Episode 229: Canva’s AI Crisis, Zoox Changes Everything, Xero’s Ad Disaster, Jetstar’s Bag War, and Atlassian’s Profit Pivot
The guys discuss Zoox, Waymo, Xero’s strange Vegas advertising, Sukhinder Singh Cassidy, Victoria’s work-from-home laws, airline lounges, Canva’s slowing growth, AI design tools and Atlassian’s profit
The Contrarians catchup
Adir is recording from Las Vegas where it’s 42 degrees Celsius. His headline stat: 15 of the 25 biggest hotels in the world are on the Vegas strip, and there are 150,000 hotel rooms on the strip alone. The $15 all-you-can-eat buffet has essentially disappeared, with prices up 400-500% in 25 years. He paid $16 USD for a 500ml bottle of water, not including the $10 delivery fee.
Ben Carroll has kept Victoria’s WFH laws intact, with only cosmetic concessions. Adam: “This is a job-killing, hope-killing law that absolutely penalizes employees and penalises young Victorians.” Adir’s read on the politics: “My only conclusion is that he decided the politics of getting rid of this is bad for him to get reelected. And think about what that says, because when Ben Carroll says we’re not changing this, he’s saying you, the shoppy, you are gonna watch as other people get to work from home.”
Victoria’s IBAC inquiry found members of the Andrews government engaged in serious misconduct in their dealings with union boss Peter Marshall. Adam paid tribute to the late Jane Garrett: “Very few people in the Labor Party ever stood up to the autocratic Andrews. Jane Garrett is one person who can hold her head up high for doing that. She lost her job, her livelihood, and eventually her life to cancer following the horrendous treatment by Andrews and his cronies.”
Atlassian announced a blowout quarter, with 31% growth and $220M in profit, sending shares up almost 30% in overnight trading. The catch: forecast growth next year is just 13%. Adam: “They’ve basically done exactly what you told them to do two years ago. And the share market seems to love it.” Adir: “I wasn’t sure that Mike Cannon-Brooks, as a guy that doubled, tripled, quadrupled, and quintupled down on mega growth and no profits, was going to be able to flip this. But I think maybe he’s done it.”
Adir is finally a convert to autonomous vehicles
Adir rode in a Zoox, the fully autonomous vehicle built from the ground up without a steering wheel, pedals, or driver’s cabin, in Las Vegas. It seats four passengers facing each other in a curved pod, controlled entirely via app and touchpads. Zoox was founded by an Australian, Tim Kentley-Klay, backed by Blackbird, and later acquired by Amazon.
Adir: “I can honestly say to you, I just experienced the future. There is no doubt about that. I felt 100% safe. It did feel like a human driving it.”
Adir: “As fast as they can build these things, they should be rolling them out in every city. And yes, I am sold on autonomous cars. If these were rolled out everywhere and you could get one within five minutes of ordering one, there is no possibility that I would own a car. Zero possibility.”
Adam: “Think of the unlock for parents, single parents, parents who are working. How many hours can you save not taking kids to school, not taking kids to activities? It’s just an unbelievable time unlock.”
Jetstar charges for overhead bins
Jetstar announced it will give priority boarding only to customers with one underseat carry-on bag. If you want a second bag or normal-sized carry-on in the overhead locker, you pay a priority fee ranging from $25 to $52. The mainstream media and consumer advocates reacted with horror.
Adam: “You’ve got all these people who haven’t paid a cent more for them. These huge bags take 15 minutes longer to board a plane because everybody wants to shove their bag up the top. And these are the people who complain the loudest and are the biggest free riders who have the most to lose, because they’re the ones costing other people. What Jetstar is really smartly doing is saying you can have a bag, but you’re going to have to pay for the cost of your externality.”
Adam: “I congratulate Steph Tully and Jetstar for this. This is a brave call, but it is absolutely the right call for Jetstar travelers.”
Adir: “Let’s think of all the things that we could strip out in order to let the poorest person who could possibly fly be able to get on our plane. There are people that do not have luggage that goes in the overhead. This is not an unlimited buffet, it’s a la carte.”
The golden window for Canva is closed
Canva told investors that growth will drop to 20% in FY27, down from 49% in 2023, 45% in 2024, and 38% in FY26. The company blamed high AI inference costs for slowing its free tier rollout, meaning the top of funnel that converts free users to paid has essentially stalled. Co-founder Mel Perkins said they “decided to slow the rollout while we rebuilt the architecture.” Co-founder Cliff Obrecht said “we were too ambitious in our assumptions.”
Adam: “This is basically like telling someone you’ve got a terminal illness. This is horrific news. Not only for Canva, but also its employees who are seeing multi-million dollar paydays evaporate before their very eyes. It’s also catastrophic for a swathe of the Australian VC industry which is really dependent on Canva’s $60B valuation.”
Adir: “Canva exists because they made it easier to do nice things and beautiful things than the previous technology, which was basically Photoshop. And if you’re a workflow enhancement business, that’s what their whole business effectively was, then there is no simpler workflow than prompts in an AI. And as we’ve seen with Claude Design, it’s amazingly good.”
Adir: “Canva has to fight against these frontier models with unlimited money whilst effectively paying the AI costs to fight that war. That is a horrible place to be. They should have sold. They should be selling. I haven’t changed my view.”
Adam: “Their gold-plated razors are a non-starter and I’m competing against people giving away other gold-plated razors like OpenAI for free. They should have seen this a year ago and sold when they could.”
Adir: “Not only is their razor now costing as if it’s made of solid gold, not only is ChatGPT giving out solid gold razors as well, not only are like ten other companies giving out solid gold razors for free. But all of these other companies, the AI companies, it turns out their things are not razors at all. They’re a magic wand that can do a hundred and fifty million other things as well.”
On valuation:
Adir: “I think it might be one of the most expensive misses of a golden window. You know, it’s even cheaper to have been a good idea. And their ability to pay this money diminishes every day.”
Adam: “This could have been a $50B exit for Australia. It’s just such a tragic missed opportunity.”
H3: Five other stories worth following:
Berkshire Hathaway CEO Greg Abel spent heavily in Q2, cutting cash from $397B to $365.5B through Alphabet investment and share buybacks. Operating earnings rose 16%, offsetting weaker insurance performance across the conglomerate.
Portland startup HitchPiggy wants to turn spare car seats into a rideshare network, letting drivers post existing trips, choose passengers, and set contributions, while riders review vehicles, routes, timing, pickup points, and costs beforehand.
Environmental groups are challenging FCC approval of Reflect Orbital’s first space-mirror test, arguing regulators overlooked risks to wildlife, astronomy and eyesight. The 59-foot mirror would reflect sunlight across 3.1 miles of Earth after dark.
San Francisco startup Conduit pays participants $50–$55 for two-hour sessions wearing an electrode helmet while talking, reading and typing. The brain data will train a noninvasive neural headband designed to control AI using thoughts.
July was the hottest month recorded across the contiguous U.S., averaging 76.89°F, surpassing July 1936. NOAA said every state ranked in its warmest third, as heat domes and climate change intensified extreme temperatures nationwide.