Episode 124: Temple & Webster Breakdown, Overpaid Lawyers, the Business of Sushi, Surcharge Debacle Worsens, World's Worst Health System and Melbourne Hellhole
The guys go real deep into Temple & Webster's full year numbers, overpaid lawyers, the sushi wars, why the NHS is the world's worst health system, and Victoria becomes a failed state.
The Contrarians catchup
Adam asked Adir which healthcare system is the worst in the world. Adir didn’t answer with the NHS in England because it was too obvious, to which Adam responded with “if I ask you one plus one, you don’t say three because it’s too obvious.”
Adir tested Adam on whether this was a real quote from Jacinta Allan or belonged in The Onion: “The Victorian government's role is to ensure peace here at home by defending our values and respect and safety for all”.
Adir described the vibe in Melbourne as terrible compared to Sydney, Brisbane, and the Gold Coast (the latter two being different places, despite Adam’s take), where people have “a spring in their step and optimism and positivity”.
Top Australian bureaucrats, including the chief scientist, are now banned from using taxpayer money to fly first class, especially on domestic routes. This decision is part of a broader effort to curb lavish spending and promote fiscal responsibility.
Consulting drama and overpaid lawyers
Paul Howes, senior KPMG partner and former Labor powerbroker, will leave the firm in February to become CEO of the rebranded Tenet Advisory and Investments, founded by ex-PwC chief Luke Sayers. His departure comes amid KPMG consulting’s revenue slump and major job cuts.
Howes, given equity in Tenet, joins after gardening leave, following Ian Silk’s appointment as chair and Sayers’ step back from executive roles. Tenet now houses 80 staff, split between consulting and wealth management.
In other consulting news, Advisory firm PKF has sued KordaMentha, Cleanaway, and co-founder Mark Korda, alleging KordaMentha misused confidential information from its 2019 review of recycling group SKM to benefit Cleanaway.
The case could implicate CBA, which hired KordaMentha. KordaMentha and Cleanaway deny wrongdoing and plan to contest the allegations, calling them without merit.
Adir: “As the Chinese would say, don't invite the wolf into the hen house.”
Adam: “I have more sympathy for KCs who charge a lot because they’re sole practitioners, so they’re sort of eating their own porridge. It’s different for a firm.”
The business of sushi
Sushi Hub, the fast-growing Japanese food chain, generated $200M in sales last year and is eyeing a $1B valuation before considering selling a stake. CEO Raymond Chen, who co-founded the business in 2006, has rebuffed private equity approaches as the company prepares to open its 200th store and expand overseas.
With consumer demand shifting toward healthier quick-service restaurants, Sushi Hub has thrived, offering 70 varieties of sushi and enforcing strict freshness standards across its mostly franchised network.
Adir: “Now, if I had a software business doing $200M of ARR and growing at 33%, then I think I could get five times ARR with not many problems. But unfortunately, the last time I checked, sushi is not a piece of software. And so I suspect this guy may have said this predominantly because he wanted the headline.”
CBA, RBA, wya?
CBA boss Matt Comyn has warned the RBA’s plan to cut interchange fees could slash frequent flyer points, as banks lose $900M annually. Lenders may respond by lifting fees, raising interest rates, and reducing rewards. Experts predict fewer bonus offers, lower earn rates, and costlier credit card programs.
Adam: “My thinking is what happened here is, Matt wanted surcharges reduced, but he didn't think they were going to hit the interchange as well. And the RBA has gone bang-bang, and all the banks have gone, hold on, we don't want this. This is actually going to be bad for consumers. It's going to be bad for everyone, ironically.”
Temple & Webster breakdown
Temple & Webster posted a 21% revenue rise to $601M and net profit growth from $1.8M to $11.3M, driven by home improvement sales. Shares surged 7%, doubling over the past year. The company continues a $30M buyback but won’t pay dividends.
CEO Mark Coulter remains cautious, noting it’s too early to confirm a sustained consumer rebound despite improving sentiment. Analysts are mixed, with some bullish on housing recovery tailwinds, while UBS flagged softer margins.
Adam: “The biggest point of brand is that it lowers your CAC, but it feels like their CAC has gone up here. They've got worse pricing power because their margin's lower, but that's minor. But my biggest concern is that they had to spend so much more on marketing to generate this extra income. The market sees revenue up 21%, but they grew marketing spend 27%. That means their brand power's worsening, so this is a business going backwards, not forwards.”
Adir: “Any CEO that manages to grow a pretty tough business like this, that's already an achievement. And then any CEO that manages for an extended period of time to convince the market that on $10M of pre-tax profit excluding interest that's worth $3B, or thereabouts, I'm very happy to invest in that CEO, at the beginning. And so without doubt, I would be selling aggressively if I had a lot of shares in this business.”
Five other stories worth following:
Les Amis, a friendship app founded in 2022 for women and LGBTQ+ people, is launching in NYC on Aug. 25 after success in Europe. Using AI to match users by lifestyle and interests, it also suggests events and trips. The app has 120K installs and 2,000 NYC sign-ups.
OpenDoor CEO Carrie Wheeler resigned after weeks of intense outside interest and criticism from hedge fund manager Eric Jackson, even as the company’s stock rose 104% this year. Investors reacted positively, with shares climbing up to 13% on the news of her departure.
Air Canada flight attendants went on strike seeking wage increases and boarding pay, grounding flights and stranding over 100K passengers. The government intervened under Section 107 of the Labour Code, ordering staff back to work. CUPE alleges bias and bad faith bargaining, prolonging disruptions and delaying service recovery.
Debit-card spending is now outpacing credit-card spending for the first time in four years, according to Visa and Mastercard. The trend reflects tighter credit card offers, weaker consumer appetite for debt, and post-pandemic spending restraint, marking a shift in payment behaviour as households adjust to today’s economic climate.
Duolingo CEO Luis von Ahn addressed backlash over the company’s “AI-first” strategy, admitting he failed to provide enough context. He emphasised AI is meant to enhance productivity, not replace staff. Despite criticism, Duolingo’s strong earnings lifted its stock 30% earlier this month, but not enough to justify Danish lessons on a free account.