Episode 48: The best Australian CEO you've never heard of, British Airways, Delta Airlines Triumphs and why Grit is the key to Raising Money
The guys chat about MGI and their brilliant CEO, the transformation of Delta Airlines, the mediocrity of BA, and Adam's tough Maldives trip.
The Contrarians catchup
The guys start by getting on the same page with how they describe COVID: “The virus was real, it spread a lot, it was nasty with a certain cohort, but the overreaction, and treating it like the Black [Death] Plague, was totally inappropriate and has proved to already to be wrong.”
Adam recorded the podcast from a 600 square metre villa with a private pool in sunny Maldives where they deliver Daiquiris to you while you’re swimming and bring you ginger tea when you’re not feeling well.
Adir references a book called “A Lifetime in Jerusalem: The Memoirs of the Second Viscount Samuel”. Adir gets his book recommendations when a book he enjoys mentions another book, which led him to the succinctly-titled “Uganda's Katikiro in England: Being the Official Account of His Visit to the Coronation of His Majesty King Edward VII".
Reading the above book led to a conversation on the continuity of governments and the treating of Indigenous communities in Australia. Adir said “for a long time, nobody cared about Aboriginals and what had happened to them. And that was terrible. And now it's like, that's all that matters to the extreme. It’s just groups trying to out-virtue signal one another”.
This line from Adir: “Everybody needs to take a moment and think, if there is a conflict of ethics and morals, it is very important to choose our civic values above religious values and find common ground with people that share those civic values, not just people that share religious or ethnic values. I'm very worried about, where the world is headed right now.”
British Airways v Qantas
Adam recently flew London to Melbourne on a “1980s” 777 where old school business class seats were $8K return and first class was $28K, opening up comparisons with Qantas.
Qantas has a world-class loyalty program that “wraps the whole airline in a halo”, but British Airways uses Avios (the currency of the British Airways Executive Club), which it shares with Iberia and Qatar Airways.
Adam: “British Airways is one of the biggest embrassments of the UK. An absolute laughing stock of an airline, that one”.
MGI Golf and their brilliant CEO
Acacia Capital are looking to buy 80% of family-run motorised golf buggy business, MGI Golf, with a reported price of around $100M. Founder and Chairman, Ian Edwards, would retain 20% of the business that reported $14M in EBITDA.
The business is run by Ian’s daughter, Carrie Edwards-Britt, who Adam believes is “probably one of the best execs in the country that nobody's heard of”. Carrie also founded a business called The Amazing Baby Company, which sells baby jogging prams.
The news was shared via a leak, which the guys discuss is worthy of jail time.
Adir: “Listen, the way business works is that everything is just a some version of war without people getting killed. And so one of the key parts of war is misinformation and disinformation. And so you've got a banker and the banker is on the sell side, and they're trying to sell something, and they're trying to drum up interest”.
Adam: “I imagine they must get lots of approaches because lots of private equity guys and girls play golf and this brand dominates. It's a high price point. It's a great product. It's international. I think they do a lot of business in the US”.
Listen as the conversation quickly transitions from Adam applauding a lesser-known Australian CEO to Adir wanting to launch a local competitor because he doesn’t understand why there isn’t one.
Delta Airlines Triumphs
Delta Airlines has joined Ryanair and Southwest Airlines as an airline that has been killing it, making the counterintuitive move of going up market. Delta recently opened their marquee lounge at JFK airport, their share price is up 17% this year, and expects free cash flow to rise by 50% this year to $3-4B annually.
One thing Delta has done particularly well is leaning into a partnership with American Express, who pay them $7B a year.
Adam: “It's like an affiliate program, really. This is the beauty of these loyalty arbitrage programs. So Qantas, Delta, etc. often make money on the points transfer. So I buy points for a dollar and sell them 50, or something like that. And customers win because yeah in many respects it's free points.”
Adir: “This is a very esoteric conversation, but the Emirates bar in business class is better than anything they offer in first class anyway. So everyone just goes there. So I think we're getting very, very close to airlines finding it increasingly difficult to differentiate a first class. And Delta One is a step closer to it.”
Delta is as much of a fintech as it is an airline, and the Delta co-brand credit card spend is approaching 1% of US GDP, which is incredible. It's at 1% of every every spend in the US is on a Delta card and American Express pays Delta 4% of its credit card spend.
Cooking up shrimp and grits with ReciMe
Melbourne-born cooking app, ReciMe, raised $1.5M from a group of high-profile investors (including Marissa Mayer) after the founders moved to New York in April and grew their user base from 20K to 400K.
Adam: “If I had cash to invest and I was looking to invest, this is absolutely a company I think I would love to invest in. It’s obviously got a really gritty founding team, an unsexy product, and good people around them. It ticks every box.”
Five other stories worth following:
Speaking of Delta, America’s most profitable airline is set to report Thursday as air travel booms. A record 3M passengers jetted through US airports in a single day in June, and the TSA said it expected another all-time high for last week.
Mark Zuckerberg said Threads, Meta’s X copy and paste, hit 175M monthly users in its first year. In an interview, Threads chief Adam Mosseri dished on a “wild year” and plans for growth.
It was reported that a hacker breached OpenAI’s internal messaging systems last year, stealing sensitive details about the company’s tech — with the event going unreported to the public or authorities.
Four NASA crew members just returned from a 378-day trip to Mars. The maiden crew emerged from a 3D-printed habitat inside the Johnson Space Center that simulated a voyage to Mars.
Tesla became the only foreign-owned EV company included on China’s government purchase list, making it eligible as a service car for government agencies and public groups.