rented a bigger house as a result. Well, is the alternative though that that person has to spend a lot of money to rent somewhere or find a space that they can work in? Yeah, I think so. An office or not claim or work from home and not claim it. So the challenge is, Mike, like if you rented, if you and your lovely partner rented a two bedroom house and you just used a second bedroom and you would have rented a two bedroom house anyway and you use a second bedroom as a podcast studio.

47:43In that case, I don't think you should be claiming. If you then rented a three-bedroom house and the third bedroom is a product and you wouldn't ever have rented that three-bedroom house, then I have more sympathy for the argument. But I think the majority of people in the first category. But how would you know? You can't get into his mind and say – You don't. That's the problem. Which is why I think you just can't allow deduction. So I suspect that it will not be extended. That ruling will not be extended to self-employed people. There are other problems. We all know there's lots of self-employed loopholes, right?

48:12And I think there are bigger loopholes than this. but I think Mike your point is going to be a very common viewpoint on this frankly. Everybody loves a tax deduction. I just think if I don't have a house that and I've worked in you know throughout my early career I was just working in share houses in my bedroom in a share house or in a one-bedroom apartment but it was just because I didn't have any other place to work. in the place I live now, there is sort of the exact scenario you described where we have another bedroom and I've converted into the office I'm currently in. But it would cost me so much money to find a permanent office space to work that I couldn't invest in other areas in my business that are probably...

49:02But that's not the alternative, Mark. The alternative is you do it on a table or whatever. You don't have to rent an office. We're just saying you can't deduct it. No one's saying that you can't work from home anymore, in this case, if you're a self-employed. So I tell you, the strange thing about this is that the only media, I'm going to say newspaper because I'm old-fashioned, the only newspaper that this appeared in this story, guess what newspaper this was in? I thought it was the AFR, but I could be wrong. I only found it in the Herald Sun. I couldn't find a reference to this. Yeah, so it was the Herald Sun.

49:33In the AFR, Bombshell Judgment Shuts Door on Work-From-Home Tax Deduction Loophole. That's a long headline. It may have been in the Australian as well because often they share business content. Yes. So this was like a Melbourne case. By the way, it was a – now I remember what it was. It was like some – like a sports broadcaster, some kind of journalist slash broadcaster and they were only claiming like$5 ,000 or$6 ,000. It wasn't like this huge claim. but the ATO I think felt very strongly about this and really wanted to run a test case. I suspect this might keep going. I think the other small point is we have a housing crisis.

50:18Like if people have been sort of renting bigger houses to run as home offices, that doesn't help the housing crisis. So you'd argue that like you want people having smaller houses or more people in, to Mike's earlier shared house analogy, more people in houses and less people using them as offices and using offices as offices. It's a small sort of second-order effect of allowing deductions because it encourages people to have bigger houses. The last thing we want is less people per house because it makes housing worse for everyone. I agree. But, glorious leader, I don't think you can force multiple people to live in.

50:50Like, I know. Ultimately, you have to give people free choice. No, you can't, but you can stop giving people deductions and effectively reducing the cost of housing, which is what happens. On that note, we'll go to a super quick break. We're actually going to go back to the run sheet and have some really great business stories coming up in just a moment.

51:18And we're back and back to the run sheet. And StreetTook reported last week that a favorite of the pod currently delisted travel business CTM, Corporate Travel Management, failed to keep its own deadline for its forensic accounting review being undertaken by KPMG UK. The review was apparently approaching finalization and completion was anticipated in March 2026. In February, Corporate Travel Management Centre was hoping to issue its audited FY25 financial results and have its shares trading by the second quarter of this year, which is obviously now. Obviously, that hasn't happened yet, although there is a couple of months still to go.

51:50Street Talk put three questions to CTM. Are they in possession of the UK forensic accounting review? If so, why it hasn't been released, if not, why it's delayed? And the answer to all three was no comment. Delaying the final sign-off the report could signal anything from it being a complex process to it's the amount is bigger than the$160 million in refunds previously flagged. One shareholder who talked to Street Talk, who didn't want to be named, said, they said the end of March, now it's mid-April, so there's clearly been some delay. Street Talk also reported that employee celebrations have still gotten the green light at corporate travel headquarters.

52:22In a LinkedIn post, a senior staff member posted that the company's leadership conference on the Sunshine Coast included dress-ups, supplier chats, and networking with colleagues across the country. Adir, we obviously have a bet on this company coming back to the boss. Are you confident that you're going to win this bet or lose it like you lost the goida bet? So humiliatingly. You basically have just chewed up two minutes and street talkers chewed up part of their column with speculation and hearsay. And so I finally – it was a good opportunity for me to take a two-minute nap. That was nice. Now I'm back awake again.

52:56And you can move on to something where there's substance because what's your argument here? They've been a bit delayed. It might be this or it might be that or it could be this or it might be that but the employees are still having a party. Okay, well, that was predictable, right? And so like it definitely is one of the 62 reasons that you said it could be but we don't know which one and so I have – I guess the question is are you getting a little bit nervous? You said they would come back. You said they would come back onto the BOS. It's now April. It's the 11th of April. They were due to have this report by March.

53:26It's not in. It's now at least two weeks late. They've got a couple of months to meet your deadline of coming back online. Are you not a little bit nervous that maybe this business will never return to trading and may never be solvent again? I'll tell you some reasons I'm not nervous. One is I don't own shares or debt in this business. Two is – I think worse than owning shares is the public flogging you'll get if you lose this bet. Two is I generally tend to forget about things pretty quickly like this. So I kind of – you just – I forget about it in between times that you remind me. Three is every time I lose a bet to you, there are actually any consequences for losing that bet.

54:04Public humiliation. I mean like, you know, come on. There's worse things that you can say about me publicly than I got a bit wrong to you. And so basically, it's a consequence-free bet for me. And so, yes, I'm in no way nervous about losing this bet. But if I was to be nervous, this vacuous speculation would not move the needle for me. Moving on, and things seem to be going from bad to catastrophic for Atlassian shareholders with the worst performing stock on the Nasdaq continuing to plunge to embarrassing new lows despite the share market having a pretty good week on the back of that Iran news.

54:41Alastin's shares slumped 15 % last week alone, with its market cap hitting a mere$15 billion US. That's down, what do you reckon that's down from its highs? And this is, bear in mind, was the fifth largest Australian stock at one point. 70%. 87 % from its all-time highs. You've smoked almost 90 % of your investment if you're an Alastin's shareholder. At one point, as I said, it was the fifth most valuable Australian business, now down to 23%. And it's not inconceivable it drops outside the top 50, because the difference between 50 and 23 isn't much, it's like a couple of billion. And this is a business where the founders grace blue-chip Australian boardrooms to give advice to those directors on how to run their own companies.

55:19And now Atlassian has become its own main in a pretty bad way. The latest slump in Atlassian share price was triggered by none other than your favorite company, Amthropic, launching Claude Managed Agents, a platform that reduces the time it takes for developers to build their own agents so it can autonomously complete multi-set processes. Sam Senior, an Australian who founded AI Startup Box, said Anthropic's latest update made it easy to run agents without spending months building the infrastructure. That said, it doesn't take much to cause Atlassian's share price drop these days, with investors seemingly taking any excuse to run for the exits.

55:50The further share price falls have come despite Mike and Scott, the founders, finally stopping their 10-year-long share sale extravaganza, which netted them$5 billion Australian each. Under Adia's famous sell-down index, that's around 50 % of the entire company's value hoovered up into the pockets of the two founders. Their remaining stake in Atlassian is worth about Australian$4 billion. So had they not sold down, they've saved about$4 billion each. Oh, I've got a name for my index now. Oh, have you? Yeah. What is it? So I'm going to call it the IR index because it raises the IR of shareholders.

56:23And the IRA, like any good American thing with a acronym for it, the IRA that stands for Insider Relative Exit. That's actually pretty good. That's actually what it is, right? Yeah. So this is the IR index. So they've scored 50 % on the IR index. I mean, it's not the best score, but, you know, we… But it's up there. Yeah, it's good. We haven't changed our view on this, which is make money. It's just become harder for them to make money. But the underlying reason that we said this was a short, what, 18 months ago or whatever it was. I think I said it five years ago, but yeah. All right. But if you said it five years ago, you say this is the thing.

57:04You don't want to say it five years ago because if you said it five years ago, you would have had to cover your short all the way up to its peak. That's why I don't actually short because that's exactly what happens. You have to cover it for years and years because the market is wrong for so long. Basically, you say. So this share, I'm going to just pick random numbers just to explain this concept. So the share is trading, let's say, a share is trading at$50. And you say, oh, this is definitely going down. I'm going to like sell this share at$50 before I have bought it. It's complicated because you actually have to cover it, right?

57:38You have to have the stock somewhere. It's illegal now. We knew CFDs. That's super risky to get stopped at. Yeah. And so it is. But if you're actually going to short it and you sell stock you don't have, someone is like effectively lending you money to sell that stock and so if the stock goes up they say well you owe us more money now because when you buy it back you're going to lose money because you sold it at fifty dollars now it's sixty now it's seventy now it's eighty when you buy it back you're going to have to make a payment that's a loss and so you have to like top us up so we feel like you're still a good credit risk to cover that loss and that's a margin call and so that's the risk of shorting, right, is that you get these margin calls.

58:20And so people mostly associate margin calls with the other side of things, right? Like people have borrowed money against their stocks, let's say, and then the stocks start falling and they have to make margin calls. They can't afford to pay the margin, then they have to sell the stocks. That pushes them down more. But the same thing happens with shorts. Like if shorts go the wrong way, you know, you have to keep topping up. And so, but - Totally. And the problem with shorts is there's unlimited downside. That's right. You can lose infinity times. The beauty, you can only lose 100 % of your long.

58:50So you put a million bucks in buying BHP, you can lose a million bucks. Yeah. But you put a million bucks shorting BHP, you can lose 100 million bucks if it 100x. So that's the problem with shorting. That's right. And so the challenge is that – like the way to think about a short is when you buy a share, you can lose 100 % of your money, but obviously you can't lose 200 % of your money. But you can make 200 % profit. You can make infinity profit. A short is just like that same dynamic playing out with a sale. And so I think, look, I don't know. I'm sure you did say to short Atlassian five years ago because it feels completely consistent with your personality and the way that you feel about this stock.

59:27But when we started talking about it, it was below its peak, but it wasn't far below its peak. But my point is less. It was probably like 50%, 40 % below its peak, but that's still a lot higher than it was now. And my point is not to say, you know, therefore, that was better timing. It's more to say the reason that we said that this stock is a short continues to be the problem that they're facing today, which is it's a business that generates a ton of revenue and makes no money. And so they should make money. And if they turned around tomorrow and started making money, then we would say, well, this stock has probably gotten pretty cheap.

1:00:02And the problem they have now is it used to be I think that before large language models, it was easy for them to make money. They just had to fire people. Now it's hard for - Actually, they just have to stop hiring people, actually. Not even fire people. Right. And now it's harder for them to make money because they've got a - because they are seen as, as you said, they are seen as the meme stock for being at risk from AI. Like they are the poster child for the cesspocalypse. And so it's much harder for them. Exactly. And so - Yeah, because it's so exposed because they sell to developers and people are worried there can be less developers.

1:00:39Right, they are right. That's right. And so I think that funding - And they lose money. And so it's harder for them to make money. Now, I will say this though. Like everything, you know, I always say the pendulum only sits in the middle on its way from one extreme to the other. And that is how I feel about human sentiment as well, right? Things are always overcorrect. For sure. 100%. And so Atlassian is not a business going broke tomorrow or I don't think even in five years if they did nothing. But I do think they've got some real problems to solve. I don't think it's beyond the intellectual firepower of Mike Hannon Brooks to solve this problem.

1:01:15He needs to bring some other people in, probably really high quality people to help him solve it. And he needs to focus on this. This is where I think we disagree. Well, I think we disagree. I think if – and the problem is these guys – and I'm obviously in favor of founder class of – like some people love it, some people hate it. I think having founder class of shares – and Mike and Scott control, I think 80 % of the business, 85 % of the voting shares and they own, I think their stake in the business is like 20, 25 % now or 30. So they have a much smaller economic stake and they have a voting stake.

1:01:45You can't get rid of Mike and if Scott was around, you can't get rid of Scott unless they choose to voluntarily go. Scott chose to voluntarily go and Mike obviously didn't and Mike remains the CEO of the business. I think if our dear shift was the executive chairman of this business and there was a very strong CEO, I'd be buying shares. I'd be selling the house and buying shares in this business because with a strong leadership team, this would be almost double overnight because you'd be making up a billion dollars a year and you'd be a great business. I think the problem is A, the market simply hates Mike now, rightly or wrongly.

1:02:17Mike and Scott were incredible founders. They built this business in 2002 where nobody had heard of servers and all this kind of stuff. They were years ahead of the trend, but this is now 24 years since they founded the business. I definitely don't think Mike should be running this business now. He shouldn't be sponsoring 50 million bucks for Williams Formula One teams. Shouldn't be flinting around on his private jet. He shouldn't be doing these half-ass firings over video. He's not the right guy to be leading this business. He's certainly not a wartime CEO. They need a wartime CEO in here. And Mike has got, for their own sake, they've got billions of dollars at stake.

1:02:52Need to get somebody to run this business who's not them. And it's clearly beyond the point where these guys should be running this business. They have to unfortunately remove probably another 5 ,000 people to get to profitability and that's a tragedy for those people. But ultimately, the only other alternative is business keeps going down and the shares are worthless. I don't think, we can't even, it's no point talking about Mike going because he's not going, okay? There's no possibility that he's going. Well, it's a point where if this business goes down to even worth single digit billions for his own sake, he may have to go.

1:03:20He's not going. That's my view. And so that's a pointless discussion. But I will say this, maybe you'd be surprised by this. I think this would be an amazingly fun and rewarding business to chair like it depends if michael like was prepared to collaborate and listen right but i think for all of the reasons that you said like this is a business now where there is no reward for conservatism or maintaining an investor relations narrative there is every reward for doing something radical and dramatic and recasting the narrative, there's never been a better time to turn this business into a cash generator.

1:03:59I think it's a great time to be involved in this business. 100%. I think someone like you could do it. It's pretty hard. Mike and Scott were at one point, very briefly, the richest people in Australia, I think, when the iron ore price dipped and these guys were worth 30 odd billion each. They're now still very wealthy guys, but it's pretty hard to go from the richest person in Australia that everybody looks up to and you're a god in Sydney and double pay G's and all this kind of stuff. And suddenly you've got John Stenshaw writing books about you and the share price dropping 87 % and you're a laughing stocker of the NASDAQ now.

1:04:31No share has fallen further. It's pretty hard to go from God to also ran and be able to – and I don't think anyone – I couldn't be that humble. Like I'm not criticizing Mike for not having this level of humility, but it's pretty hard to have that metamorphosis in how people look at you. This guy was the king of the hill and now he's the opposite. Yeah, well, that's true. That is a tough psychological position to be in. Let's move on to another king of the hill. And Elon Musk's SpaceX outlined details of its highly anticipated IPO in a meeting last week, telling bankers that it will host an event in June for its IPO roadshow.

1:05:10Retail is going to be a critical part of this and a bigger part of any IPO in history, according to Chief Financial Officer Brett Johnson. Bankers are talking up the IPO as being the biggest of all time, seeking to raise$75 billion US and values by SpaceX potentially at$1.75 trillion. The company claimed that 30 % of shares will be set aside for retail investors well above the usual 10%. The Musk-led company plans to launch its roadshow in June and pitch to 125 analysts from 21 banks, which sounds like a pretty big pitch. The$1.75 trillion valuation is a significant step up from the$1.25 trillion valuation that was set when SpaceX merged with XAI in February, which is like a month ago.

1:05:50And in December, the shares traded on the private market at US$800 billion. So, inverted commons doubled in the space of like three months. Many speculated that SpaceX IPO will lead to a subsequent merger with the highly valued Tesla. Barclays analyst Dan Levy wrote in February, The main investor question we've received is whether Elon plans to merge Tesla with SpaceX, forming a broader Elon Inc., an idea that Tesla megabulls have hoped for. Tesla's value valued at$1.3 trillion somehow and is only off 23 % of its record highs. Adir, what are your views on this SpaceX float potential and the merger with Tesla, if it happens?

1:06:26Well, we know we've had a continuous view on SpaceX, which is they're a great business. So we can't criticize SpaceX. Tesla it's hard to know what that business is it's very unclear I mean it's kind of makes electric cars but doesn't really want to it's got some solar panel stuff and battery going on now it wants to build robots so it's hard to know what that business actually is and then you've got this like Twitter X thing which I mean that has got to be miles down on the purchase price presumably I suspect well it's not because it's part of SpaceX now so if you invested in Twitter you made a fortune.

1:07:04I know. And it's so crazy. And so what I think, this is not business. This is like Elon is basically an emperor of his domain. And he's saying to people, look how big my empire is and look how powerful it is. I'm the richest emperor in the whole place. Do you want to come and be a part of this empire too? And I'm not sure that people are so much assessing the financials of this empire. They're predominantly assessing what you've just highlighted, which is like, do the finances really matter or is there just like emotional momentum of being around this emperor that constantly pushes everything up because by no objective measure could an investment at what was the twitter price 44 billion dollars or something that was when he bought twitter but this is perfectly twitter then merged with the sort of xai thing and then that merged with spacex and that made them merge with tesla but yeah so at the moment it's so i would have thought that if you bought i can't remember the exact numbers but if you bought into that 44 billion dollar twitter thing and twitter was worth like five billion at the time but if you bought that you probably five x your money which is because spacex has gone up so much i know but like why you know the thing is this he has these huge hits like tesla for whatever its ups and downs it's been it's a huge hit of a business it's one of the most successful businesses of the last 50 years in the world in terms of like creating a position and selling new stuff and SpaceX is an even better business and so what he does is he seems to grab his various bits and pieces that haven't gone so well and because the hits are so big he can just roll those in relatively inconsequentially and that is very smart because the real narrative that Elon can say is it doesn't really matter which bit of my empire you buy into, I'll make sure things go okay for you by rolling it into the bit of my empire that flies.

1:08:56And there's always going to be some bit that's flying. And so that is what he did with, what was that business? What was the name of it? Solar City, right? Solar City, that was a struggling, struggling thing. That was his brothers? Wasn't that Kimball or his cousin, Kimball Musk? Yeah, and a few other people were in there. He just rolled it into Tesla. And it's like, don't worry, there's a bit of my empire that's flying. Like, I'll just roll you into that. And like this idea that you could pay$44 billion to buy X and participate in that and then make three or four or five times your money despite the performance of that business being questionable at best.

1:09:29Like that goes to show you what a great machine he's created here. And that's why I say to you, I think in a sense, the financials are less important. You're basically betting on here's a guy that just seems to be able to find a mega winner periodically and whichever part of his empire I buy into, he'll make sure that I'm exposed to the mega winner. And in this case, he's actually selling a bit of the mega winner. But I think an Elon, what was it called? An Elon Inkoil, whatever it is, right, type thing where – I think, yeah, ticker Musk or ticker Elon. That actually makes complete sense for Elon.

1:10:03I think every single thing in his empire is inextricably linked to everything else in his empire. And there should just be an Elon business and buy whatever you want in the Elon business because it's all interconnected. Yeah, I think that makes sense. I think you're right. You're also being very kind. I think we're at a peak bubble and nothing indicates this peak bubbleness more than this. So you've got SpaceX, incredible business, like unbelievable business. Starlink, also unbelievable business. They're probably worth though, like$100 billion. So the valuation of SpaceX is just ridiculous because, yes, it's a great business.

1:10:35It doesn't actually make that much money. I think it's single-digit billion profit. So, yeah, they've got a great market position. Let's see if you've got Amazon launching, you've got Leo. You've got some competition coming from, say, for Starlink, but Starlink at the moment is just next level. No one close to it. SpaceX, no one close to it. But, like, that's$100 billion. If being generous,$200 billion business. The Elon brand is the$1.7 trillion valuation just seems completely absurd. But it's not new. That's what I'm saying. I'm not – I totally agree. It was worth$800 billion three months ago, allegedly.

1:11:05That was ridiculous. But if you were running it or I was running it, it would be worth the$100 or$200 billion. And so, yes, I agree with you. But the thing is, this is what Elon does. That's what he's been able to do. But eventually – For how long? For 20 years. For 20 years. Atlassian 2021 was crazy over value. But everybody thought – all these idiot American investors thought it was worth$140 billion. is now worth$15 billion, but they thought it was worth$140. This is the same thing. And Elon's not Mark, and SpaceX and Stalin are brilliant businesses, but they're not$1.7 trillion businesses.

1:11:41They're$100 billion businesses, but people are just so starry-eyed over Elon. He's done with Tesla's$5 billion business valued at$1.3 trillion as well. So he takes these businesses that are worth collectively, call it$105 billion, and he's got them potentially worth$3 trillion together. It's like comical. I agree with you on the overvaluation, but the thing is this. Elon is like – Like a 30X overvaluation. Because he is like an amalgam of like Thomas Edison, Howard Hughes, you know, that plain dude. Yeah, the guy who never left his room for 10 years and went nuts. I mean, you know, and P.T. Barnum, like the, you know, the roll-up, roll-up guy.

1:12:22He's an amalgam of those three. So he's got all of the marketing salesmanship of P.T. Barnum and the genius eccentricity of Howard Hughes and the innovation of Thomas Edison. And like people just want to be around this. And let's not forget, like he is, I don't know, orders of magnitude, more sophisticated and innovative and technologically advanced than these money managers that he's pitching to and to try to invest. I just think it's so obvious to me why there's overvaluation. And yes, it is because of the bubble. But I think we just have to put him in a category of one. because he is completely unique in the world.

1:13:01It feels like you see in the 80s, these guys used to spin all those plates on those little - 100%. Fine little piece of wire. And he's got all these plates spinning, spinning, spinning. He's running around spinning, spinning his plates. Eventually, all these plates are going to crash. It's so inevitable that these valuations - Let's not say I have a Tesla and I love it. He makes great products. I love Starlink. There's nothing better than jumping on a Qatar flight and using Starlink. SpaceX dominates space flight. It's not saying that he hasn't created great products, but you talk about not shortening religion.

1:13:27You're completely right because this religion has somehow got this$3 trillion collective valuation for businesses that collectively doesn't make a dollar of profit if you add up Tesla's losses and SpaceX's profits, I reckon. So it's – or actually maybe it makes$10 billion or something like that. But it's barely profitable and it's worth$3 trillion. It's insane. Listen, a lot of people believe in monotheistic religions that have got a long history of all these miracles. Now, I've never seen a miracle. You've never seen a miracle. No one's really seen a miracle. But like lots of billions of people believe that these miracles happened and they totally are all in on these religions.

1:14:07And so Elon, like, you know, people just believe that this is a miracle, man. And it's kind of true. It's like, oh, you invested in Twitter. Well, that's gone terribly. Don't worry, I put it with Grok. Grok, that just loses money. Don't worry about that. I put it with this thing. It's a miracle. We made five times our money. Like he's delivering real miracles to people in this day and age. Of course people are buying into that religion. I absolutely agree with everything you say on fundamentals. It's ridiculous, these numbers. But this is like the closest thing to a capitalist religion that there is in markets.

1:14:45It reminds me a bit of, remember in, what was that, the big short movie? And they go to, and all these people in the mortgage business, and they're selling these mortgages for these houses that are worth a fraction of what they're selling for. and it was the Steve Carell character goes to that. Remember he meets these two guys who are the mortgage sales guys? Oh, absolutely. And they're talking about – and they're going, why are these guys confessing to committing a crime? Because they're selling these mortgages to people who – like ninja loans, people who can't afford it. Yeah. Because people thought the housing could never drop.

1:15:12So they're a loner. They had this religion in housing. Like housing – I can buy four houses, keep making money because in the last 10 years I've done nothing but make money. And then Steve Carell goes, they're not confessing. They're gloating. Absolutely. And it's the same as these Elon adherences. I think because I've made money in the last 10 years betting on Elon, this sort of illusion will continue forever. And eventually, and in the same way as the Atlassian shareholders did till really sort of called two years ago, you could keep investing in this Atlassian business that was losing money and not a great business.

1:15:41And eventually the whole thing dropped 87%. Like it's almost a never will that Tesla, Elon Inc. will drop 90 % if they can even get this float away. And the fact that they're needing 30 % retail kind of just proves that Instow Money – I know there's still obviously Instow Money in there, but it proves that the smart money realizes this valuation is ridiculous. You've got to dump it onto idiot mom and dad shareholders who believe in this ridiculous Elon myth. Well, I would say that. I tell you why I wouldn't call them idiots. The problem that exists in the world of capitalism today is it is very hard for most people to conceive of how they could possibly get ahead financially.

1:16:21And that is why we've seen the rise of crypto, for example, like Bitcoin, and a whole lot of other things, and a lot of this stock market bubble, and meme stocks, and Elon. People, like most of the world, feels like there's no way for them to get ahead financially. And so they look at Elon, who's the richest guy on Earth. Everything he touches seems to turn to gold. And so, of course, they're going to pile in and buy that. And, like, it's hard to know what is going to crash all of this. Like, because you have to think about this. Everyone in Elon's orbit, their job is effectively to be an Elon enabler.

1:16:56Like, no one is there holding, trying to make him face reality. And it's worked very well. Like he would not – his reinforcement would be I have not accepted reality for the last 20 years and that's gone great. If you try to feed, force feed me reality, you're just holding me back. And so everyone in his orbit is just an enabler. Different people do different things. Some people's job is to say how great he is. Some people's job is to stand between him and investors. Some people's job is to like help him spruik. Like everyone's got their role. And look, eventually probably it's going to come crashing down to reasonable valuations.

1:17:33but he does have a way of making sure he's always at the front of whatever the hottest thing is i mean the fact that he's at the front of llms all right like grok is not a frontier model let's call it in lms but it's the next level behind like and it's pretty good like this guy just fine he was at the front of open ai right like he was open ai i don't mind grok yeah no 100 he funded open ai i'm not denying his brilliance like but that's it like you've built a hundred billion dollar business which i think is what he's built that's incredible like only a handful people have done that so i just don't think it's a three trillion dollar business so that it's that it's we get anchored at this high level is the problem let's let's move on and let's come closer to home to guzman and gomez which continues confounded skeptics who include my co-host adir shiffman with this mexican fast food was i a skeptic on it i think you were a bit skeptical i think my view was it's hard to buy it at these prices but i think it's a fundamentally good underlying business.

1:18:31I thought you were a bit more critical than I was. And I think that – It had been right until this week for sure. I was critical when it ran up, doubled in price on the basis of – Yeah. No one – we never thought it was$43 a share, but even when it was down at$22, I didn't think you were as bullish on it. I think the financials are very hard to understand, but I don't think they're hiding stuff. I just think it's hard to understand. Yeah. And I think that the drive-through narrative was a bit preposterous. So the Fast Food Chain reported blockbuster sales of 346 million per third quarter this year, a rise of 20 % on 12 months earlier.

1:19:07Once new stores were accounted for, we still saw same store sales of 6.6%, which is also very impressive. The company said part of the growth was due to its Uber Eats launch in February. The AFR reported that while this was slower than 11.1 % comparable sales store growth last year, it beat market expectations. Investors had been worried about GYG's plans to expand to the US, where there's open stores in Chicago. And they're probably right to be worried there because that division continues to underperform. Despite Mark's moving to the US to shepherd the US business, the results didn't inspire great confidence with revenue rising in 4 million up from 3.2 million one year earlier.

1:19:44The increase was primarily driven though by opening new outlets. Same store sales were only up 2.2 % in the US. They're basically flat in the US. GOG did affirm its full year guidance forecasting underlying EBITDA in the Australian division should be 6 % to 6.2 % higher with 32 new restaurant openings. The market did love this announcement, sending GYG shares rocketing 32 % in the last week, up to$21 per share. They're pretty much back at their IPO price now, but still about half their irrational December 2024 high of$43, which was shaved during the fast casual craze. Adir, are you more bullish on GYG after hearing that news?

1:20:23So this is one of those stocks that is polarizing, I think. And there are a significant number of people that are really believers in this and in management. And so I think that that is why we've seen volatility in the share price. This business trades at a multiple that is very hard to work out through no fault of theirs, mostly because of the way that accounting ruins expensing stores. and they're predominantly a stores business. That's what they are. This is maybe my broader view. Like this narrative that says this is going to be a rocket ship, I'm not a believer in that narrative. The narrative that says this might emerge to be a very significant player in Australia, which it's like really on track to do.

1:21:15It is a significant player here and like it's a really good business. I definitely think that's true. and then the question is, is the story just predicated on making the US work? Because that seems to be, I mean, this seems to be basically a bull versus bears battle on the US. Is that right? Would you say that's a fair characterization? I disagree. I think the Australian, I think the US is actually, it's attractive from the valuation and they'd be far better off just forgetting about it. There's enough, I think there's enough of a TAM in Australia that could be a very, like, and I agree with you, it's not going to be a, it's not going to be a 10 bagger, But could this be a solid grower over the next 20 years growing 10 % a year?

1:21:53Absolutely. Yeah. That's great. Like 6.6 % same store growth when they've got the ability to launch another 500 stores probably and 20 % top line. That's strong growth. What would you pay for that, right? Because it's hard to look at what this company is actually earning. That's obviously pretty difficult because you're the whole EBITDA mess. I agree. I don't think you can use EBITDA as the benchmark. You've got to use EBIT. But they're also investing in new stores on a cost to fit them out. And some of them are company-owned. so yeah ebit probably is unfair as well so it's it's a tough one um but i think i think the i think that the gyg haters were wrong yeah i definitely the gyg rules are also wrong yeah so i think it's i think it sits somewhere in between i'm moderately bullish on the stock and i think we'll get a an insider and at some point to talk us on the pod to talk us through stuff that we might not know about and how to figure out what its real earnings are right like how do you think about a business with this level of enforced complexity by accounting standards growing like this.

1:22:50And so if the US, if they shut the US, here's a hypothetical, it's a ridiculous hypothetical, but if they shut the US, you would think the business gets more valuable, but the market would probably half the share price. You reckon? I don't know. I think it would go up. You think so? I think it would go up the second it shut it. Yeah. I think the market hates the US stuff. Well, I think the bounce in share price is – well, what do you think caused the bounce in share price? All they did is reaffirm their guidance. No, well, they beat revenue. I think people thought that the revenue – remember they had that soft first three weeks, first three or four weeks to the financial year, and that's what caused – Right, but who's basing decisions on three or four weeks?

1:23:27Well, the share price dropped as soon as he said. As soon as Stephen announced that, the share price dropped significantly. And I think the fact they're able to grow sales 20 % and same store 7%, that's a strong result. That's a high growth business. And the reason I like this business, the key to any franchise system is, does the franchisees make money? If the franchisees can make money, you've got a good business. And my understanding is - That's the subway problem, right? Those subway restaurants were notoriously hard to make money out of. The Quismo's why it went under and why McDonald's has been such an incredible business for 50 years is McDonald's franchise literally a license to print money.

1:24:01If you make, I think, 2 million bucks a decent McDonald's makes, you own 10 of them, you're making 20 million bucks. you're a pretty wealthy person if you own 10 McDonald's. So I think Guzman has similar levels of profitability per store at the moment anyway, certainly with drive-through. So my bullishness around GYG is if the franchisees can keep making money, especially in Australia, then you've got a really strong underlying business that I think the bears are wrong. I think the Uber Bulls, again, probably pushed it too fast, too quick, which is problematic. And we get that anchoring at 43, which is not ideal.

1:24:31But if you anchor it at the 22 listing price, it's basically flat. And at 15, so at 15, you're valuing it, the business is worth$1.5 billion. And that's pretty much it's sales. So it's one time sales. Yeah. Yeah. But I would rather pay earnings on a business. Yeah, I get it. Sales is a bad metric used. We just got that issue with working out what the hell the earnings are. I know. And so it's basically a tough one to make sense of. Maybe I can say this overarching for you about share price. so the way that investors increasingly think now is about catalysts what a catalyst means is is there something that's going to change the market's perception of what this share should be worth and so a really good business that um is valued at i don't know 15 times earnings and it's just consistently growing 14 or 15 percent and the same amounts flowing through.

1:25:32Like that stock is never going to spike because no investor is going to look at that and say, FOMO, I better buy this stock right now because I might miss out on something because there's a catalyst that might hit. But that is fundamentally what drives jumps. And I think that the way to think about this is probably that these results, which were so different to the first three or four weeks that they had reported made people worry that actually this business is not doing like not declining in the way that we worried it's doing much better and that formed a catalyst for people to say yeah this is not this is not what we thought this company might be and that is effectively what drove the buying and what is this is why I mean it's hard to be a value investor on the ASICs or any stock market today because the market is expensive generally speaking I actually think there's some great bargains out there, just the unpopular stuff.

1:26:29That's true. But a lot of what goes on with stocks through this whole boom period, especially with increasing valuations has been trying to pick what the catalyst might be. Is a stock going to go into the index? Okay, let's try and get in before it does and sell into passive fund buying or the reverse, right? Like sell out ahead of it and buy back into passive fund selling. A lot of what's going on now, by the way, is there's a lot of active funds that are under extreme pressure on redemptions. They're shutting or they've underperformed because of the SaaSpocalypse or whatever it is. And so people are shorting stocks in the anticipation that a lot of these active funds are going to have to sell their holdings and they'll buy it back when they sell.

1:27:12So what I'm basically saying is this. These week-to-week movements, I think I try to look through those and make longer-term views on stocks because I can't compete with these traders that are doing this all day, every day, and they're finding catalysts and they know what's going on in supply and demand in the stock on the market. And when I look at this stock over the long term, I think it's probably going to be a good business. It's very hard for me to figure out whether to buy it at this price or not. Yeah, I think we look at do we like the underlying competitive advantage of this. Exactly.

1:27:42And I think there's a lot to like about that with GYG. And then obviously the valuation is a reflection of that at a point in time. Our last story, let's move on to another favorite of the pod. has been a lot of favorites of the pod in the last few minutes, but DroneShield had a big week, to say the least, with embattled chair or former chair Peter James and controversial former CEO Oleg Vornick leaving the fast-growing drone defense business after controversially selling their entire stakes last year. Vornick reaped$50 million from his share sales, whereas James cashed in more than$12 million.

1:28:12Of course, this should come as no surprise to Contrarians listeners where we said in episode 150 last November, this guy, I don't think this guy should be running this business anymore. I don't think he's going to be running the business for much longer, is he? Well, his mates also sold shares. Unless both the chairman and the CEO go, who's going to do it? Drone Shield, which develops hardware and AI-based systems for countering drone attacks, sells its tech to governments, police and infrastructure owners. Its share price has had a wild rise since January 2025 when it rose from$0.75 to$6.36 in October, giving the evaluation of almost$6 billion.

1:28:45This was just before Vornick and James dumped their entire stakes immediately after exercising options. Share price then slumped to$172 in November before repounding to$447 in January. Bit of whiplash here and it's now dropped back to$347, but still is valued at a remarkable$3.2 billion. Well, all this happened last week, the company announced it would appoint Hamish McLennan, the Hammer, as the new chairman, hopefully winning over institutional investors who had previously shunned the hot defense stock. Of course, Hammer has a pretty busy dance card. He's chairman of REA and ARN, of course, dealing with Kyle and Jackie O.

1:29:17He's also a director of Light and Wonder. So he's actually had a pretty good record, but for a couple of things, which ARN is one. Angus Bean, DroneShield's 36-year-old chief product officer, has been promoted to chief executive. James claimed that Oleg was the right guy for the right time. One of the best decisions we ever made was putting him as CEO way, way back. If that wasn't all bad enough, Tess Bennett reported that DroneShield buried a$100 million drop in its sales pipeline in the Prezzo, published late last Wednesday and briefed select shareholders at a closed-door Goldman Sachs event.

1:29:46One day after ditching its CEO and chairman promising to woo Insto investors, DroneShield stated its pipeline had shrunk from$2.3 to$2.2 billion. Actually, it didn't state that. You basically had to work it out. It just simply said its pipeline was now$2.2 billion. Despite describing the presentation as price sensitive, it made no mention of a change which the company blamed on a change of scope for some orders and what it described as sales conversion. DroneShield doesn't publish formal earnings guidance and its sales pipeline became a signal to the market about the company's growth prospects.

1:30:17There's a lot going on here. So number one, this sales pipeline junk, put that in the bin. I don't know why people look at that. You run a company. I'm involved in running companies. Sales pipelines in enterprise businesses, they're unpredictable.

1:30:39There's an art form and a science, I'd say, as well, in working out what your sales pipeline is. For example, I'm going to just go into slight amount of operational detail, which is super unusual for me. But like, let's say there's an order and the order is$20 million, but the order is really early in the pipeline. Like sophisticated businesses, like sales operations would say, this is at this particular stage. They'd have a name for the stage. They'd characterize it and they say there's a 15 % chance of closing here based on historical stuff. So that$50 million, we're going to put that in the pipeline at$7.5 million to 15 % times 50.

1:31:15And so is that their pipeline or is their pipeline just put that in at$50 million? And so I think like this idea of exposing an internal sales pipeline to the outside world as a metric with no parameters around how it's calculated, I just can't believe that people are looking at this thing and they believe this is some kind of relevant metric in any way. It's as far from a gap metric as you could possibly get. Maybe like, I don't know, rolls of toilet paper in the bathroom would be a worse metric, but it wouldn't be that much worse than that metric. Like this is a ridiculous metric basically. I totally agree it's a ridiculous metric, but it was this metric that was given, this is why the business is valued at$6 billion.

1:31:54So people relied on this metric. And I think the issue is, so the issue is not that this is a ridiculous metric. We absolutely 100 % agree that it is a ridiculous metric. The issue is this was the metric they used. And instead of telling the market that, yeah, we've got the metrics changed, they snuck in this report given to private investors of the Goldman's conference. That's the issue. We can say there's a lot of stuff that goes on in here that if it's not deliberately sneaky, at the very least, continues to make the market feel like it's a bit sneaky, including the sell-down, right? Like it doesn't – and so that's one point I want to make.

1:32:28The second point I want to make is pretty short. They should have pulled out of the Goldman Sachs conference. That's my view on that. I don't think that's a hard thing. Goldman Sachs – you know I love Goldman Sachs. Like they have great conferences. I've been involved in those conferences. They're very good. And like really I can say definitively like there's no way that Catapult would ever present to selective disclosure at those conferences. But like I just think it's a bad – I'm not suggesting they would, right? But it's a bad look. They just announced something very dramatic. I know why they would want to be there.

1:32:58It's a good opportunity to like try to calm the market and explain stuff. But I don't think the perception – any risk of a perception of selective disclosure is the right thing to do at that moment. So that would be my second comment. And now I've got this broader question to ask you, which is this. So presumably they didn't want to leave. Would you say that's an accurate assessment of their departure? I don't know how voluntary the departures were. Like I thought they were for sure going to go and we both said they would. And then they held on for so long. I thought they got through it. I thought, oh, my gosh, I can't believe it.

1:33:35They've actually gotten through this. and so I it's weird because they've got no real insto investors so like why are they going I don't know what the who's pressuring why are they going speaking of catalyst I don't know what the catalyst was there's got to be something we don't know here exactly and because for me I will say this if this would have happened a week or two after they sold down I would have said yeah no surprise to be honest with you I'm surprised by this like this surprised me that they went now I agree the timing yeah like who is pressuring them to go or did Oleg is that his name I don't know, former CEO.

1:34:07Oleg Vornick. Did Oleg just say 50 mil, pay some tax, still walk away with 35 to 40 mil? And they've had previous, that's not what he's got. He's got other share sales. That other share, two years before, which is not that first rodeo. Yeah, but still, they're probably another 10 or 15. And did he just say, what am I doing? Because my view on Drone Shield is the end of this is going to, you're going to hear a very loud thud ultimately with this business, right? I think we're very much in agreement there. And so he maybe doesn't want to be around for that. Maybe he shares that view. And so Peter James, like he's done, he was the guy that did.

1:34:44He's done a heap of stuff, Nirmap, Computer Power. He was famously in, he was the guy who oversaw the Healthy Mummy acquisition and that destroyed the business with his hand-picked CEO. So that's a miss. I mean, I would think you'd say Nirmap ultimately will be remembered favorably and he made money out of that. Well, yes, yes, but it was sold for well below its peak. It did, but it sold to a big, highly credible private equity player. Who was it? Tom O 'Brien. Tom O 'Brien. Oh, who? Yeah, that's who bought it. And so, like, they had that exit and he would have made plenty of money on Niermap.

1:35:18I think he was in there early. And he's made plenty of money on this. And so maybe they just decided we keep getting smashed. Every time we meet – I'm just going to tell you a complete hypothesis here, okay, that would fit in with what's happened, but it might just be totally unrelated to what happened. but I'll just have a guess, okay? Every time we go and see institutional investors, they pummel us and tell us they've got no interest in investing. And like after you see 30 of them or 50, like it just becomes unpleasant and you don't want that. And like they can be a bit nasty if they think that you're a bit dodgy.

1:35:50And I think maybe they just decided, what the hell are we doing this for anymore? And that would make sense about going and getting Hamish to come in because like he's very respected by institutional investors and part of that whole world. And they might have just gotten sick of it. would be my guess. And they might have done it on the eve of that Goldman Sachs conference so that the 36-year-old new CEO could go and get rolled out in the Goldman Sachs conference. But Oleg was there as well, wasn't he? And like they can smooth it over. And there's a guy that's the new head of investor relations called Josh Blott who – I know Josh.

1:36:21Josh is actually a great guy. He's a great guy. I don't know what he's doing this job for but like – Yeah, he was at MOLFA previously and I knew him really well. I met him when he was – Yes, I was really surprised that Josh is here. But anyway, I'm sure he's got a reason. Well, I met him when he was involved in Monash Capital. But, you know, he was at Monash before that with Jeff Levy, right? Yes, he was. And he was like a nice and smart guy. Neither one of us can say enough good things about him. Super impressive, yeah. He was involved with Ari Klinger a bit with his stuff. Like basically, I'm not quite sure why he's there, but it is possible.

1:36:51I just want to say this as well. So both of us think Josh is a good operator. He's not going to go to a piece of junk. drunk and so maybe this is all part of this new investor relations positioning which is we're going to clean this up the chairman and founder chairman and ceo not founder are going to leave and move on with their bags of cash we're going to bring in a more structured governance thing and we're going to try and make this more institutional friendly that would be consistent with that narrative now i think the fundamental problem might be how the hell are they going to to be worth$3.5 billion, right?

1:37:27That's the challenge they've got. There's no question that Hamish and Josh and the product guy are much better suited to be running this business now after the last debacle of November. But that still doesn't explain why the other guys left. It feels like it has to be involuntary. Well, Oleg agreed to do three months of consulting. I'm sure he's getting paid handsomely for that. I'm sure he is. But my point is, if you boot someone out and you say to investors, we just want a clean break, then you make them head for the hills, right? You don't want them anywhere near your business or associated with your business.

1:38:00Yeah, but he didn't do anything criminal. I think – and he's got a lot of institutional knowledge. I think they would have wanted some sort of transit. Yeah. The whole thing is very strange. I think it's certainly a positive sign that Hamish and Josh are there, no question. That said, I've got some – I think we go back to first principles here. Like we don't think a little Australian business can beat the Ukrainians and the Americans and the Israelis at this drone game. That's probably our biggest issue if we go back to first principles. I'm absolutely not buying. And if you said to me, do I think it's a short?

1:38:32I think my view on this is very high level, which is I don't really care about the financial details of this. I just think long term, this is not going to be the global winner in my view. I don't have any special knowledge. And so it's tough to short because it could double. These are catalysts, right? Yeah, but I think I'm going to be a bit sophisticated and say I think if I had to bet on this business, for sure I'd be betting on it going down in the long term, not up. Maybe shorting is not the way to do that with this particular stock, but I think something dramatic would have to happen. Like, for example, they would have to totally change the way they report, make it much more transparent and give me earnings guidance and get this sales pipeline and put that as an operational metric inside the company where it should be and not bring it out.

1:39:23Then those things might persuade me, wow, there actually really is a great business sitting inside here. I just feel it's very unlikely that I'm going to feel that way about it. We shall see. That was a great action-packed episode this week. We'll be back, of course, for our Ask Us Anything on Saturday. Thank you, everyone, for listening in. We'll see you soon.