Woolworths v Coles, Cettire Nears the Precipice, Australia’s Secret Unicorn Founder, Neurodivergent Founders and Dan’s Brush with Dictators

21:49So let's forget about that. I tell you what surprised me about this list. The big ones, you're going to know what they do. But there's tons on here at high valuations. Yeah. And I'll be interested if you know what they are. I have to tell you, I have to look up a lot of them, and I've forgotten some of them. A lot of them I would know. So I'm probably going to have to look them up again when I ask you. So the really big ones, I'm not even going to say the order, but the really big ones. So OpenAI. Yeah, we know what that does. $500 billion. You've got SpaceX. To give you an idea, like this list, which is two weeks old or something, OpenAI is$300 billion.

22:18It's already gone up$200 billion. Yeah. Allegedly, the whole thing is all. Yeah. The next SpaceX, you're right. And you've probably got Anthropics,$183 billion this week. You've got ByteDance is on here. Oh, ByteDance will be at$300-ish. Yeah, it's at$300 on this. You're right. Then probably Anthropics. that might not be on that list two weeks ago. Anthropics here, but on this list it's 62. Yeah, it was 100, it's triple. And it's number seven. So that's an interesting point. So let's talk about what comes between three and seven. Four, five, six. Okay, so let's talk about four. So four is Stripe.

22:44This is on this list, but don't worry about the order so much. I'm just talking about these really high ranked ones. So you know what Stripe does, right? Yeah, payments. Payments, right? So that's four. Five, Sheehan. Interesting that that's so high. Yeah, I thought it was a bit lower actually. That was 66 on this list. I thought it was in the 40s, but yeah. Yeah, that was 66 on this list. Where do you think – so it's color-coded by where businesses are domiciled. Yeah. Do you know where she is domiciled? It was moving to the UK to list there, but I'm not sure if it ever did. Is it Singapore? Yes, very good.

23:13I wouldn't have guessed that. Yeah, because they obviously tried to get out of the whole China thing. And then number six, see if you can explain to me what this company does. Because you've heard of it. You might use it. I wonder if you – like I didn't really understand the detail. I'm not even sure I do understand the detail. Databricks. I don't think we use Databricks. I don't know fully what they do. Do you know what it does? Nah, I've heard of it, but I don't know fully what it does. Like, I'm not going to try and explain it on this podcast. It basically brings pieces of stuff together and then has an AI layer.

23:40But like almost no one, I would maybe say no one outside the technical part of the tech industry really has any idea what it does. It's like a data lake tool. Amongst many other things. That's right. And so almost no one knows what it is. When I say almost no one knows, there are a lot of people who do know what it is. but like this is a company generating many billions of dollars a year of revenue. Yeah. And it's certainly in the top 10 private companies. Yeah. But relative, like people have heard of it. Kind of no one knows what it does. I'm not just surprised how quickly they fall away. Yeah.

24:11Well, they've been there for a while. No, as in, sorry, the valuations. So you've got open i500, SpaceX are close to probably the same. SpaceX can be more now actually. But by the time you get to six, which is that. It really does drop off, doesn't it? Like six would be a 10th of one. Yeah. So massive drop off. Power laws. Yeah. But public companies don't have that same power law, funnily enough. Oh, that's true. Like number 10's Tesla at 1.1 billion. Is it quarter of NVIDIA at 4.4? Yes, that's true. So I know there's some other ones in the top 10 of this. Well, you know what's in this. Canva must be in there somewhere.

24:44Canva was 10 on this. It's 32 bill, but they've jumped out. But probably they might not even be in the top 10 because everyone is moving faster. Yeah. So like, I don't know what you call it. That's actually pretty credible. XAI, you know what that is? That's Musk's AI business. So that's in there, according to probably his own valuation, right? How incredible is it that an Australian private company is top 10 in the world? I know. That's actually pretty amazing. Amazing. Yep. Yep. Let me tell you something. Now, let me tell you something that I'm not sure. You'll know this one, I think. This is also in the top 10.

25:13Revolut? Yes, of course. You know what that is? That's the neobank out of – is it the Ukrainian guy who founded it? It's based out of the UK. Yes. Is it all that? Yes. I'm not sure he's Ukrainian. Linoid or whatever. Yeah. And so they just did like a, I don't know, some billion to a buyback of their own stock. What about that, the merch business? Oh, that's a good one. Yes. I thought you'd know what that is. That's actually number 11 on this list. What's it called again? Fanatics. Fanatics. That's right. Yeah. And so that's come from nowhere. That's worth 31 bill. I met that founder at a conference years ago.

25:43Really? I mean, I think it was already a billion. He had a couple of businesses. He had a business before this one. And that's how I could fund it himself. I listened to a podcast with him. He was on How I Built This with Guy Raz. About two months ago. Maybe I would characterize him as crazy. Like his level of drive. I want to talk about a similar topic to this in a second, about neurodiversity in a second. We'll come back to it because his level of drive is off the charts. Yeah. Now let me ask you some. He's that classic American entrepreneur, the Gary V style. Yes. So tell me if you've heard of these.

26:09Well, you will have heard of some of them. Grammarly. Yeah, but I'm surprised it's up there. I know. So it's still doing really well despite the rise of open AI. It's still on this list, it's 13, Bill. Wow. Yeah. And so. So Rocked could be getting close to being on that list as well. I think Rocked would be – Rocked is seven, right? A-U-D? Yes. Okay, so not on this list. Jewel, J-U-U-L. Do you know what – you didn't tell me what Gremly does. I thought it was an AI software, piece of AI software. It was basically a way to help you write before this open AI world started. Yeah. And it does that and now it's actually, I would say, at least as well known for identifying AI documents that have been written by AI.

26:47I didn't know that. Yeah. Jewel, do you know what that is? J-U-U-L? That's the bathing business. that got bought by Ultria and they blew like 30 billion on it. That's worth 12 bill? Yeah, because I think they paid like a 30 bill of hour or more than that. It's absolutely smoked, pardon me, a bunch of cash. Airtable, you use that? I'm not sure if we use Airtable, actually. I don't think we do. What's that? It's some sort of, it's like a Jira type. I think it's a spreadsheet. I thought it was a project management piece of software or something. Yeah, so lots of people use that. I don't really know what it is.

27:13Then there's a few boring businesses. Epic Games is on there. What about deal? Epic should be, I thought Epic would be well in the tens of billions. Epic is 23 on this list. Is that all? I know, that's on this list. That can't be right. What about Deal? D-E-L. D-E-E-L. Oh, this is the famous, of the famous spying. We use Deal. So Deal and Rippling are having a massive war. Okay, so Rippling is another one on here. So do you want to explain what those are? They're, well, effectively what Deal does, and I think Rippling is, effectively, we've heard it, we've talked about Employment Hero on the show, the HR software, and Deal specifically allows you to hire people in other countries, and they'll do all the work for you.

27:47Say you've got three employees in Luxembourg, and you don't want to create a Luxembourg business and do all that kind of stuff. Deal essentially has entities in every country. You pay deal, they then pay the employee. So it's actually a really handy way to hire people globally. If you want a more permanent arrangement, there's just a contractor arrangement. Interesting. And so then there's a whole lot of Chinese companies on here that I guarantee you haven't heard of. One is Xihongshu, which you will have heard of in English, which is Little Red Book. Okay. So that's on there. But then there's all these ones that you never would have heard of, like Xingxeng Selected.

28:17Ever heard of that? No, I've not. I mean, that's worth$12 billion. Of course it is. And like, it's hard for me to even see these, but Yuangi Senlin. No. I don't know what that is. That's$15 billion. Bitmain, M-A-I-N? No. That's$12 billion? Yeah. You tell me what this, the most controversial company on this list. We've been named a few controversial ones, to be honest. And Teril. Oh, the defense company started by Palmer Luckey. Yeah, so what did he do before that? He was the thing that Meta bought. the AI, the VR thing that Meta bought. What's it called again? Oculus. Oculus. He invented the Oculus.

28:52Yeah. Then I think he was fired by Meta after they bought us. I think it was pretty soon after. He's certainly a conservative. He's part of the whole all-in sort of gang. And then he went and started Angeril. Yep. That's got 30 bill value. I thought it was quite high. At the time of this, it was 14, but it's been rocketing. Basically, they're revolutionizing defense tech and a whole lot of drones. It's like a bigger drone shield, essentially. Well, it's drones, it's integrated systems, and so sanctioned by China for selling to Taiwan. What I think is interesting about this list is there's a neobank on here.

29:26There's a whole lot of software businesses on, and there's a whole lot of AI businesses, but there's a neobank. There's a business that does defense tech. There are a few that are clearly leaders in their field that have ended up being huge businesses, but their competitors have not ended up being anywhere near as big. So I think that's super interesting. Yeah, I love seeing new business models come up as well, because we want to see disruption. Did you see the article the AFR ran this week on neurodiversity? No. That's a really good article. They basically noted that neurodiversity, obviously an umbrella term that refers to a wide range of neurological differences, including attention deficit, hyperactivity disorder, of course, ADHD, autism, spectrum disorder, dyslexia, and Tourette's.

30:04And it's on the rise, particularly for women who have often been socialized in childhood to mask or suppress their symptoms from public view. The article did notice, however, and as we've talked about, the growing number of neurodiverse incredible founders. Who do you know the few incredible, there's some unbelievable neurodiverse founders? Bill Gates would be my top of my list. Yep, yep. Richard Branson, of course. When we say neurodiverse, though, are they, like, how do we know that they are? Like, we might suspect they are, but do they come out and say, I am. Richard Branson certainly has. I know, and Bill Gates, it was in, at the very least that was in that Netflix or whatever or show all about him.

30:40Yeah. I mean, I think... There's another big one, another really great one. Another big one. I think all of these... Like, I'm hesitant to say and label people. They're mostly like that. Yeah, Ingvar Kamprad from IKEA who's one of the great founders. that's right. I think Steve Jobs could have been. I mean, come on. Like, none of these people that have built these big, like these enormous businesses. Yeah. You don't look at them and say, oh, they just seem like everyone else or the majority, Not everyone else, but the majority of people. Yeah, I think that that's absolutely right. The way I think about this type of thing, I've spent a lot of time thinking about this because there's this huge rise in neurodiversity diagnosis in Western civilizations.

31:19And so the way I think about it is that there's different people who have different ways in which their mind works, the way they think. And historically, we tried to push everyone into one way of thinking. If you look at the education system in Australia, for example, it's kind of a remnant, as you would say, of like the English colonial system of trying to get people ready to be colonial bureaucrats, basically. That's what it is, okay? That's like when the schooling system was created. And so now more and more we kind of recognise that different people need to learn in different ways. And I think at some point these people realise that instead of struggling through life because they learn differently and it's hard for them or maybe they're kind of tricky socially or whatever it might be, all of a sudden these things turn into superpowers for them And they're able to think and behave in a way that nobody else can understand.

32:05And it gives them this tremendous advantage. Because I say, if you want to be very successful, you have to believe something that no one else believes and really bet on it heavily and then be right. And the first step is believing something no one else believes. We've got a counter position against something. Right. And if your brain works differently, then you have this natural advantage of being able to see things differently. So I think it's totally unsurprising that so many founders would be somewhere on the neurodiversity scale with something. I think that's totally right. And there's two reasons why neurodivergent people are often made great founders.

32:41Obviously not every single neurodivergent person is going to be a great founder, but they over-index. And there's a lot of neurodiversity. We're talking about ASD a lot here or ADHD, but it's like a very broad kind of line. And there's different levels of what I was saying. I think your one point is if you want to counter position, if you want to think differently, if you want to challenge an incumbent, you've got to think differently. Otherwise, you just become a poor version of the business that has powers. You've got to try and overcome these powers, and you do it by counterposition and thinking differently.

33:04That's one clear great reason. And the other one is, and this goes to why a lot of great founders also have lost a parent, it's because if you've struggled in your – and a lot of refugees make great founders as well. If you've experienced struggle, A, you appreciate the value of money significantly and being frugal is one great trade of founders, but also you just know how to fight and be gritty and battle it out. And if you're a bit neurodivergent, you've had a tough time. if you're dyslexic and you can't read at school or you struggle to read, or if you've got ADHD and you can't concentrate, that gives you such great advantages later in life.

33:33You've had to overcome those early challenges. So you're in such a great place. I speak to parents who tell me my son or daughter has got ADHD or got autism or got dyslexic. And sometimes I say it as if, oh, this is a terrible thing. But really, it's actually a real blessing. And this puts your son or daughter in a much better position to be a great founder or entrepreneur in 20 years' time and obviously with great support from a great family. So it's such a paradox that we think we want these sort of perfect children who get great marks and go to university and study medicine, study law and then get a job at KPMG or McKinsey or God.

34:05That actually is – that was 30 years ago. But now that's actually not what people want. I totally agree. You know I love comedians. And so with a comedian, you can basically say about any comedian, so what was wrong with your relationship with your parents or tell me about how you got teased at school or like tell me somewhere where you didn't fit in or you were sick. Like there's something – no comedian had this tremendously happy and successful upbringing and then decided to stand up in front of a group of strangers and try and make them laugh and potentially bomb and be humiliated. It just doesn't happen.

34:38And I think with founders, it's not universally true, but there is definitely something there that is pushing them to take – It's helpful. Yes, it's helpful. Exactly. And overrepresented. And I think – Especially the great – the really great – the generational great founders seems to be more over-obsessed. So one of the things that you would say about someone like Bill Gates is that he was very single-minded and confident in his own views. Yeah. And like his work ethic is crazy. Yeah. But you need a partner with someone that complements your skills because you're going to have blind spots because of that as well.

35:14Yeah. And I think the fact like he had a business partner. Paul Allen. And Steve Jobs had a business partner. Steve Wozniak. And they were both very different and very complementary. And I think that is important. Wals and Jobs were completely complementary. Wals was a technical wizard of Jobs was a sales guy, essentially. Now, I think Allen and Gates were a bit more similar. They had similarities, but Allen was much more… It was more Bormer and Gates. I think he called their partnership… Maybe, yeah. …much more complementary. Right. And Bormer really became that late-stage co-founder. He came in in 1980 or so, and it was much more impactful on business than the late great Paul Allen, who obviously struggled with illness separately for a big portion of his life.

35:50But definitely I think the message you're saying, which I agree with entirely, is like don't be down on yourself for being different. Like if you think about it the right way, it's going to become a superpower. Absolutely. And it's played out like that so often. You're going to talk about other stuff. I want to talk about a company that you're going to think is boring. But it's not boring. It's very exciting. Don't wait to introduce to a listener. This is the most boring thing you've ever heard. Turn off. We've never talked about this company before. Really? And it's such a stalwart of Australian business.

36:17It's one of the – definitely an ASX 100 business. It might be an A650. I kind of a bit lost track. However, you might be able to figure out who this is. However, since the end of COVID, it's fallen 33 % its share price. And this year, its sales were up, but its profits were all down. And you would say it's involved in the duopoly in Australia. Well, it's every company. We talked about Woolworths last week, so it's not Woolworths. Well, it is. So I want to talk more about Woolworths because we touched on it last week, but we didn't really talk about it in any detail. and so I tell you what motivated me to talk about it after we touched on it last week, right?

36:54I don't think it's a boring company at all, but I think it's a fascinating company. Well, unfortunately, it's nowhere near as boring as it wants to be right now. That's the problem, right? No, but it's a business. That whole, the whole, is X business cartology? They're incredible businesses. Well, let's talk about where the wool is. It's an incredible business. So I was in... Big W, maybe less. Well, I was in Big W, and now Big W has got problems. Yeah. And its main problem is it sells more stuff and makes less money. And the main problem is a business called Kmart. Yeah, well, so that's interesting whether that's an issue.

37:24So the reason I started thinking about this topic was when I was in a Big W store, and I'm going to tell you what my experience was there, because I don't think you need to have fancy 40-page investor presentations to understand what's going wrong with Big W. You just have to go into a Big W and have the experience. And also, I don't know if you saw this week, you probably did, but the reject shop was acquired by Dollarama. Yeah, Canadian business. And it's rebranding all of their stores to Dollarama. And so the Reject Store is going to be, Dollarama is going to be a much more serious competitor for these Kmart, Target, Big W type businesses.

37:56So I went into Big W and these are the two bits of the experience that I had, maybe three bits. One is a lot of the shelves just doesn't have stuff on them. Yep, don't have stuff on them. Number two, they've got these brand new scanning machines in. The self-scanning ones? Self-scanning, don't work. Really? Yeah, and so. Well, this is just that. This is just gun riding competence, it sounds like. Don't work. And I said to the lady that came over to help me, who was very lovely, you know, the staff is so nice, right? And she came over and she scanned my book that I wanted to buy. It was 212 key presses to figure out the prize.

38:27I was a present for Father's Day. Okay. For yourself? No, I don't buy myself a father. In fact, I said to my kids, give me a card, don't give me a present. And so… Cards are about$10 these days. Better off getting a present, save some cash. Yeah, well, I think I bought a card from there as well, actually. Yeah. And I said to the woman, this looks brand new, these machines, right? Yeah. And she said, yeah, they're brand new. And I'm like, well, has no one plugged them in yet? Because the red light laser is shining. Yeah. It's just not scanning anything. There still have some teething issues there.

38:54It's ridiculous. This is in Southland. So it's a mall, okay? Yeah. It's ridiculous. And then I go to the checkout and there are like, there's no one on the desks, only self-checkouts. That's good for me. I like self-checkouts. Yeah. There are eight. Three are broken. And then there's a queue that stretches back six or seven people Yeah. But the store isn't even that busy. Yeah. And the machines that are working are constantly having the usual self-checkout problems with this one poor sod trying to race around. And that was the big W experience, right? And I don't know if you've been into a Target recently or not.

39:28Like, it's a totally different experience. A Target or Kmart, you mean? A Kmart. Target's also good. Well, it's now part of Kmart. I know. And these are – you walk into that store and you can just say to yourself, we don't need to have fancy strategy days and investor presentations. Just fix the experience in the store for a start. I think what Guy Russo did so – because remember Kmart was on his knees before Guy came back. So Guy was famously CEO of McDonald's and he got appointed CEO of Kmart in probably the early 2000s and did just one of the great retail jobs ever. Guy did an incredible job.

40:00and a number of amazing executives since then who have carried on the mantle. But if you look at what Kmart's been able to do, they've got great product-led growth with Anchor and then they've got scale. And the real challenge with any of these stores is not having scale. You've got scale, you can get people in. You get, A, you don't have issues with registers because it gets fixed straight away. But you've got lots of people in because you've got lots more scale. It's the JB Hi-Fi thing as well. It's such a great business. But Big W is not having visitor problems. So for example, there's a graph.

40:25So I want to tell you some data on Big W and on Woolworths more broadly. Because Woolworths is going badly. That business is doing really badly. It's been punished on the share market, but the profitability is not that different to Coles. Basically, it's the same level of profitability. It's just one's going down, one's going up, and the margins are completely... Well, that's a pretty big difference. One's going up, one's going down. Eventually, they get it right. Well, I'm not sure about that because of all the other stuff. Because when you say Coles, you're talking about an Australian food, an Australian grocery business.

40:55Yeah. And so Woolworths has an Australian grocery business. It's a Woolworths business. It's a much bigger business than Coles. Yeah, but this company, Woolworths, has got lots of other, and pet stock, and all sorts of things. Cardiology, as you said. But let me tell you something. Cardiology is helpful. It's their data business, essentially. And so let me tell you some things about Big W. So they've got customer momentum, and they've got sales momentum. They've got a graph that says transactions and items up on FY25, and sales momentum improving each quarter on FY25. And then they've got a thing that says, big W total sales growth in percentages, but very helpfully they don't put an actual axis on there.

41:34So you can't see any digits. So they're basically, it's just directional, right? Which means it's not good. Like if it's good, you put numbers in, right? What's interesting is like, you know, e-commerce across this group is absolutely booming. Unsurprising because it's booming. I'll come back to it. Unsurprisingly. I mean, Woolworths or is in the Woolworths? The Woolworths company. I love the Woolworths e-commerce experience. I find that actually much better than calls. Every part of it is doing, every part of e-commerce for this group is doing well. So where do you think the CEO came from? I mean, she's been there for 23 years.

42:01Yeah, she came from Willie's Ex, didn't she? Yeah, she came from e-commerce, right? That was her last job. So it's good that she's getting e-commerce, right? So the problem with - I hate that everybody's putting pressure on Amanda. She took the job like six months ago. Like I never have people blame the new CEO for the faults of the old CEO. Yeah, these are not new problems. Yeah. These are not new problems. I'll tell you what's interesting. Do you remember a few weeks ago we were talking about what the penetration is on online grocery shopping? About 11 or 12%, isn't it? So I'll tell you what their penetration is by their three cohorts, which is interesting.

42:33These are people that have used the Woolworths app in the last 12 weeks, and I'm going to tell you the most interesting stat. So younger singles and couples, 17%. Families, 32%. Older singles and couples, 8%. So it might be higher than that number even, right? So there's 15 % growth year on year. That's great. So that's a good business. And what's more astonishing is this. Of the people ordering, a group of them want orders fulfilled within two hours of order placement. I'm one of those people. Is it the$10 one? Yes. You pay$10. So$10 even if you're a member of the Woolworths. That's right. Even if you pay, because there's 100 different things you can subscribe to with Woolworths.

43:13I subscribe. You told me I subscribe. It's great. I love it. I subscribe to everything. But now I'm disappointed because I find that they've got stock issues, basically. I find it's okay. I don't know. Whatever. Everyone's got their things that they like. Like one of the two dozen stock, right? Yeah. And so what percentage of orders do you think want their delivery within two hours of online orders? I thought low. 10%. More than 40. What? Yeah. So that is the most interesting statistic for online shopping. Have people paid the premium for it? Yeah, well, I guess so. That's amazing. That's the most interesting statistic in this.

43:45Why? Because, you know, I just think, oh, I need groceries now. And it gives me the option of getting it in two hours. I'm like, all right, I'll get it in two hours. You can get it in four hours and pay$10 ,000 bucks less. No, but not when you order. If you're in the evening, it's already too late to get it in four hours. Sorry, yeah. I usually order in the morning. Yeah, I'm at 4 p.m. or something. I work for this evening. I'll order at 10 for four. Yeah, but then if you want to pay less, it says it'll come between like 5 p.m. and 2 a.m. the next morning. No, I usually get it in one hour window and it's free with that Wooly's membership thing.

44:13So I'll tell you some other interesting things. I think it's a great membership. I'll tell you some other interesting things from Wooly. So the Australian food business, like the sales are up a bit. It's hard to compare 25 and 24. Yeah, because it's 53 weeks. But the sales are up a bit. It's basically inflation. But profit is down at the supermarket. Yeah. Profit is down. Their first light is, oh, people – like this is the brainwave of like the investor deck. People are really shopping for sales at the moment. They want items on discount. Okay. But you know, I'll tell you an item that has really, really negatively affected them.

44:45There is one item that has declined 51 % in the first eight weeks of this year. Nope. And it's going to cost them this year 80 to 100 mil of EBIT. I can't think of what that could be. Tobacco. Oh, of course. So tobacco is plummeting. So all this illegal tobacco is killing their tobacco sales. It's the taxes that's killing it. Because the government's just gone to town and taxing it so much. People get stuffed this. I'm going to roll my own. And so this is really negatively affecting them. Obviously, I don't smoke. But it's like$16 versus$60. It's like a crazy difference. I think they've made a mistake with that.

45:22They've got to roll it. I was at a petrol station last year getting something, whatever it was, and a guy ordered a pack of cigarettes and it was 62 bucks. I almost fell over. I thought cigarettes were like 20 bucks. Yeah. Shows how much I smoke. But I could not believe how expensive they were. Well, I think you get to a point where you go from dissuading people from smoking to ruining people's lives who are smokers and then creating all of these unintended consequences like the tobacco wars. Yeah, exactly. I'd rather just either ban tobacco or charge it somewhat reasonable. I don't mind if they ban it, but like don't destroy people and create this year.

45:53They create these gangland wars as a result, which is what they've done. So I should have said at the top, this is a business with 69 bill of revenue. 69 billion. Something like that. Wow. 2 % NPAT margin. Yeah. That's it. So they make 1.3 bill. The main reason they lost money this year, and by the way, they lost - As in, they still made money. They made less money than the year before, is what you're saying. The main reason, yes, their profit went down. Yeah, they still made 1.3 billion. Because they lost money in the last year of, who was the last CEO? Brad. Brad Baducci. Remember when he left the half year, lost 700 mil due to write downs?

46:25Well, at least they're consistent because this is the write downs they had in this period. The biggest write down was Big W. That was$346 million gone. Then Your Mate's My Deal, 52 million gone. Then Healthy Life Impairment, I don't even know what that is, 17 million gone. Then they have this line item called - They've just got to stop buying stuff, I think is the first point. because I don't think I brought much stuff to work. Although one of their only – because there weren't many pages of the investor presentation that were nice. Like the Acknowledgement of Country, that was a very nice page, good pictures and stuff.

47:02I'm not sure why that's a good page. That was a good page though. That looked nice. And then it just all went downhill from there. But there were a few bright spots. One was e-commerce, which we said, and another one was – Which is important. Which is important. And PetStock is doing well for them. But listen to this write-off item. support office and store operating model redundancy and restructuring costs they call that an abnormal 146 million dollars yeah and then other eight mil total group significant items before income tax like all this write-offs and whatever yeah 569 million dollars i mean it's not good right and then but the good news is they get 147 million dollar tax benefit for that so really it's only $422 million incinerated.

47:45And so the thing is, like my last issue with this business, because like I think this business has got problems and like there's a big job to do. It's good that they swapped CEOs, I think. Like it's time to turn this business around. But the other big issue that people don't really talk about with this business is the cash profile of this business. Last year they paid a special dividend. Forget about that for a second. I think they paid 144 cents of dividends last year. Yeah. $0.40 of that was special. Yeah. So let's call it$1.04. It's like a 3 % dividend roughly. Yeah. And so now this year it was like$0.82.

48:22Like the dividend was down 20%. Like that is painful for self-managed super fund people that are relying on dividend streams. I think that's why it got punished as well. But their cash profile, they talk a lot about their flow through of how much operating profit flows through to operating cash. That's very exciting. but this is a business that burns cash. It burns cash. Like last year in FY24, it burned through – because it pays dividends, right? Yeah. And so it burned 200 – What's their operating cash? Their operating cash, last year was 4.4 bill. And this person – And this year was 4.6 bill.

49:01What about the lease stuff? Like if you have real operating cash. Well, that doesn't include the lease, right? Then they've got these investment activities, CapEx, et cetera. Yeah. So that burns$2 billion out of that. Yeah, you've got to factor in CapEx as well. So that's gone. Yeah. Oh, now you want to factor in CapEx now. Oh, how the tables have turned. How the tables have turned. So that's$2 billion gone. You and that ivory tower just pointing down. Oh, God. That's gone. And then they've got lease liabilities. So that's actually paying rent. So that's another$1.2 billion gone. Yeah. And that doesn't leave much.

49:29And then they go and they pay dividends. I mean, obviously, there's tax in there. Yeah. And so after they pay between$1.2 and$1.7 billion of dividends, last year they burnt approximately 300 mil of cash and this year they burnt another 700 mil of cash so in the last two years they've had one billion dollars of cash outflow in order to be able to continue paying these dividends does that feel like sustainable dividends to you i mean it's already been a drop of 20 percent in the dividend but they have a dividend payout ratio of 75 percent which means they're paying 75 percent of their after-tax profits as dividends but if you're doing this does that feel like sustainable dividends to you they have to borrow to pay their dividends Are you buying Coles or buying Woolworths now?

50:10What do you want to trade? So I don't know. Look, I was very unfamiliar with Woolworths. Market loves Coles now. Okay, we spoke a bit about Woolworths last week. Yeah. And I like, but I didn't really know much about it. Yeah. And so now I went and I was like, because of the Big W experience, I was like, what's actually going on with this business? And I looked at it and I'm like, oh my God. I just thought this was going to be a good, reliable, we grow 6 % a year and our profit grows 7 % a year kind of business. It's not that at all. We used to be. Right. And so I think, I don't know. Look, I take your point that the market loves calls.

50:42I don't know enough about calls, but I thought Woolworths should definitely hang on to Big W before I did this research. And now? Well, what I discovered is of the 40 pages of documentation in their investor presentation, maybe two to three pages was Big W. Somebody needs to be running Big W that has a 40-page investor deck all on Big W, I think. And I think they've written this off. there is definitely an argument that says coles should be focused on more of the sorry woolies as a business should be focused on fast moving consumer goods so pet stock would fit into there and they're doing smart things with pet stock like they're selling pet stock branded dog food inside woolies yeah but big w is consumer durables yeah like it's not the same business and i think that they're struggling badly enough to run their core business they maybe shouldn't try to walk and chew gum at the same time yeah so i think maybe there is an argument for selling it off there's two if you look at cold versus woolies there's two arguments there's the argument that i think most fun managers take is coles performing really well it's expanding its powers it's getting greater scale the brand's going really well let's buy coles because coles is the better performing of the two and there's the other call the dogs of a dow adam schrob type nike added as for you which is worse inherently still it's a great business it's got great power still.

51:59It's got an incredible loyalty plan. But you mean it's got a great brand. It's got a great brand. Grocery business. It's got a great grocery. If you get Big W for now, it's got the core business and the pet stocks are great business. The loyalty business, the cartology business is an incredible business. Woolies X is an incredible business. It's got some actually really good assets. The Adam Schroff view is this is a downtrodden enough business that I think it will come back because it still has great powers. It just hasn't been executing particularly well in the last couple of years. Do you think the duopoly still exists in Australia?

52:25Forget about IGA. Aldi's got 600 stalks. That's what I'm asking you. So in the good old days for Woolworths and Coles, there were two of them. And then there was IGA, which was good for them because it looked like it wasn't a duopoly, right? Yeah, it makes me shame. But now there really is a third player that's making grants. Yeah, it probably doesn't help them. They're winning market share. Yeah, I don't shop at Aldi and I probably won't. So there's definitely a cohort of customers that just wouldn't shop there. But no doubt it's taken market share of both. Every time I go in there, it makes me laugh because I look at like, you know, there's an up and go and there's like a down and stop or something, right?

53:01Yeah, but it looks identical. And so it makes me smile. But I also, like, I think a lot of shopping, I kind of tricked myself. A lot of shopping is what's convenient. But also when you buy online, that need not be the case. I don't know if LD has much of an online business. I suspect they don't. They barely have one. They don't even pay your bags for you. For many years they didn't have one. They maybe have one now, but it was nascent. I think you've got a good argument, which is the Woolworths grocery business, which by the way, is not doing well either. like it had a little I think it had 3 % growth but like that's adjusted because of the weak yeah the weak thing but still that's genuine I know but the EBIT went backwards and so that's not doing well and so I think that probably will come back like that is Coles Woolworths duopoly is cyclical and it feels like Coles is doing better now and in two years time we'll be like how good is Woolworths Coles is finished like it does tend to change every three four five years you know this this Peter Lynch one up on Wall Street book a very old book where I talked about it a little bit but he goes to the shopping He goes to the shopping mall and says, you know, in a different time, I don't want it to be cancelled.

54:00What are my wife and daughter buying them all? I should buy those stocks. I will tell you this. About a year and a half ago, when I was in Woolworths, things started being really out of stock. Like, I like these sweet and sour pickles. I'm a big pickle fan. I'm a pickle fan as well. I love pickles. Fresh sweet and sour pickles. I love pickles. Do you eat pickles with a sandwich or do you just eat them by themselves? I eat them by themselves. By themselves. I love pickles. I do love pickles. I'm from like Eastern European stock, right? And so... And so... Do you make your own pickles? I would make my own pickles, but does anyone make their own anything anymore?

54:30Like everything is just so easy to buy now. Oh, I feel like people make their own sourdough. My mother-in-law is making some great sourdough at the moment. I know, but people, I don't know. I think it's a generational thing. Maybe I'm wrong. I don't know. No, I don't make my own pickles. But the thing is, when I noticed that they were out of stock for a long time and then a whole lot of other items were out of stock for a long time, I thought something has gone wrong with Woolworths and I started going to Coles, even though I had this subscription thing that I had to Woolworths. Yeah. And at that moment, if I would have shorted Woolworths and bought Coles, that actually was a signal.

55:02And it is true that, like my Big W experience, retail businesses, you can feel when they're doing well and not doing well. There's no doubt about it. When our digital marketing team starts spending more on Meta or more on Google, that's usually a great signal to buy or sell one of the two because we're a great proxy for ad spend. If the ROAS and Google are doing really well, they've worked something out. versus Meta two years ago came back. And almost every time our buyer switches, it's time to buy. Oh, that's interesting. So if you saw your team, because Meta went through their dark days and then your team started spending more.

55:38And at that moment, if you would have just bought Meta stock, that was a very positive signal that Meta had sorted out their problems. And same with Google as well. I caught Google a year ago. That's very interesting. Yeah, I used to think people that understood the value of companies and how to analyze stocks, like there's some genius that they had. and what I've kind of come to of you over the years is you don't need that much information to figure out if a company is doing well or not. A lot of it's in the annual report and then if you want to, and other than that, you can go into a store if it's a retailer or use the stuff, right?

56:06And I think that it's very easy to overanalyse businesses but mostly, because you don't have to know if something is a good value to the one or two cents. You just have to know, do I think this feels cheap and it's going better or do I think it feels overvalued and its best days are not ahead of it at the moment? Is it solving a problem for me or is it not solving a problem for me? And what's the price of it relative to how it's going, right? And I think that it's very easy to overthink those things. There is a piece of research that I read many years ago, which is that meeting CEOs, and I know I meet a lot of, I'm not CEO, I'm chairman, but I meet a lot of investors.

56:39And I think it is helpful when I meet them and I talk to them about stuff. But there was a piece of research that said that very charismatic CEOs distort investors' perceptions of the real value in the business. They always tend to go wrong. And I'm not sure. Like whenever we sit here and we talk about if we think a business is a buyer or a seller or whatever it is, like we haven't had long conversations with the CEO about the business. And I think Warren Buffett doesn't talk to CEOs, does he? He just analyzes the reports. No, he does. He does. People spend a lot of time analyzing reports. Yeah, I think a lot of understanding if a company is good value or not is just keeping it pretty simple.

57:17Understanding what it does. Like I can't analyze a bank. Yeah. Because I don't understand what a bank does. Like there's all these things on the balance sheet. I don't know what any of those things are. But like a business like this, you can understand what it does and like it's not going well and it should do some things to fix itself. Totally. Let's go a quick break back with a very special guest right after this.

57:47And we're back and we've got a very special guest, Dave Hyman, the founder and CEO of Lendi. Dave, welcome to the pod. Hey guys, thanks for having me. You've been one of those great founders that sort of sprung up on us. We're going to go through your story in a second, but you guys have been just an incredible business. And I think you only started, what, 2013, 2014. So you've really sort of come from, I would say from nowhere, to be just a giant in the mortgage broking space. Yeah, it's one of those long-time, decade-long overnight success stories. We started back in 2013 as Lendi built the first digital mortgage platform.

58:24And then over the course of the last kind of 12 or 13 years, we've acquired the Aussie home loans business, brought the two businesses together, and then more recently kicked off our find-buy-and-own strategy where we're bringing property and mortgages together. So it's been fun. We'll get to that in a second. I just want to go back before Lendy, because we were competitors for a little bit when you were famously one of the first employees of Jump On It, which most listeners probably, did you remember Jump On It? Oh, I remember Jump On It. I love three, I love three word, three one syllable word names for websites.

58:57So you, I think, you were probably one of the first employees. So there was Colin, James, who was the other founder? Yeah, Colin, James and Adam were the three founders. and then you were probably in top the first handful of employees i reckon weren't you yeah well we were operating out of a like a little shed office above a chinese restaurant oh that's fantastic um it was a typical startup story but yeah that's a bit of a blast from the past that was a lot of fun so tell us though because we were obviously we were we had a tiny business and you guys were one of the first you got bought by living social probably a couple years after you started but tell us about that early days group buying was just a massive boom in 2010 2010 2011 and you guys were at the epicenter of it.

59:37What was it like working in such a fast-growing action-packed startup as well? You weren't a kid, but you were pretty early in your journey. Yeah, look, we won't be offended if you call us a kid. We definitely were. We're in our early 20s. We'd seen, actually, Sebastian Bass is my business partner. We'd seen the Groupon model take off overseas in both the US and in Europe. And we came across the Jump On It guys. It was kind of Jump JumpOnIt, Spreets, and Scoupon all starting about the same time, like in sort of, I'm going to say August or September of 2010. And we actually cold called the JumpOnIt guys and said, hey, we've got a bit of relevant experience.

1:00:15And we had a business at the time that we ended up folding in to theirs. What was your business called? We actually had a pretty boring business. We were a telco business called Dento Group. So not before the startup days. but we had sort of a pretty big b2c and b2b operation and we we sort of knew what was going to be what it was going to take to kind of kick off one of these group buying sites so we we pitched our wares and over the course of a couple of weeks ended up joining what was the founding team at the time and it was it was one of those classic like literally building the plane as it was going down the runway story so i think from from when we started in September 2010 to about the - I think you started 20, I think it was 2009 you started, because we started 2010 and everything went nuts sort of March 2010.

1:01:00So you guys must have started late 29, I reckon. Yeah, yeah, that's, I think that's, I think that's right. Yeah. And over that first 12 months, we hired something like 250 or 300 people. Oh my God. No one remembers those days. I mean, Spritz, who's long forgotten. We bought Spritz. Well, but you bought Spritz off Yahoo 7. Yahoo 7. Well, the Yahoo 7 Spritz deal was the MyDeal Woolworths deal of its day. Actually, it was$45 million. Yes. And actually, when you talk about the jump on it - It was$45 million, but worth what? $0.45? We paid$2.3 million and massively overpaid. Yeah. Dave, tell us about the jump on it, Living Social.

1:01:37Obviously, you started Jump On It, you were going really well. Living Social. Because Living Social was the second biggest US business we went under. We actually bought Living Social in Australia as well. But Living Social bought Jump On It. Can you talk us through that whole transaction? You really bought all the prime cuts, didn't you, in your business? Let's not talk about us. Okay. Yeah, so Living Social invested initially, I think it was 5 mil for a third of the business at the end of 2010. And they'd been basically gearing up to launch in Australia. So they'd started like member acquisition in each of the different areas.

1:02:10And post that acquisition, it was effectively, there was a put call agreement for the rest of the business. So we just aggressively scaled on every aspect. So, you know, marketing, member acquisition, bringing it. But more importantly, we needed to win in this space. We needed to win on deals. So we set up a really big B2B workforce that was a combination of inside sales as well as boots on the ground in like 52 markets around Australia and New Zealand over that time. And you were running that team? Yeah, Bass and I were basically running that side of the business. So acquiring merchants, running the deal structure, and just the machine that was effectively churning out the deals.

1:02:50That was the side of the business we were running. And so LivingSocial came probably, what, 2011, maybe 2012, bought you guys out. And you stayed for another year or so effectively working for the US guys? We stayed for a few months, but we basically left early 2012. There was a couple of different options to stick around. It's actually funny, the model that became Uber Eats was really the model we felt the daily deal sites kind of needed to morph into. But obviously, I think the boat was missed pretty well globally there. But we well and truly had the bug. And we spent the start of 2012 and looking at two or three different business models and actually building out the end-to-end business.

1:03:31So it was in diverse areas as literally end-to-end e-commerce from China all the way to Australia at a product level. There was a wholesale car trading platform. And then the business became Lendi was the third one. And can I ask you some questions? Like there's some personal questions I want to ask you, but I want to ask you some Lendi questions. But they also pertain to being a founder. So if I'm not wrong with Lendi, I know that during COVID, effectively, ComBank, you merged with Aussie Home Loans and ComBank became a 45 % shareholder was what was reported. Does that mean that you've got Macquarie ANZ and ComBank on your share register?

1:04:10That's right. So that's, I mean, that's quite astonishing. And there's a couple of questions I want to ask you about that. One is, I read that Macquarie's writing 40 % of home loans at the moment or something. Is that right? Yeah, look, Macquarie's done an excellent job. So they were, if I can maybe just bridge the stories together, they were our first institutional investor in 2014. Which bit of their business invested in you? The bank, the retail bank. Okay. So they've got a lot of respect for that team. they really saw an opportunity to build a great proposition for customers and a great proposition for brokers.

1:04:46And over the course of the last decade have basically come from being less than 1 % market share to I think they're sort of five coming up on 6 % of the entire mortgage market as a lender, which is no mean feat in such a competitive market. It's actually incredible. Yeah. And they've really done that through building a great customer product and a great broker product. So Ben Perrim and the team over there, they made a lot of early investments. in their technology and platform that's really starting to pay dividends in the last three or four years. And if I ask you a dumb question like, you know, what's it like having ComBank as a 45 % investor, then you're just going to say platitudes and I'm going to get bored.

1:05:21But so I'm trying to think of the right question to ask you that's going to get to the crux of things. And maybe the best way for me to ask this is, how different do you think running your business is with CBA as a 45 % investor than it would have been if CBA hadn't been a 45 % shareholder in your business? It's a good way to ask the question. Maybe the way to frame it is we've basically, and this sort of started in 2014, we had to walk through a one-way door around having our partners as shareholders. And that was when Macquarie came onto the register. And we thought quite deeply about that and set up a framework that really separated governance from partnership to equity relationships.

1:06:10And we iterated on that when ANZ came in in 2018, and we iterated on that again when we did the Aussie deal. But it was the investment bit of ANZ, right? ANZ-I, wasn't it? Yeah, the startup part of ANZ. That's right. The deal was largely done with the bank. Obviously, Shane's moved on, but he was obviously very close to things alongside his executive team. But I guess really the upshot of all that, just to come back to your question, is we've been working with banks as shareholders and partners for over a decade. And that while having CBA in the mix has obviously added another dynamic, we haven't fundamentally changed the way we operate.

1:06:55So, you know, the operations of the business are genuinely independent in terms of how we build that product, how we drive our breaking experience, because we're obviously a choice-based experience at our core. And really what it's done, to be honest, is added a significant level of credibility to all stakeholders we deal with. So whether it's hiring staff, brokers, et cetera, it kind of – there's a lot that goes to be said when sort of people are looking at the names on the register. I'd love to talk about your journey just from you guys starting Lending in a Room in 2012, 13, to taking on these goliaths.

1:07:36So I think – like I did – you worked in mortgage broking sort of 15, 20 years ago. I think you had a business. You ran a Helplew Choose business. Yeah, I'm trying to – we didn't write loans. We were more of a lead generator for – actually, Aussie was probably our single biggest buyer of leads at the time. And like there was just this insatiable demand for leads. So my view of them came from the acquisition side as opposed to running the business side. So you're competing against – Aussie – John Simons had a$200 million house at this point. So these guys were massive players. And you've come – a couple of guys coming out of group buying and somehow you're taking these guys – this is counter positioning and it's fine.

1:08:13How did you guys take these massive players on about big established brands, massive scale? You guys had nothing. What did you do? Yes, I think you just hit the nail on the head there before around leads. So if you think about the way the mortgage broker market has evolved, when we started back in 2013, something like 35 or 40 % of loans were done through brokers and you still had to explain to customers what a broker was and you didn't have to pay for it and all that sort of stuff. Now, three quarters, 76 odd percent of loans are written through brokers. So, it's obviously commonplace. But to go on that journey, really, the way the market has exploded is through these wholesale aggregation platforms, which enable brokers to get agreements with lenders or accreditations with lenders is probably the more appropriate way to describe it.

1:08:58But the brokers themselves are ultimately the lead generators. That's how the market works. And so what we saw back in 2013 was coming from the group buying space and our previous stuff before that was all in customer acquisition across both B2B and SME, B2C, so B2C and then SME, B2B, was the power of building your own distribution through a solid lead acquisition funnel. So when we first built Lendi, you couldn't actually write a loan end-to-end digitally. And we really focused on the top of the funnel in the early days, which was really about building scalable lead funnels. And as we built out those scalable lead funnels, that allowed us to attract more brokers, allowed us to control more of the process.

1:09:41We've got a slightly different economic model because we obviously own the customer flow. And the net result of all of that is we now have over 5 million customers on the platform. And that drives something like 70 % of all of our transactions every month. It's very interesting because I sold my business in, I'll say our business, in 2010 to Mortgage Choice. I didn't want to sell it like I didn't sell it for much money it was the single largest home loan lead generator in Australia at the time think about selling that for not much money and I had to sell it because there was a financial crisis and my investors would not give me one cent more and it wasn't quite profitable it was pretty close but it wasn't quite profitable and so I had to sell that off and I definitely think like like what you've done is is incredible you know there's a business in that was way before you that people have largely forgotten it was called e-choice it started well you know e-choice i mean they still exist they're just you know i don't know we'll call them inconsequential and um slap well i don't mean it i mean because they were they were big okay they were really early in the market they were all pretty much mckinsey consultants and I once, I ran into John Simons and I was very interested to know how this, you know, Aussie will save you.

1:10:58How did that beat a room full of McKinsey like, you know, geniuses, consultants? And the answer that he came back to was basically brand, was that they were doing everything around arbitrage and what now would be called performance arbitrage and it was all like deeply analytical but they really didn't build that E-Choice brand very much And he basically was not into any of that very technical stuff, but just had this very memorable person with a very memorable cash phrase, making himself the Aussie battler. Mind you, I saw him getting out of a car in Double Bay years ago out of a Rolls Royce or a Bentley.

1:11:33And I think that that brand building was key to Aussie's success as a business. And so I assume that you would agree with that. I mean, how do you feel about the brands that you have and how important, like, I guess, brand is for its ability to attract leads in this space? Because a very competitive industry where fundamentally the level of differentiation between players is not obvious, like the nature of differentiation. It's very people, person dependent. Okay, you've got a tech layer. But how central is brand to this industry? Yeah, you've got a very good insight there in terms of the different dynamics.

1:12:11and I'll try and answer your question really simply with a little story about when we bought the Aussie business and we brought the two businesses together. So we had a period of transition initially where we maintained both brands, we maintained both systems while we're working through the right approach to migrate all the brokers and customers onto our technology platform. Once that had happened, we had this little window where we had the Aussie brand in market, we had the Lendi brand in market and for a good deal of our marketing spend, we were able to directly attribute and run customer tests side by side, where the only difference in the experience was the brand and the colors on the experience.

1:12:49And so we had this really interesting live market test for a period of time where the propositions hadn't diverged intentionally. And what was really the outcome of all of that was when we spent a dollar in Aussie, it was 1.4 times more effective than spending a dollar in the Lendi brand. And the only thing you can put that down to is the brand. What I'd call brand equity, right? basically. Yeah, correct. The thing that's extended from that now though, so we continue to extend on the Aussie brand and all the great work that John and James and the team did over 30 years before we bought the business.

1:13:24But really what's changed now is products and what I mean by digital products. So in the Aussie brand in particular, we've now shifted left and right of the mortgage. And I mentioned before, we've got 5 million customers on the platform. That platform now is more than just mortgage. It's actually the whole property ecosystem. Oh, that's fantastic. You know, I was involved with some guys, you probably know them, like ex-Aussie guys like John Kalenda and his partners like Calvin and Eric Chan who did the Finnshaw business. Yeah, the Aura guys. So I met them because I sold this Help Me Choose business to Mortgage Choice and John, JK reached out to me and said, come and do some stuff with me.

1:14:03And I charged him what I thought was an exorbitant amount of money for consulting at the time because I was on this like money from Mortgage Choice not to compete. I was so tired I was not going to be competing. And I got to know them. And, like, I just thought they just taught me about, John in particular, about how backing yourself and taking some risks is the only way to really, like, you don't want to overthink things. And, like, you know, they bought this 1-300 home loan phone number for more than a million dollars. And, like, that's the bets that they made. And they built out this business and ultimately they sold it to MA Financial in the end and they sold it off.

1:14:37I want to ask a question about a founder. I hope that you're going to agree with this question and not be offended and hang up the phone. But you'll definitely agree with the first part. So you're a very successful founder, so you can't disagree with that. Although you probably don't feel that successful because successful founders are always feeling like they're still on the journey and haven't made it yet. I assume you're the same. But you're not running around all over the media talking about what a successful founder you are and how great your business is. and you're relatively low profile compared to the kind of names and faces that we see constantly in the media.

1:15:12I hope you agree. If you don't, you can shoot me down. But if you do, like, is that a conscious decision? And like, how do you think about the degree to which you put yourself out there as a founder for your own ego and also to build the awareness of your business? No, look, it's a really good question. It has in the past, it has been an intentional thing. we've been really focused on build the business, build the metrics, continue to level up and drive influence through outcomes has really been the strategy. I'd say that the, and we operate in a space as well from a mortgage perspective where there's been very specific topics where we have been quite opinionated on them.

1:15:54And we've been very loud on those very specific topics. Within the industry, you mean? Within the industry, that's right. So, for example, there was a time around the Royal Commission where the commission model was being challenged, and we were quite vocal on our thoughts at the time around the different pathways there. I'm shocked to hear that. Yeah, look, we probably didn't have the perspective that you might initially be thinking there, actually. We had a slightly contrarian view on that one. Oh, really? Okay. All right. But look, I think more recently, we're investing heavily in AI. We're actually re-platforming the whole business to be effectively AI native from our core.

1:16:37And that is a topic that we've been a lot more vocal about. And I'd say over the last, again, only short period of time, call it eight weeks or 10 weeks or so, we've intentionally been leaning in more to that sort of external narrative piece. But I mean more like you as a founder, you as a person, you're not on the the five most amazing founders in Australia lists. And like, you can get on those lists. Like, you have to submit. And so you've made what seems like a conscious decision not to do that. And maybe your ego doesn't need that, et cetera. I mean, like, is that right? Like, have you decided not to do that?

1:17:09Or does that not occur to you? Like, why are you not on those lists? Yeah, look, it has been a conscious decision. As I said, we've really focused on talking about outcomes at a business level. that that being said um over the last period we've sort of been changing our tune around the power of to your point before about building brands yeah yeah the power of founders and also the key people within organizations to build their personal brands and use those as platforms to elevate the business i think is going to be one of the next call it battlegrounds for great businesses and so what i'd say is watch this space because it's something we're actively working on at the moment because it's amazing that john was able to sell that aussie business i didn't think it was i was always shocked that com bank bought it to be honest i thought you were the very like you know the the greatest beneficiaries of that whole process to be honest with you but like i thought it was amazing that he could link himself so closely to that brand and then was able to flog it off to com bank and effectively ride off into the sunset and not have significant obligations ongoing to be connected to the business because you look at like Ruslan with the Kogan business.

1:18:23I mean, it would be almost impossible for him to sell it. Now, all right, his name's on the door, but like Aussie John was pretty close to a name on a door. And so are you bringing Aussie John back to your brand or is that past the use by date? Oh, look, I think we're a very different, like I said, I think John and James over the years built a great business. I think we're a very, very different business today. And we've really sort of shifted Aussie into, I mean, it's very much leading digital platform today. A very, very different business to what it was four or five years ago. That's a diplomatic no, we're not going to get John.

1:18:55I just want to talk about that whole Aussie thing because it's actually remarkable because obviously I tracked, obviously your beautiful wife, Bec, worked with us for a couple of years before going back and working with you again and obviously followed you guys. But the Aussie stuff was really what vaulted you onto the map big time. If you look at, I think the last, Aussie John obviously sold his equity in stages to CBA. For a ton of money. The last 20 % in 2017 was sold for$160 million, which is like an$820 million valuation for the Aussie business. Obviously, Dave, you're the majority. So you were a 55-45 merger with Aussie.

1:19:30So you got arguably, obviously, that CBA could have overpaid. My guess is they would have written down some of that value. Potentially, but let's just assume they didn't. That's a$1.6 billion business you're running and you guys control. That's a remarkable 12 years to be controlling a business of that scale. Are you surprised at how well you've done and how quickly you're able to do it? Look, I think, I mean, you said this before about the founder mindset, I think, or the entrepreneur mindset, like we're never really done. If you go back to 2013, and if I look at some of the pitch decks, and I've still got them all, we were pretty happy getting to three or 4 % market share in Australia.

1:20:07We then pushed that target to five, we're now pushing that target to 10 and beyond. And I think we've also, you know, We've also extended our ambitions. We've launched our property division late last year, which is the find-buy-known strategy I was talking about before. So I think there's like a, whether this is a defect in certain personalities or you call it something else, but, you know, we get incredibly motivated by the challenge. And so while if you look back retrospectively, like there's definitely, you know, we're super proud of the team, super proud of all the outcomes, but there is just so much upside for us.

1:20:41Okay, now I'm going to ask you a hard question. Adam's going to love this question. So Adam thinks that the Australian banking system is, even to put it most mildly, a house of cards, because it's completely leveraged to lending to residential property ownership. And so you're deep in this industry. What do you say to him about that? I think the lynch in that is ultimately, are houses overpriced in Australia? And if they are, what would be the thing that brought the house of cards down? Well, that's two separate questions. are they overpriced and will anything make them not overpriced if they are and so what yeah what do you like what's your answer to him on that yeah look what i'd say is we live in a country where we've got really two maybe three cities where the vast majority of the population live and in those cities we've got incredibly tight planning laws and so like there's not going to be a lot more houses in bondi there's not going to be a lot more houses in manly well they might be in woollara pretty soon.

1:21:38It might be a willar, but even if all those things get up, it doesn't move the needle. We had 600 ,000 net migration last year. We're building a couple of hundred thousand homes a year nationally. Your argument's basically the supply and demand curve is what it is in Australia, and people are getting richer, and therefore we're going to see continued climbing house prices until that's solved, which I kind of agree. I want to say this statistic, which you're very free to use because it's not my statistic, but I've been waiting to hit Adam with this for a little while. You know, this is – I think this is an astonishing statistic.

1:22:14There are 27 % more people living alone in Australia today than there were 30 years ago. And I think that that is the driver of housing demand that nobody talks about. But I think that is much more than just – I'm pretty sure I told you that. I think you're hitting me with my own statistics. No, no, you didn't tell me that. I think I did. Oh, this is how it plays out. We literally talked about this 18 months ago. But, oh, I tell you some stuff about Woolworths. Oh, I told you all of that last week. We did talk about that last week. I don't know how I forgot about that. So, and how much is my second question, which is basically your answer to the first question, I would say is the mainstream answer to the first question, which doesn't diminish you.

1:22:54Like sometimes the mainstream can be right about things and that's the mainstream question. The second question is this. How linked do you see in your experiences writing loans, like the housing market to minor changes in like RBA interest cuts or rises? Like how sensitive is it to that? Yeah, look, there's a few different layers of sensitivity. So there's sensitivity in customer demand and then there's sensitivity in lender appetite. I'd say on the latter, what's been really interesting for this period we've just gone through, say from 2021 to 2025, we had interest rates basically go from what we sort of loosely described as free money.

1:23:36The average rate was like 1.8 % all the way up to 6%. We've obviously come off by 50 basis points since then. But from a customer rate perspective, like that's a big amount to increase. It's 3x and it happened over a very short period of time, under two years. What was really interesting through that period is while arrears rates went up, they didn't go up a lot. We didn't see in any of our portfolios, we didn't see any stress, certainly no major signs of stress. And so what that tells you is that Australian households are a lot more resilient and there's a lot less stress on that side. On the demand side, however, you can literally plot a chart on our Google Analytics or whatever tracking we're using.

1:24:17So the days before and the days of RBA rate changes, people are incredibly sensitive to them and it drives a lot of volatility in the market. And then the two weeks after rate changes when people start getting their letters, the same story. So there's this really long tail as there's either rate changes up or down that drives a lot of refinancing activity on one hand and on the way down. And we're now seeing that in this market. Our approval in principle or pre-approval pipelines are bigger than they've ever been. As people are starting to say, you know, 50 basis points cheaper than it was at the start of the year, I might be able to buy that house.

1:24:54Adam's going to love that. This is my last question. Just on that, we've seen Sydney clearance rates at 80 % and Melbourne at 75%. So it's a pretty 100 % correlation between the RBA making the rich getting richer by continuing lowering rates below the natural level so that you couldn't have put a better 100 % agreement. We've seen such a massive increase in M2 money supply. A lot of that's gone to house prices and M2 is actually tracking almost perfectly. So it's just that we've had generations of governments supporting homeowners and essentially older, wealthier people. and allowing them to get richer and just completely shafting a younger generation.

1:25:28And would you rather be, I don't know if you can answer this question honestly, would you rather, I think you can, would you rather be, you're the originator, so you're writing the loan as a broker. So would you rather be the originator or would you rather be the lender in this market? Who do you think has got the better deal in this market? Yeah, look, I'll answer it in a general way. But in today's market, the general way is we've obviously made our bet around being an originator. And a big part of that is to grow to the levels of market share we want to grow to. It's a great capital light way to do so.

1:26:00In this market, it is interesting. I'd say we're at the bottom of the margin curve, so to speak. So as rates went up, we saw massive competition and net interest margins contracted. So if you're looking historically in the last decade, it is the worst time to be a lender. It's so ironic, isn't it? Because people look at banks, oh, bloody gritty banks. They don't realize as rates have risen, their margins have just been crushed as a consequence of those. They have, but then again, you do the full look through and look at the headline profit numbers. And what comes through in the headline profit numbers is the non-interest-bearing deposits that sit on the other side of the ledger.

1:26:36So I think maybe the nuanced answer to your question is it's still great to be a bank. The banks in Australia are incredibly resilient and incredibly profitable. It's pretty tough to be a non-bank because you don't have that deposit benefit unless you're operating in very, very specific credit niches. And there's some really good non-banks that operate in credit niches that provide products that just don't exist elsewhere. So if you're trying to do capital arbitrage, taking warehouse facilities and letting them out, that's a tough time to be doing it. But like, yes, I'd always – that's what we always talk about.

1:27:08Like being in the big four, like no matter how bad it goes for the big four, like it's a pretty good business to be in. On that note, Dave, you've done an unbelievable job. I've seen the group buying mafia, creating billion dollar businesses like you have in what is an incredibly competitive and difficult space. You've just done an unbelievable job with your founding team and certainly a massive congratulations from us to you guys. And no doubt your next 10 years will be even better. Thanks, guys. It's been great to chat. Thanks for your time. Great to have you on. Thanks, mate. Awesome, guys.

1:27:38Thanks. See ya. See ya. And it would be remiss, that was a great, great interview. Be remiss of me not to mention my favourite business, Friend of the Pod, Satire, released there. On the very last day, what can only be described as probably another disastrous set of numbers. So whilst the headline number wasn't amazing, revenue was flat year on year. It's not great, but - A lot of businesses in retail would take flat - That's true, that's true. Luxury retail, they definitely would take it. Yeah, so I think the revenue number was, you can kind of give them a pass on that. They claim they generated$300 ,000 in EBITDA, which, you know, it's better than losing money.

1:28:10On what revenue line? 700 million revenue. I mean, so that's, I mean, you know, you sneeze in the wind the wrong way. Yeah, well, I'm getting to the sneeze. Net profit was actually a$2.6 million loss after they made an alleged$10 million profit last year. But that's obviously just that. Let's look below, behind the headline numbers. Well, I'll say, you say alleged, I'll say after they made an audited$10 million profit last year. Well, there's some real questions on this. Satire watchers were quick to point out that the EBITDA number was helped by a staggering drop in refunds in June. Did you see that?

1:28:41Yeah, well, I saw it because you sent it to me. I did send it to you, didn't I? And you can talk about that a bit. This is bizarre. I'm trying to think about how to position this so then to let you talk freely on it. This is analysis by someone who's not – we don't know who they are because they're anonymous. They're not involved in the business. They're a genius. But a lot of what they write seems to be very astute. And they certainly put in the work, but they might be right or wrong, and we're not making any allegations. This is a blogger called Tax Losser. I imagine the short seller who not only has a magnificent way with words, is one of the smartest bloggers I've ever seen.

1:29:17And TaxLoss noted that the refund rate in June, and TaxLoss wasn't the only one who noted this. It was pretty obvious. Setire's refund rate was always around the sort of mid-20s, up sometimes a little bit higher, sometimes it was always in a couple percentage points of 25. Which is crazy. No, it's about right for a product business like this is what I expect. Oh, I know, but I don't – like how the hell do you make money out of a business? What's the problem? Because it's 25 % return rate. This is a big reason why we sold these businesses. Do you have the same experience? We have brands exclusive, which is - I know, but did you have this 25 % return rate?

1:29:44I can't remember exactly, but it was very - Something like that. And it was disastrous. You think you've got to try and sell this product again. So it's just a really hard business to run. We had half our warehouse was returns. I can tell you without telling you, like I'll be vague, but like in the DTC spaces that I'm involved in, there's long dated free returns. Free, like we will come and pay and collect it. It's like either bed. For example, and like I would not be happy with anything in the low, low single digit range. Yeah. Okay. Like I just, I cannot wrap my head around the margin destruction of a 25 % return rate.

1:30:21They actually said I started charging a lot for refunds probably because of this like two years ago. I don't know. Just to harp on this. I know I'm going to let you, I'm going to let you go through your setire stuff. Far be it from me to stand in the way of that. But, you know, the way that I think about margins, you get a dollar comes in at the top. and then it erodes on the way through. And like, if you can keep 25 % at the EBIT line, that's a great business. Amazing business. But you're just taking 25 % margin off me. No, because you're taking 25 % - Of top line because I'm refunding the purchase price.

1:30:52Oh no, but you also get your cogs back, presumably. Well, okay. So the businesses I'm involved in don't really get their cogs back, but the cogs are pretty low. But like, I see what you're saying. You can resell. I don't know what proportion will be resold and for what price. Or they might be able to give back to the supplier. There could be a few nuances there. It's pretty horrible. It means you sell a million dollars worth of stuff and$250 ,000 of those sales is refunded to the customer. Yeah. It's horrible. Booking or Com, for example, have a massive – because that was obviously fully refundable.

1:31:20It's intangibles. Yeah, so they can live with a big – And I pay for my ability to refund. Yeah, absolutely. So they can get away with it, but when your product business is much harder. We can't compare this to intangibles. Let's forget where the fact that refunds are good or bad. We know refunds are bad. They've always been around the 25 % mark. Somehow in July, they dropped to 12.5%. Sorry, in June, they dropped 12. How does a refund rate drop to 12.5 %? It's just completely bizarre. Let me guess. What you're going to tell me is last June, it wasn't 12.5%. It was always 25%. So that itself just makes no sense at all.

1:31:51Even more bizarrely, and cash loss, not it is. Suspicious. Well, how about this? Suspicious, but in and of itself, not a smoking gun. The gun gets more smoking in a second. So there's a refunds payable number. On the balance. On the balance sheet. Yeah. Which is refunds that have to be paid, but haven't yet been paid. Yeah. Like a reversal of revenue, essentially. And it'll be a dollar value, but presumably that dollar value will be closely linked to a percentage of sales. So last year, that number was 5 ,475 ,938. Very precise number. Yeah. Precise to the dollar. To the dollar. Yeah. This year, 5 ,475 ,938.

1:32:27Same dollar value. Same dollar value. That is, like, I don't know what the odds are of that. It's got to be a practical impossibility given the revenue's changing, the refund rate's halving. How is this remotely possible that the refund rate hasn't? The only rational conclusion you can draw is an error. Yeah. Innocent error there, potentially. I would say the likelihood of that being correct is very low, but not zero. Like, there are weird coincidences, but like, you would, as close to zero as you could ever imagine. your starting point would not be, this is probably right. So, which makes you wonder exactly how well audited, because this went in the annual report.

1:32:59This is not like some rando statement. But why is no one talking about this? I think it's because the business is now worth$120 million. So no one's looking at it. Yeah, people are like - So like whenever I talk to you about Step 1 or Dusk or something, you basically tell me off, why are you talking to me about$100 million business? Yeah, well, Step 1's a much better business. Like Step 1 makes money. I know, but you know how you criticise me for raising any business that's not worth a trillion dollars. But this obviously was a$2 billion business like 18 months ago, which is why it's irrelevant.

1:33:22So let's assume that the refund number was 25%, like it was every other period for the last six years. that means the EBITDA number we told you$300 ,000 EBITDA yeah it's not going to be like 300k is not a lot of buffer we'll become a$6.6 million loss so that's pretty bad that's probably not the worst thing that happened so we're getting worse and so if I so I'm going to talk purely in the hypothetical here just emphasize that so if I wanted to at the end of a fiscal year generate an EBIT and I wanted to use a refunds lever what would I do in order to use that lever i would effectively not process because doesn't matter if you pay the refunds or not i would have to not process the refunds yeah so there would be all of these requests for refunds and by the 30th of june i would have just had to not have gotten to those requests for refund yeah or else i'd have to accrue them anyway exactly and so have people been complaining about not getting a refund well there's always complaints they can never tell you know right I've played for years.

1:34:25Yeah. So maybe you could, and so that's interesting. So that may or may not have happened. We don't know. Yeah. It's bizarre. Yeah. What's probably more concerned? You have to tell your stuff. Basically, you don't have to divert the request for refunds into a rubbish bin somewhere or you'd have to kind of - Just get rid of all your - Sack all your customer service stuff. Or sack your customer service stuff. Like I'm not saying, then we're not suggesting anything that's happening. But it's not a simple thing to engineer. And presumably the auditors would, I mean, I don't know how they end up with a number that was the same.

1:34:50That sounds like there's some sort of error there. put the EBITDA to the side for a second what's probably more like when you get to a point where profit becomes irrelevant and all you care about is cash because without cash you die so while this all is happening the business's cash balance has dropped from 78 million bucks this time last year like 7-8 7-8 and there's a bunch it's negative working capital business right we're talking about negative working capital so you get paid by customers before you pay your suppliers so why do you get that in this business? it's not as much as like a travel business but they might be like have like one month terms so you make this you sell a because this business hold no stock right?

1:35:21Yeah, you sell a Gucci bag, you tell the supplier, ship the Gucci bag to Joel. Joel gets his Gucci bag, you then pay the supplier. That's like a month later. You've got that negative working capital balance. Interest-free loans from your suppliers. And some customers. Yes. Well, not really from customers. It's more of an interest-free loan from suppliers because the customer gave you money for the product, but the supplier hasn't been paid yet for the money that you've got. Definitely from suppliers, but customers also have to wait like two, three weeks to get the product or whatever. Oh, is that right?

1:35:48However long it is. Oh, yeah, because they're only sending it once the order comes in. A bit of a gap. I see. But yeah, more supplies. There's terms from both sides, which is a beautiful position to be. That would be a reason that we would love for this business. Well, that's why cash balance is great. The problem with negative working capital businesses, and we talked about this a few months ago, is when they unwind, you've got a real problem. Because as you're selling less, suddenly you've got to keep paying your supplies for previous sales, but you're getting less cash in the door. Maybe a way to say it is, the problem with negative working capital businesses is, if you go and spend the cash that isn't really yours, and you need it later, it's not there.

1:36:22And so the good working capital businesses will not spend all of the cash that's not theirs, right? And so tell me about this 78 mil. Where did it go? So it was 78 million this time last year, decent. We're now 37 million, which is not good. Dividends? I think they stopped paying dividends this year. Maybe they had paid previously, but I think they're paying dividends now. The trade receivables balance initially, that dropped 9 million, as in went from current to non-current. So that means they don't think they're going to get this trade receivable money. I don't know how this works out. What's their trade receivables?

1:36:51It's like 26 million. But what does that pertain to? I don't know. Because their receivables is from individual customers. So what's a trade receivable? It might be stock. They're returning back to suppliers. They're saying, you can have this. I can't sell this Gucci handbag. Well, they've returned it. I'm returning back to you. You then pay me my cogs back. So you think it's related to the returns? I think so. I think so. I could be wrong. I don't know the answer to that. Either way, it's bad. I've never dealt with a 25 % return. If it goes from current to non-current, it's a real problem. Yeah.

1:37:18So we can say in a simple way, current assets are assets that you are going to be able to access and liquidate in 12 months. Yeah. And non-current is you think it's going to take more than 12 months. Yeah. So you've got those problems. So you've gone from$78 million cash balance to$37 million, which is not good. Plus you've got that negative working capital thing. Yeah. And their operating cash flows were negative 28. This is the unwind. And they paid$16 million for intangibles as well, which is really capitalized wages, essentially. So call it$44 million out the door this year. So you're still doing that, capitalizing wage?

1:37:48Yeah, pretty much 100 % of it. Close to it. So if you've got$37 million, negative capital unwinding, and you lost$44 million in the cash this year, this business could have months to live. They're going to need to do a rescue raise unless something changes. A rescue raise or something drastically changes. That's the only thing. I don't know how this business is still going at this position. Yeah. So what would they have to change? Fire people? They've always run pretty lean. $17 million. Yeah. $17 million. If your assumption is that a lot of that 17 mil is staff, then they can fire them. Yep. You can fire half of them.

1:38:22Yeah, you can fire half of them. There's eight mil a year minus redundancy costs and stuff like that. Yeah, well, it's not ideal. Well, that's cash outflow on day one. Although I think it's a lot China-based, their staff. So maybe there's not redundancy there. Yeah. And so the thing is this. It's September and these results were for the 30th of June. Yeah. Do they provide an update to the market? I don't think so. All right. So I think you'd want to provide an update if this was your stuff. I certainly didn't notice one. They may have. And to make matters worse, just to add a bit of salt in the wound, Dean Mintz, the founder who's sold 300 million bucks of shares in the last three or four years, and Tim Hume, who sadly has not been able to sell shares because he's options are miles on the water, got their full cash bonus this year and have got a pay rise for next year.

1:39:01So I don't know if they think they're going to be top of the list of creditors or what's going on here. But it seems strange that the board is giving these – and our friend Daniel Agostino, who stepped on – he was the great CEO of Accent Group, has quickly stepped off the board in a quick hot step on off. Look, I think the amount that the CEO is being paid - It's pretty low. It's cheap for a business with this revenue, okay? There's 700 mil revenue. He's getting 850K. That was his increased salary. So the problem is not the dollar value of his salary. It's just a weird thing to do - Yeah, that's the point.

1:39:34When the business - Yeah, no one's saying these guys are earning 5 million bucks. Yeah, I think, you know, like it's a weird thing. Well, it really didn't need any salaries. It got 300 million bucks out. Well, I don't really understand the motivation for doing something like that. Someone, not us, I just want to emphasize not us, someone should go and talk to Regal and do an article and ask them how they're feeling about all this and what their comments are. Are Regal sold out or are they still shareholders? I don't know. But that would be the most fascinating. Because Cat Rock has sold out, the other hedge funds are in there.

1:40:02That would be the most fascinating article to read. If they were candid about how they feel about this. Oh, I thought Regal's kind of written this off by now. They've got bigger fish to fry. Yeah, maybe. It's a fraction of Regal's funds on the management. It's a relevance fund. I agree, but it would be interesting to feel, to hear the view of someone that was clearly so bullish on the stock. It hasn't played out. At the very least, it hasn't played out the way they were expecting. It would be interesting to hear what they think didn't align with their thesis for the business, basically. Yeah. We're going to get Jess or Phil on the show.

1:40:31Open invitation. Yeah, based on this, we can talk about the EBDA. The EBDA is a bit separate. It's a bit worrying. but the cash balance is hugely concerning in this business and it's hard to think we'll be discussing this in a year's time. You know who we can get? We need to find an analyst that was – I mean, they'll never admit to it. That's the problem. We need to find an analyst that was ultra bullish on – Well, it's Julian from E &P who sadly departed. That's right. I think he had a seven-back target on this business until like three weeks ago. I actually really liked Julian from E &P. And so, yeah, it'll be interesting to get someone on – because the thing is no analyst is going to admit to having been bullish on it.

1:41:04Well, Julian was because he was bullish until like a month ago. I know, but someone, people had a thesis on this business that was a bullish thesis. In fairness to Julian, most people were pretty bullish. I know. It's really just we wing from RBC and us were the only ones who sort of weren't. Like we know why we were bearish. Yeah. And I think it's fair to say we thought this was the most obvious short possible. Yeah. And have been proven correct in that. Although our zero short from two weeks ago has already returned 15 % or something, right? But we thought that was super obvious as well, right?

1:41:32But I never quite understood the bull case for this stock when it was worth so much money, right? I never understood it. It didn't make sense to me. I knew the bull case people believed the profit, didn't bother looking at the business model, didn't bother looking at anything, and just said, oh, this business is making$30 million. And it's capital. And it's capital. And it's capital. Negative working capital. Given how sceptical investors often are, that this one got through remains one of the great mysteries of Australian capital markets. And it wasn't, and like the sale was not out there doing razzle dazzle to investors.

1:42:05He was super occlusive. Yeah. So it's just, it's just a fascinating story. You know, you get these businesses that end up with founders making a ton of money and you look back a few years later and like, we talk about my deal a lot. I don't begrudge my deal one cent. No, Sean's a great guy. I don't begrudge one cent. But you look back and you think that wasn't really a business. and like I don't mean that in like they didn't put a lot of work in or there was no nothing was dishonest but it didn't like a few years later it's gone it wasn't making money it wasn't making money and it's gone right and you see these things although the money guys argue it's part of the infrastructure now of ruleies although we obviously talked about what he's before that's fine but what was the price some hundreds of millions of dollars right yeah and like whatever it was worth it was never worth that yeah it was hard to think that was a more valuable reason than catch at the time or I mean I think he can go and write thank you notes to the Leibovitch brothers for selling catch and leaving wars with no option to buy, right?

1:42:59But I think what you learn more and more as you watch business more and more and more is the overwhelming amount that luck and timing play a role in getting people rich. Like whenever you have, you just cannot believe your own hype. I think it's a question. If you've got a business with no - This is why I tell Canva to sell now, by the way. If you've got a business with no powers, then you want to sell whenever you can because you've got no powers. And this is why the catch guys are so smart. Gabby and Hesse realised they had a great brand, but other than that, not much. And they've got Amazon coming with all these powers.

1:43:30A great brand that had no brand compared to its major competitors. No brand advantage, right? Not compared to Amazon, but it was a very good brand. Catch, Kogan, Amazon, the list goes on. You can't say that Catch is the strongest brand in that group of three. Well, it was a very strong brand for a long period. All right, but when they sold it, it was not - We were agreeing in principle that they had no real powers. Very smart to sell. And powers are relative to competitors. Yeah, but if you're Mark Zuckerberg in 2005, and Yahoo comes to you offering a billion dollars and you've got real network effects, which is hugely rare, then you shouldn't sell.

1:44:00So your golden window is dependent on your powers. You think you shouldn't have sold for a billion dollars to Yahoo? Well, you can argue about the good or bad benefits of being rich or not rich. But in terms of maximizing the value of your wealth, like in terms of purely that, if you've got no powers, the answer is sell any golden window you get. You've got great powers. Your golden window might get more golden. I think, I'll tell you something else I've learned. I think Mark Zuckerberg might not be in it for the money as it happens. Yeah. And so I think there are two kinds of founders. One kind of founder wants to make money and the other kind of founder would like to make money, but it's definitely not their primary motivator.

1:44:33I think most founders is the latter. Most great founders. Most founders, if I offered them$100 million, they would take it in the blink of an eye. I said, you have to give up on this dream. It's sold now. Here's 100 mil. They would, as they should, okay? And so sometimes not being motivated by the money is the right thing. That's Zuckerberg. Yeah. And sometimes it's the wrong thing because you miss your golden window. You never get your money and then your business goes and sinks very gradually over a long period of time. Generally, my view is if you're a founder, you're not going to be short of ideas.

1:45:05If someone's writing you a big check, there better be a bloody good reason not to take it. You should be running the null hypothesis on it. The reason is you're building powers. You've got powers and the business will be more valuable. Almost nobody gets there. Almost nobody gets there. Like a lot more people have said no to a check than have gotten to powers. I'm not denying that, but I'm saying that for the people who do have powers, and that's the great businesses we see now. Look, Catapult is a great example. You've got real powers. You've got scale. You've got some network. You've got scale.

1:45:32You've got brand. You know why the founders didn't take the money? Because nobody gave it to them. Well, is that as well? That's it. That's the reason. We never took the money. That's exactly it. And look, by the way, not to throw them under the bus, I would have also taken eight million bucks. Yeah. We all would have taken it. Yeah. Nobody would give it to us. Yeah. Now, what is it? One and a half, two billion dollars? Yeah. Okay, now everyone thinks it's amazing. But like, I can tell you - But that's the point. The point is you were able to - Just lucky. You were able to build powers. So because you were able to build powers, the value kept increasing.

1:45:58So versus a business that couldn't, like a cash that didn't really have powers, genius is for selling at 230 because now the business has been written off to zero by West Farmers. So the smartness of the call is based on the competitive advantage of the business is my point. If any founder says to me, I'm being offered 100 mil plus in cash for my business and I still own a decent chunk of it, what do you think I should do? My starting point is take the money. And if I was a VC, my starting point would be don't take the money. My starting point is I want to analyze the business before I tell you what I think you should do.

1:46:29Well, I think I need to be persuaded that they shouldn't take the money. But if I'm a VC, I tell them not to take the money because I need my power law. VC, that's a different - Different business, right? Yeah, absolutely. But fascinating - That's why I said to the founder, don't ask the VC whether you should take the offer. Go to someone independent. Like they'll help you build it bigger. But you're better off getting someone not interested for a start, whether you're a VC, PE, whatever, family officer. It doesn't matter who it is. You want an independent view, but it's also hard to find. Because if your answer is you want to make it bigger, the VC can help you, but they can't give you a totally arm's length decision.

1:47:01Because if you're going to be a rocket, they need you to be a rocket. Yeah. On that note, we'll wrap it up. Thank you, Adia. Thank you, Joel. Mike, hope you're having a great time in Korea. We'll see everybody on Saturday for our Ask Us Anything episode, as always. Thank you for listening in. Tell a friend if you like the show. we love hearing word of mouth and we love your feedback as well don't forget to send us your questions through the linkedin page or thecontrarianspod.com thanks again see you soon