Episode 59: WFH Death Throes, Which Jobs Make the Most Money, Myer and the Retail Armageddon, Build-A-Bear v Squishmallow
The guys discuss Amazon's move to bring staff back five days a week, which professions make the most money, Myer's big moves, the Build-A-Bear and Squishmallow litigation, and dyslexic founders.
The Contrarians catchup
Adam and Adir chatted remotely for the first time in a few weeks, with Adam joining from The Apurva Kempinski Bali resort, which took eight years to build and is “probably one of Asia’s best hotels”, according to Adam.
Adir quizzes Adam on every island in Asia-Pacific in terms of how luxurious each location is.
Adam gives a review of an Adir book recommendation: “The Barry Diller Story: The Life and Times of America's Greatest Entertainment Mogul”. The review starts with “it was okay”.
Adir shared a story about James Earl Jones, who recently passed away, growing up with a speech impediment that meant he couldn’t verbally form sentences, but when he read other people’s words in the form of a script, he could overcome this impediment.
What do Walt Disney, Richard Branson, Steven Spielberg, Charles Schwab, Ted Turner, Henry Ford, Steve Jobs, and Tommy Hilfiger have in common (besides all being men)? They’re all dyslexic founders.
Here’s the Fatima Payman speech that Adir references in the second half of the episode.
Adam predicted the demise of John Donahoe, who was ousted as Nike CEO last week and will be replaced with Elliott Hill, who joined Nike in 1988.
Why some professions make so much money
Adir’s son is in year 12, which prompted an important discussion about why (not what) certain jobs earn more money than others.
Adir: “The reason bankers get paid a lot is they've managed to insert themselves in a process where lots of money is being generated around them and they take a small percentage of that money. And so what I think is the easiest, if all you're trying to do is make money in life, which I think is a terrible career decision making matrix to follow, but if that's what you want to do, the trick is to find the largest amounts of money that are flowing past you, like a gushing river, and go there with a thimble and fill that thimble up.
“If you are an investment banker and there is a billion dollar transaction and you manage to get half a percent or 1% of that billion dollar transaction, that is lots and lots and lots of money continually flowing into your coffers because that river is flowing all the time.”
Adir on lawyers: “I thought a lot about this, but they're all earning more than $1,000 an hour. And I thought about why are they getting paid that much money? And I think the answer is because, by and large, everything they're involved in involves significant conflict. It's either jail time or very large amounts of money. And the people that are paying a largely not paying with their own money, they're paying with shareholders money. And so what they say is, ‘I just want the best and who knows who the best lawyer is. It's actually impossible to work out empirically. And so the the profession has come up with a system that says, how about we just tell you who the best ones are? And you just pay them. And I think that's why lawyers are getting paid so much money now.“
Adam: “These unions have us over a barrel, and nobody talks about these unions, the biggest gouges on earth. But when we talk about a doctor shortage, there's only a doctor shortage because these doctors unions make it so you need to get a 99 TER to get in. It’s ridiculous, they dominate these fields and don’t let people in.”
Build-A-Bear v Squishmallow
If you don’t have kids, Squishmallows is a brand of stuffed toy owned by Jazwares, a Berkshire Hathaway company. Squishmallows are round and come in a variety of colours, sizes, animals, and textures. The brand has created over 3,000 Squishmallows styles.
Build-A-Bear is an American retailer that sells stuffed toys. During store visits, customers go through an interactive process where the stuffed animal of their choice is assembled and tailored to their preferences including varying scents, sounds, looks, and outfits.
Build-A-Bear has recently created a few characters that Squishmallows have decided are a rip off their characters, creating a “soft toy plushie lawsuit”. Adir’s daughter, a special guest on Episode 59, clears the record of where the confusion is.
Adam: “The whole thing about Build-A-Bear is that you’re building a bear, and you pay a premium for that. It's the Korean barbecue of toys.”
The Everything Store not an anywhere workplace
Last week, Amazon announced that its office staff will be required to return to the office five days a week from January, deciding “that we’re going to return to being in the office the way we were before the onset of COVID, better set up to invent, collaborate, and be connected enough to each other.”
He emphasised that face-to-face interactions foster innovation and strengthen team dynamics, critical components for maintaining Amazon’s competitive edge in the tech industry.
Amazon also announced an “unbossing” with one in seven of its middle managers exiting the business or finding individual contributor roles.
Adir: “Homo sapiens evolved to be face-to-face and I think that fundamentally for our mental health, productivity and so on, things need to be face-to-face. That doesn't mean I think that there shouldn't be flexibility with working. I actually think there are certain people that it's difficult for them to come into the office every single day. And I think that if they're good enough employees and committed enough, you'll take less money, then you can certainly be flexible.”
Adam: “You don't want capital having too much power because workers get exploited, so nobody wants that. Nor do you want to see employees have too much power because it creates stupid things like work from home, which in the end hurts employees. I don’t hate work from home because it's less productive. I think in many cases it's more productive. I think for some employees, it’s actually far more productive. But I think it's terrible for the business and terrible for the employee.”
Myer and the Retail Armageddon
Olivia Wirth, Myer’s new CEO who was previously the Qantas loyalty boss, unveiled her first set of Myer full-year results, which showed that total sales declined by 2.9 per cent and signalled a more hands-on approach with those brands.
Adam: “I think Olivia did a great job at Qantas Loyalty. It clearly wasn't just her, it's a big business, but she did a very good job. She was basically the PR intern and built an incredible career and deserves a lot of credit for that. But Qantas has an unbelievable brand, it's got huge scale, it's got an unbelievable network. it is it's basically Australia's cryptocurrency. It is a phenomenal business that prints money.”
Adam: “The beauty of why Qantas loyalty works so well is that airline and frequent flier schemes were created in the 80s as a way for airlines to discount their seats when they couldn't sell them. They didn’t want to discount publicly, so they said you can use this fictional currency called points that we create and we'll sell it to you for cheaper. And Qantas, better than anyone, said we we're gonna we're going to sell our points to banks and to Amex and make a profit on the points. So they have this incredible flywheel that just keeps spinning and what Qantas really did well is increase the size of the flywheel by bringing in extra partners, bringing in more banks and just increasing liquidity at points. And they got to the point where they actually have too many points. Now you look at that, financial statements released about a month ago and they've got like they're growing like trillions upon billions and billions of points are being are being earned more than that.”
Five other stories worth following:
Legendary iPhone designer Jony Ive confirmed a long-running rumour that he’s developing AI hardware with Sam Altman and Co. Making it more spicy: The project is being funded by Laurene Powell Jobs.
The US FTC is suing three top pharmacy benefit managers — Caremark Rx, Express Scripts, and OptumRx — for artificially inflating the cost of insulin. Over the last 20 years, the drug’s price has increased 600%.
OpenAI gave its staff a sneak preview of a potential new logo and it didn’t go great. The large black “O” was panned internally for being ominous and lacking creativity, but no one else has seen it yet.
Cards Against Humanity is suing SpaceX for $15M, claiming Elon Musk’s company is trespassing on its Texas land, which it bought in 2017 as part of a crowdfunded stunt.
The AFR released its “The five most powerful Australian tech leaders in 2024” list, which included Melanie Perkins, Robin Khuda, Sam Sicilia, Mike Cannon-Brookes, and Ed Husic.