Episode 183: Life360 Deep Dive, Dorsey's Block Shambles, Kyle & Jackie Implode, OpenAI Raise in Doubt, Grand Prix and World's Most Valuable Sporting Franchises
The guys go deep into ASX darling Life360, Jack Dorsey fires half the block, Australia's richest DJs break up, OpenAI's fake raise in the spotlight, Australia's Grand Prix, and rich sports teams.
The Contrarians catchup
It’s Grand Prix week in Melbourne - Adam’s least favourite week of the year. Hotels are reporting no-shows and last-minute bookings, and Victorians are now on the hook for another $115M after asbestos was found at the pit facilities. Adam: “It’s got to be an inside job.”
Adir overheard a man loudly discussing the financial vulnerabilities of Hamish Douglas’s investments on his phone in a Melbourne cafe. “If Hamish Douglas is listening to this, I’m not going to tell you who it is, but just have another look at the people you’re dealing with.”
Adir is reading Winston Churchill’s My Early Life (1930) and cannot recommend it highly enough. “You would be shocked at how much crazy stuff he did at such a young age, and how close he came to dying so many times.”
Trump called UK Prime Minister Keir Starmer “not Winston Churchill” after Starmer declined to support military action against Iran. Adir: “That’s one of the best burns I’ve ever heard. Every UK prime minister thinks they’re kind of Winston Churchill.”
Adam’s first quiz this week: Top 10 countries with the highest household debt as a percentage of GDP. Listen in to hear the “unbelievable scenes”.
Adam’s second quiz: The world's most valuable sporting teams.
Adir’s son started university, and the experience did not disappoint: the only logo options for student IDs are a plain blue background, three indigenous backgrounds, and a pride background. ‘The Socialist Alternative’ was the most aggressive club recruiting on O-Week. “They’re the most capitalist, just selling 100 different bits of paraphernalia.”
Block sacks 4,000 and blames AI
Jack Dorsey announced that almost half of Block’s 10,000-strong workforce would be cut, blaming AI-driven efficiencies. The market loved it - shares surged 28% in a single session. But Adam and Adir aren’t buying the AI narrative. Block’s revenue sits at $24B, operating profit at $1.7B, and growth has been virtually flat. The cuts follow a disastrous expansion to Melbourne and an advertiser boycott campaign targeting Dorsey’s other venture, X.
Adir: “Is it in any way possible, based on the tools available in the world of AI today, that you could get rid of 4,000 of your 9,000 staff? The answer would be not if you actually need those functions performed. It is absolutely AI-washing.”
Adam: “At the same time, Jacinta Allen is trying to push through two days compulsory work from home, and Jack Dorsey is sacking 4,000 mostly remote workers who were stupid enough to fall for his garbage.”
Adir: “So whatever culture existed there is now dead. Because of that one move. Employees found out via Twitter, not even through company channels. That’s terrible.”
Victoria’s two-day WFH mandate
Victorian Premier Jacinta Allen is pushing through a policy mandating two compulsory days of work from home per week for public servants, in what Adam and Adir see as a cynical pre-election vote grab. The move comes at the same time global companies are aggressively cutting remote workers.
Adam: “This is going to be the absolute death knell for the state if she’s successful in this. It’s the ultimate bait and switch - you vote for me and you can work from home. It’s like a doctor prescribing McDonald’s.”
Adir: “Working from home two days a week leads to not working five days a week. It just leads to unemployment.”
Adam: “If I’m a boss and I’m not seeing someone ever come in, I’m going to cut them. Who am I going to cut - the kid who’s in at 7am every day, or the one working from home five days a week? We know that answer.”
OpenAI’s economics are getting worse
A prominent blogger’s analysis of OpenAI’s financials revealed that for every $2.5B in revenue, the company spent $6.7B in training costs, and that’s before factoring in the $23B spent on training models.
Meanwhile, SoftBank’s $30B commitment is yet to arrive, with payments to be initially financed through bridge loans. Adam and Adir say the economics of AI broadly remain deeply broken.
Adir: “The big problem is: no matter how much revenue you deliver selling your services, there’s some multiple of that expenditure behind the scenes to train up the next model. And it doesn’t stop.”
Adam: “Pick a company that’s involved in AI - their economics can’t work in the real world. There is no part of the stack that I think is economically sound. The least bad might be Anthropic. And I’d still go for the hyperscalers if you forced me.”
Adir: “There’s an important rule about creating a bubble: if you’re going to create a bubble, you have to sell before it bursts. I think that might have been a little bit lost on Sam Altman.”
Kyle & Jackie O: the $200M fallout
Australia’s most lucrative radio deal (a 10-year, $200M contract between ARN and Kyle Sandilands and Jackie O) is unravelling after Jackie walked off the show following an on-air incident with Kyle. ARN has issued a breach notice; Kyle’s camp has reportedly leaked that his contract explicitly permitted his loose-cannon behaviour.
The pair’s Melbourne expansion flopped, an advertiser boycott hammered Sydney revenue, and now the entire business model, built on two people who must appear together, is in free fall.
Adir: “This deal was like a massive wealth transfer to them. ARN’s market cap is about $110M and they paid $200M to two people.”
Adir: “The problem is, you have two founders who’ve had a falling out, but the entire asset is them being together. It’s an asset base that only exists if they’re in the same room.”
Adam: “I think the best course of action for Kyle is this: it’s the Kyle and Jackie O show. No Jackie O, no Kyle. He needs her as much as she needs him.”
Life360: deep dive
Barrenjoey analysts almost halved their price target on family-tracking app Life360, cutting from $50 to $27 per share, after the company’s growth guidance disappointed and concerns mounted that AI could allow customers to replicate its core product themselves.
Life360 has nearly 100M users, owns Tile (which rivals Apple’s AirTag), and is listed on both the ASX and in the US. Its share price has fallen 62% from its $55 peak to around $22, giving it a market cap of around $6B.
Adir: “The investor presentation had 30 pages of product documentation before you got to a single financial number. When you see that, what it says to me is that investors have been communicating a concern about the longevity of this product suite and the company is trying to allay those fears.”
Adam: “This could easily drop another 80% and not be that cheap. Even if you gave it 40 times EBIT on a generous set of assumptions, you’d get to about a $2B valuation. That’s a 60% drop on the current share price.”
Adam: “The two real red flags for me: marketing costs going up 25% versus revenue growing at 3%, and the financials being genuinely hard to follow.”
Five other stories worth following:
OpenAI is retreating from plans to embed shopping and travel checkout inside ChatGPT, opting for third-party apps. The reversal follows feature delays, Pentagon-contract backlash, falling US downloads, and a surge in Anthropic Claude installs.
Pixar’s Hoppers opened at number one with $46M, but worries remain about the studio’s struggling original films. Chief creative officer Pete Docter said earlier leadership gave filmmakers too much freedom recently after setbacks.
Apple introduced lower-priced iPhones and a USD $599 MacBook, aiming to win back younger and budget-conscious buyers after losing ground to Chromebooks. Cheaper devices could expand since many consumers want iPhones but buy refurbished models.
Surging oil prices linked to the Iran war are squeezing airline margins. Analysts warn jet-fuel costs could force carriers worldwide to ground thousands of aircraft, while financially weaker airlines risk suspending operations entirely temporarily.
GoPro’s stock has collapsed nearly 99% from its 2014 peak, but the company hopes AI demand for video data will revive growth by licensing users’ footage for training, sharing revenue equally with contributors starting.