Episode 120: Victoria Goes Full Stalin, Tesla Pivots, Figma's Epic IPO, Google Deep Dive, Step One Hammered and Carsales Well Earned Victory Lap
The guys discuss Victoria's bizarre WFH edict, Tesla expands to food service, Figma's IPO goes off, Google's death greatly exaggerated, Step One's profit crunch, and Carsales CEO retires a legend.
The Contrarians catchup
Victorian Premier, Jacinta Allan, is trying to legislate working from home as a mandatory requirement and a legal right in both the public and private sectors. Adam referred to Jacinta as a “merchant of doom, emissary of the far left and secret destroyer of young people”.
Adir’s view: “This government has said they have a complete and utter disdain for private enterprise in this state, especially for small business. We hate them, we think they're losers, and we're gonna do nothing to assist them whatsoever. And at every opportunity, we're gonna hit them with taxes and we are going to impose these kind of draconian regulations.”
The guys discuss the new Tesla Diner (“a Supercharging station, classic American diner and drive-in experience all wrapped up into one”) and whether the Tesla brand is growing or slowing (like someone trying to take off in Valet Mode).
When it comes to rate decreases, Adam thinks “we've reached the point of completely being gaslit by the media and by the banking economists who clearly want rates down for their own selfish reasons.”
Adam had another Uber Eats debacle with his driver heading in the wrong direction for 40 minutes. “He was going around in circles before he picked up the one before me. He was kind of just riding around like a maniac. The whole thing was completely bizarre.”
There are two strategists who have shaped Adir’s view of business: Hamilton Helmer (author of the oft-quoted ‘Hamilton W. Helmer’) and Clayton Christensen (author of ‘The Innovator’s Dilemma’ and founder of the Jobs to Be Done methodology). Listen in to how Christensen helped McDonald’s sell more thickshakes.
Figma's epic IPO
Figma’s IPO surged 255%, but was significantly underpriced, leaving nearly $49B in value on the table and benefiting institutional investors over the company itself. Despite strong financials, 46% revenue growth, and expanding beyond designers through AI integration, risks remain: a sky-high valuation, tough competition, and likely share dilution. Only a fraction of IPO proceeds went to Figma.
(See the bottom of the newsletter for an update).
Adir: “Any net revenue retention north of 125% for a SaaS business, definitely north of 130% is crazy. North of 125% you're in rarefied air as a SaaS business.”
Adam: “Part of the reason for that success is customers use multiple products, and we're one of them. So they've got their core product and they're selling other stuff because they're actually such a great business. They have products people want to use. I almost call these guys the anti-Atlassian in some ways. These guys have products that people absolutely love, whereas Atlassian has products that people sort of have to use.”
Adir: “Canva is a much better business than this business. If this is worth $60B, what the hell is Canva worth? Like $150B?”
Adir: “I think Canva should IPO immediately and get cash because these golden windows they talk about, guess what? It's open. They're fighting an AI war against very big players. We don't know how that's going to play out. But God, like I'd be going through that window if I was them.”
Step One hammered
Step One expects FY25 revenue of $86.9M, up 3%, and a net profit of $12.6M, despite a 4% drop in EBITDA and declining cash reserves. Challenged by cost-of-living pressures and shifting consumer behaviour, the brand is relying on product quality and loyalty to maintain momentum in a tough retail climate.
Adir: “The CEO basically said, consumers don't want to buy stuff so we have to discount. New data came out during the week and retail sales were surprisingly up in June, but they were only up off the back of sales activity. I think this business to me looks very cheap if you believe that they can get back to growth and even if you think they can't get back to growth, it's a pretty easy bet to make, right?”
Google deep dive
Newly minted billionaire Sundar Pichai, CEO of $2.3T Google, credits his rise from product manager to the top job to embracing discomfort and following his heart. Despite moments of self-doubt, he leaned into challenges. Now worth over $1B, he urges Gen Z to chase fulfilment over logic.
Adir: “It seems completely obvious to me that the long-term future of these AI businesses is in monetising B2C revenue and getting the consumer. And you've seen that because a few of them have released their own browsers, which is Google's early Trojan horse.”
Adir: “I still think they're going to struggle to hold on to a monopoly, but I also think the pie is likely to increase pretty significantly. Google's incumbency advantage might be more powerful than I understood.”
Carsales well earned victory lap
Cameron McIntyre will step down as Car Group CEO on August 15 after nine years and over 200% company growth. Under his leadership, the company reached a $14B market cap and $1.2B revenue. CFO William Elliott will succeed him, earning $1.6M salary plus incentives. Investors praise the smooth transition.
Adam: “We know how founder transitions tend not to work. They're really hard. And these guys have absolutely nailed it. This is how it's done. Very strong board, very strong exec team, great brand and have done what most Australian businesses can't do, which is succeed overseas.”
Five other stories worth following:
Trump fired the head of labor statistics, Erika McEntarfer, after a weak July jobs report and major revisions to previous figures. Critics, including Sen. Rand Paul, warned it risks politicising data. Nate Silver explained that revisions are normal and non-political, though White House advisor Kevin Hassett defended Trump’s concerns.
Over 3,200 Boeing defense aircraft workers went on strike after rejecting a second contract offer, halting F-15, F/A-18, and missile production. It’s the first strike of its kind since 1996. Boeing says it’s prepared with a contingency plan. The CEO downplayed the impact compared to a larger 2023 commercial jet strike.
Mark Zuckerberg offered Matt Deitke $250M over four years to join Meta’s superintelligence lab, rivalling top athlete salaries. Compared to Oppenheimer’s WWII pay, it’s astronomical. Big Tech’s lack of salary caps and huge market caps fuel these figures, though Deitke won’t get a Nolan biopic or Pulitzer along with the cash.
Anthropic revoked OpenAI’s access to its AI coding assistant Claude Code, citing a violation of terms. OpenAI had reportedly used Claude’s tools to benchmark against its own models, which Anthropic said is prohibited. OpenAI called this industry-standard practice and described Anthropic’s move as “disappointing.”
Since recording this week’s episode, Figma’s stock plunged 23% to $94.50, erasing nearly all post-IPO gains. Despite raising $412M last week, the drop reflects broader market fears, with analysts from Morgan Stanley, Deutsche Bank, and Evercore warning of a pullback. Figma’s high valuation remains vulnerable amid shifting investor sentiment.
Apropos of nothing here, I hope y’all turn attention to redistricting. If we want politically neutral districts that could bring the middle into the process, it should be done with nearest neighbor analysis (NNA). NNA divides space into maximally compact units. In the first elections thereafter, every incumbent will have to earn the support needed for re-election. It will make congressional politics competitive in a society that putatively places competition at the center of a marketplace such as an electorate.