Episode 195: WFH Blow, SpaceX IPO, DroneShield Deckchair Shuffle, GYG Hits Back and CTM Debacle Continues
The guys discuss the bombshell tax ruling on WFH, Elon's big IPO, DroneShield Chairman and CEO gone, GYG confounds its critics and CTM disappoints investors again.
The Contrarians catchup
Adam is skiing at Whistler with his son William, who had a fall on day two and was carted off the mountain. It turned out to be just a hyperextension, not a ligament tear. Adam: “If you look at the absolute heroes of the mountain of these ski patrols, these guys and girls who first they do like the avalanche bombing, so they make sure it’s safe to ski, and then if you get injured, they come often within like two minutes they’re on the scene.”
Adir spotted an IREN ad on a Sydney light rail that said “For the next big thing.” Adam: “This reminds me of when Woodside sponsored Fremantle Footy Club. There is no better short signal than people burning cash in this way.”
Claude was down for nearly three hours last week. Adir: “If you’re building on a platform that uses an LLM as part of its core, you gotta have fallback LLMs and you gotta have tested the output that’s being generated with those different LLMs because it is not the same with different LLMs.”
Adir’s deep-dive on LLM hallucinations and why they’re not going away: the problem comes down to a fundamental structural issue - there are 40,000 tokens but only 4,000 dimensions, meaning information constantly overlaps. “According to this MIT study, very respected, that we’re not really gonna be able to do much better with these hallucinations than we are right now because of this fundamental structural issue with the way these models are built.”
Anthropic has become the luxury brand of LLMs. Adam: “What Anthropic’s actually been able to achieve is branding power - it’s able to charge two, three, four times as much for tokens. It is the Hermès of LLMs, incredibly, for now anyway.”
A “decisive victory” in the war in the Middle East
With the US-Israel operation against Iran ongoing and Iran now selectively tolling the Strait of Hormuz, a media narrative has emerged that the US and Israel are “losing” because there is no decisive victory. Adir pushed back hard, arguing that decisive victories only come from total war or from a country defending its own soil, neither of which applies here.
Adir: “The more reasonable objective for the US and Israel is to say we need to make things significantly better for us than they were before this war - i.e. get rid of a regime or weaken it, stop nuclear weapons, stop Lebanon Hezbollah firing missiles into Israel. That’s the best you can hope for. And I think that the success or otherwise of this war should be seen through that prism, not through the prism of, is there a decisive victory where you can say mission accomplished.”
Adam: “The one thing that maddens me no end is people say the US and Israel have lost the war because Iran is now tolling the Strait of Hormuz. Iran slash Oman are letting Iranians through, they’re letting allies like China through. The Americans could bomb the hell out of those Iranian oil tankers in two seconds. So could the Israelis. Israel could toll the Strait of Hormuz if they wanted to tomorrow. They’d just have to kill innocent civilians, which they won’t do, despite what all the far left accuse Israel of doing.”
No more work-from-home rent deductions for employees
A landmark ruling, upheld on ATO appeal, has confirmed that employees working from home cannot claim a portion of their rent or household utilities as a tax deduction. The ruling appears to apply specifically to employees, with self-employed people potentially still able to make claims.
Adam: “It never made any sense in the sense that you already have your house, you’re already paying for all this stuff. You’re not generally paying anything extra if you’re working from home. Like the notion that you should be able to deduct it actually never made any sense to me.”
Adir: “This is incredibly problematic for Victoria’s push to let people work from home two days a week. I think part of the incentive that people saw was that they can claim some of this as a tax deduction working from home.”
Adam: “The other small point is we have a housing crisis. Like if people have been renting bigger houses to run as home offices, that doesn’t help the housing crisis. So you’d argue that you want people having smaller houses or more people in houses and less people using them as offices and using offices as offices.”
Atlassian down 87%, and now it’s Anthropic’s fault too
Atlassian shares slumped a further 15% last week, hitting a market cap of just US$15B, down 87% from its all-time high. The latest trigger was Anthropic launching Claude Managed Agents. Founders Mike Cannon-Brooks and Scott Farquhar have quietly stopped selling shares after collectively banking around A$10B, scoring 50% on what Adir is now calling the “IRE Index” (Insider Relative Exit).
Adam: “I definitely don’t think Mike should be running this business now. He shouldn’t be sponsoring 50 million bucks for Williams Formula One teams. Shouldn’t be flitting around on his private jet. He shouldn’t be doing these sort of half-ass firings over video. Like he’s not the right guy to be leading this business. He’s certainly not a wartime CEO. They need a wartime CEO in here.”
Adir: “There’s never been a better time to turn this business into a cash generator. I think it’s a great time to be involved in this business. There is every reward for doing something radical and dramatic and recasting the narrative.”
Adam: “Mike and Scott were at one point, very briefly, the richest people in Australia, I think, when the iron ore price dipped and these guys were worth thirty odd billion each. It’s pretty hard to go from the richest person in Australia that everybody looks up to and you’re a god in Sydney, and suddenly you’ve got John Stensholt writing books about you and the share price dropping 87% and you’re a laughing stock of the Nasdaq.”
SpaceX IPO: the Elon religion
SpaceX is telling bankers it will host a June IPO roadshow, pitching a US$1.75T valuation, up from US$800B on the private market just four months ago. The company is reserving 30% of shares for retail investors, well above the usual 10%. A potential merger with Tesla, valued at US$1.3T, has been floated.
Adam: “SpaceX and Starlink are brilliant businesses. But collectively these businesses might make ten billion or something like that. But it’s barely profitable and it’s worth three trillion. The 30% retail kind of just proves that insto money - I know there’s still obviously insto money in there, but it proves that the smart money realises this valuation is ridiculous. You’ve got to dump it onto idiot mum and dad shareholders who don’t who believe in this ridiculous Elon myth.”
Adir: “Elon is basically an amalgam of like Thomas Edison, Howard Hughes and P.T. Barnum. He’s got all of the marketing salesmanship of P.T. Barnum and the eccentric genius of Howard Hughes and the innovation of Thomas Edison and like people just wanna be around this. I absolutely agree with everything you say on fundamentals. It’s ridiculous these numbers. But this is like the closest thing to a capitalist religion that there is in markets.”
Guzman y Gomez proves skeptics wrong again
GYG reported third-quarter sales of $346M, up 20% year-on-year, with same-store sales growth of 6.6% in Australia, ahead of market expectations. The market responded by sending shares up 32% in a week to $21. The US division remains a drag with same-store sales up just 2.2%.
Adam: “The key to any franchise system is do the franchisees make money? If the franchisees can make money, you got a good business. Fifty years of McDonald’s franchise are literally a licence to print money. I think Guzman is similar levels of profitability per store at the moment anyway, certainly with drive-through.”
Adir: “This narrative that says this is going to be a rocket ship - I’m not a believer in that narrative. The narrative that says this might emerge to be a very significant player in Australia, which it’s like really on track to ,it is a significant player here, and like it’s a really good business. I definitely think that’s true.”
CEO and chair gone at DroneShield
DroneShield’s former CEO Oleg Vornik and chair Peter James have exited after both sold their entire shareholdings last year, netting $50M and $12M respectively. Hamish McLennan has been appointed new chairman and 36-year-old chief product officer Angus Bean has been promoted to CEO. The company also buried a $100M drop in its sales pipeline in a presentation shared at a closed-door Goldman Sachs event - the day after promising better institutional relations.
Adir: “The sales pipeline junk, put that in the bin. I don’t know why people look at that. Like, rolls of toilet paper in the bathroom would be a worse metric. But it wouldn’t be that much worse than that metric. Like this is a ridiculous metric, basically.”
Adam: “The issue is not that this is a ridiculous metric. We absolutely agree 100% that it is a ridiculous metric. The issue is this was the metric they used and instead of telling the market that the metric’s changed, they snuck it in this report given to private investors at the Goldman’s conference. That’s the issue.”
Adir: “There’s got to be something we don’t know here. Every time we go and see institutional investors, they pummel us and tell us they got no interest in investing. And like after you see 30 of them or 50, like it just becomes unpleasant and you don’t want that. And like they can be a bit nasty if they think that you’re a bit dodgy. And I think maybe they just decided, what the hell are we doing this for anymore?”
Five other stories worth following:
A University of Ottawa study found negative emojis in workplace messages reduce perceived competence and appropriateness, while positive emojis only help in positive contexts; when paired with negative messages, they make senders seem insincere.
The Masters Tournament triggered a surge in private jet traffic to Augusta, with operators reporting significant increases in flights, alongside hosting lavish events and pop-ups to attract wealthy attendees as demand for private aviation continues rising.
Hungary’s longtime leader Viktor Orbán conceded election defeat to opposition figure Péter Magyar after corruption scandals weakened support, marking a shift in power, though major policy changes may be limited despite promises of anti-corruption reforms.
This year’s WNBA draft features expanded opportunities due to new roster rules and franchises, with six UCLA seniors projected to be selected early, potentially making history as the first program with six players drafted in one year.
Asha Bhosle, legendary Bollywood playback singer and one of the most recorded artists in history, has died at 92, leaving behind a vast multilingual catalogue and a globally celebrated legacy defined by versatility, longevity, and enduring vocal excellence.