Episode 44: Elon's Pay, Turmoil at Nine, Dodgy Taxis, Streamers Unite and How to Ask for a Payrise
The guys chat about Elon's potential $46B payday, Costello goes at Nine, streamers unite to stop churn and what's the best way to ask for a pay rise?
The Contrarians catchup
Adir met up with fans of The Contrarians podcast and was able to get away with being 15 minutes late for the meeting because they were expecting it from previous podcast conversations.
Adam caught a taxi in Sydney that should’ve cost $60-65 and he was charged $95. He pulled the driver up on it and was proven correct by bystanders who verified the price.
Adam is blown away by the effectiveness of Funlab, founded by Michael Schreiber. Adir asked “can you imagine a business that's more fun than just fun like that? His whole job is making people, mostly kids, just have fun”.
The “AMF” from AMF Bowling stands for American Machine and Foundry.
John Cheston, former CEO of Smiggle, is taking over as CEO of Lovisa - “ultimately the CEO is reporting to a group CEO who runs the listed business. The Smiggle CEO thinks I want to go and run my own listed business and be the ultimate CEO. This is one of the challenges with subsidiaries”.
Peter Costello's resignation as Nine Entertainment's chair is the latest example of how a high-profile role, built over decades, can be undone in a moment of poor judgement.
An all-time Australian exit
High-profile PE firm, Vista Equity Partners, have written off their stake in a business called Pluralsight, which started as a classroom training company in 2004 and became an online platform for training courses. Pluralsight acquired Australian business A Cloud Guru for a remarkable US $2B, making it one of the all-time great Australian exits.
Adir: “They decided that it would be better to take the money than to endlessly believe in their own blue sky, is how I would describe it as the ultimate smart move. So yeah, I think I think hats off to them”.
Also: “My one piece of advice to founders is if someone offers you $1B, the answer is yes”.
Elon Musk’s share options
Two major proxy advisors are recommending that shareholders vote against Elon Musk’s $46B share options grant. Musk was awarded the options back in 2018 but a Delaware court ruled that Tesla directors had breached their fiduciary duties.
The mammoth compensation package is around 300x what America's second highest paid CEO received last year and more than twice Tesla's free annual cash flow. If shareholders vote in favor of the new plan and it's approved, it will lead to their holdings being diluted overnight by 8%.
Adir says you can’t ignore the fact Tesla isn’t a normal company because of Musk.
“I think Tesla is a super simple thing to understand. Basically, you're not investing in a company, you're investing in a person. That person is Elon Musk, and he's going to get a lot of money for running that business. And if you don't like it, don't invest in Tesla. And if you invest in Tesla, you have to expect it. And I know that sounds a bit defeatist, but I just don't think Tesla's a normal company. It's not normal in any metrics. It's not normal in who's running it and the way it's being run. And I think it's an enrichment vehicle for everyone who is involved in a senior capacity in that business”.
Streamers Unite
Disney and Warner announced a bundle which includes Disney+, Hulu, and HBO Max, while Comcast announced it will bundle Peacock, Netflix and Apple+. The driver of the bundles is to reduce the huge churn that these streamers face with many users jumping back and forth to watch specific shows.
The Wall Street Journal noted that 70% of Netflix users have subscribed for more than six months, but that figure drops to only 40% for Disney and 30% for Apple.
Is bundling the solution to the churn issue streamers face?
Adir says that everything that’s old is new again.
“When multiple streaming companies bundle together and a customer only has to subscribe once, I think that's called cable TV's, isn't it? One subscription, lots of different channels, lots of different content. I think there is no way the future of content consumption streaming is going to be that I have to subscribe to five separate services for $6 and have to manage them separately”.
Adir thinks streamers should adopt the video game approach that Steam has popularised where hit shows make money through distribution partners.
Listener question: What strategies or tips do you recommend for someone looking to negotiate a salary increase with their employer?
“And what would your tips be for someone who is navigating that conversation while pregnant?”
One thing that Adam and Adir can agree on is the fact that single mums (and dads) and part-time mothers working from home are some of the most reliable employees. Given they largely come at this question from the employer side, the advice is to always be honest about your pregnancy going into these conversations.
Adir: “By the time a good employee has to ask for a pay rise, it’s probably a failure of the business. I try to avoid people having to ask for pay rises. But I don't really want to get approached for a pay rise by someone who is a mediocre performer and I don't think really cares about the business”.
The answer for negotiating pay rise: bring data.
Five other stories worth following:
The World AI Creator Awards and creator platform FanVue are currently running the inaugural ‘Miss AI’ contest, with over 1,500 AI-generated models competing for the world’s first AI beauty pageant.
BYD, which last year surpassed Tesla as the world’s largest EV seller, crushed it again with a third straight month of selling 300K+ EVs and plug-in hybrids. BYD’s Seagull electric hatchback, which retails for under $10K in China, is making waves because it offers premium features like wireless phone charging at a low price.
Apple’s rumoured to roll out AI-powered features for iOS18 at its developers’ conference. They could include real-time voice memo transcriptions, genAI photo editing, and a Siri makeover. Apple’s reportedly teamed up with OpenAI to infuse ChatGPT into phones.
The US added 272k new jobs in May, beating estimates. The unemployment rate also rose from 3.9% to 4% — the highest level in two years. The country gained 600k new millionaires in 2023, a 7.3% YoY increase, according to a new Capgemini study. Today’s 7.5m American millionaires have a combined fortune of $26.1T.
On a topic covered by The Contrarians a few weeks ago, New York passed a bill making it illegal for people to snap up and resell hot restaurant reservations. The bill, lauded by OpenTable and Resy CEOs, awaits the governor’s sign-off.