Episode 171: Netflix Dumped, SaaS Meltdown, Koala Deep Dive, Are Private Schools Worth It, Airlines and Goyder's Parting Disgrace
The guys discuss Netflix's share price meltdown, is the SaaS meltdown overdone, a booming Koala, question whether it's really worth it to send your kids to private school, and Goyder's AFL farewell.
The Contrarians catchup
While cancelling Virgin flights, Adir discovered that cancelling via Velocity returns points instantly, while Virgin’s own site doesn’t. Same ticket, wildly different experience. Lesson: brands don’t just compete externally; internal platforms can quietly destroy goodwill.
Adir on Qantas: “Qantas is still the Spirit of Australia. That emotional connection does an unbelievable amount of work. People don’t choose it rationally - they choose it because it feels Australian.”
That rolls neatly into a broader brand riff: Qantas as the ultimate case study in “forgiveness as a moat”. Despite ghost flights, baggage chaos and peak-Alan Joyce energy, Australians have mostly moved on. Strong brand equity buys you an extraordinary amount of grace.
Which leads to Adir’s hot take: the strongest brand on Earth isn’t Apple, Nike or Coca-Cola. It’s the United Nations. A brand so powerful people cling to it even when the reality repeatedly contradicts the story. Endless forgiveness, infinite cognitive dissonance.
A quiz on the world’s most visited websites (Wikipedia still quietly dominant), with a joke about Mike being the UN of the podcast - permanently forgiven, regardless of behaviour.
A new favourite metric: Founder cash-out ÷ current market cap. When that ratio blows out (think Afterpay, Adore Beauty), it’s usually a sign the market massively overpaid - not that founders did anything wrong.
Are private school fees actually worth it?
Private school Year 12 fees in Sydney are now pushing ~$50k a year, with projections suggesting $100k within a decade. Inflation-adjusted, that’s almost double what parents paid 20 years ago.
Adam and Adir wrestle with the real question: not whether private schools are “good”, but whether they’re good value.
Key tensions:
Public vs private quality varies wildly - a great public school changes the equation entirely
Academic outcomes don’t necessarily translate to life outcomes
The “network effect” of elite schools is massively overstated
$200–400k invested instead could meaningfully change a child’s financial future
The darker undercurrent: private schools increasingly clustering wealth, accelerating social stratification, and quietly normalising a semi-aristocratic education system - often subsidised by grandparents via tax-free super.
Adam: “If you take the total cost of private schooling from Year 7 to Year 12 and invest it instead, you’re talking about $300–400k in today’s dollars. If you gave an 18-year-old that choice, private school or the cash, I think most would take the money.”
Adir: “The ‘network effect’ of elite schools is massively overstated. People love telling that story, but when you actually look at who stays in touch, who builds businesses together, who creates real opportunity, it’s surprisingly thin.”
Adir: “What worries me isn’t academic outcomes. It’s that private schools are increasingly just full of other rich kids. That’s how you end up with social bubbles that don’t understand how the rest of the country lives. We’re quietly recreating an aristocratic education system. Not intentionally, just through pricing.”
Netflix: overpriced, misunderstood, or fine?
Netflix’s share price is down ~40% since its mooted Warner Bros Discovery ambitions spooked markets. Yet fundamentals remain solid: ~16% revenue growth, rapidly accelerating earnings, clear category leadership.
The key insight: Netflix has quietly become a utility. It’s the default subscription, with everything else layered on top. At ~$17 a month, it’s arguably the cheapest entertainment in modern history, massively deflationary compared to Blockbuster-era economics.
Adam: “Go back 20 years. You paid six or seven dollars to rent one movie overnight from Blockbuster. Adjust that for inflation and compare it to what Netflix gives you for the same money - entertainment has been deflated by about 90%.”
Adir: “At 35 times earnings, Netflix isn’t screaming cheap, but it’s not expensive either. It’s priced like a business that’s won its category and is going to be around for decades.”
Koala IPO: this time it might actually happen
Koala is again circling an IPO, reportedly seeking ~$400M after delivering 42% revenue growth and a huge EBITDA rebound.
The guys discuss whether Koala’s brand can ever translate into real pricing power, or whether it remains structurally capped. Compared with Temple & Webster at similar valuations, Adam and Adir lean toward Koala: simpler economics, clearer control, fewer moving parts.
Adir: “Koala has a great brand, but it doesn’t have luxury pricing power. You don’t buy Koala to feel rich, you buy it to feel clever. What Koala has done well is prove that vertically integrated retail can actually make money at scale. That wasn’t obvious five years ago.”
Adir: “They’re never going to be Nick Scali margins. But you don’t need to be luxury to be a great business. If I had to choose between Koala and Temple & Webster at similar valuations, I’d take Koala. Simpler model. More control. Fewer moving parts.”
AI, vibe coding, and the SaaS reckoning
SaaS stocks have been smashed as investors panic about AI, “vibe coding”, and tools like Cursor making software easier to replicate.
Adir lays out a framework for separating real risk from noise. Key questions every SaaS investor should ask:
Do you service software developers?
Are you in a complex space? Slash, are you vertical SaaS?
Do you have proprietary data?
Is there a meaningful service layer?
How high are switching costs?
Is the product mission-critical?
Is it cheap enough to ignore?
This explains why tools like Jira look exposed, while platforms like Shopify, SAP, and deeply embedded vertical SaaS businesses remain far more defensible.
The mistake markets are making: treating all SaaS as equally vulnerable. In reality, AI will compress weak moats and strengthen strong ones.
Adam: “What the market is doing right now is throwing great SaaS businesses out with the junk. There is real risk from AI, but it’s being applied indiscriminately. AI will absolutely kill bad SaaS. But it will also make good SaaS stronger. The idea that everything is equally vulnerable is just lazy thinking.”
Adir: “You can vibe-code Jira. That doesn’t mean Jira is dead - but it does mean its growth multiple deserved to come down. The presentation layer isn’t dead. Enterprises don’t want infinite flexibility - they want predictability. They want to know where the button is. People who don’t work inside large organisations massively underestimate switching costs. Incumbency is one of the strongest moats there is.”
Five other stories worth following:
Super Bowl LX is set: Seattle Seahawks face New England Patriots on Feb 8 at Levi’s Stadium. New England beat Denver 10–7; Seattle beat Rams 31–27. Bad Bunny headlines halftime, Puth performing.
Trump threatened Canada with a 100% tariff if it strikes a China trade deal, after PM Mark Carney’s Beijing visit and Davos comments about “great powers” using tariffs. Carney denied talks; Trump rescinded Carney’s.
Four Magnificent Seven giants report this week: Meta, Microsoft and Tesla Wednesday, Apple Thursday. Investors want robotaxi updates from Tesla and clearer AI returns from Meta, Microsoft and Apple, as Alphabet leads artificial-intelligence race.
Trump-driven policy shocks are rattling Wall Street, disrupting trade and corporate planning as tech no longer props markets up. Magnificent Seven stocks are down 0.4% year to date, S&P 500 up 1%, amid volatility.
China removed top general Zhang Youxia, investigating alleged nuclear secrets leaks to the U.S. and bribery. Analysts say Xi is decapitating military command to crush corruption and patronage, signaling Taiwan ambitions, with former CIA.