Episode 65: Qantas Upgrades, US Election, Roblox Struggles, Temple & Webster, and the Nerds Gummy Cluster Phenomenon
The guys discuss the fallout from Joe Aston's Qantas expose, US election, the turmoil at gaming platform Roblox, Temple & Webster's valuation, and Adir dives into the world of Nerds Gummy Clusters.
The Contrarians catchup
Adir recommends a colonoscopy for everyone over the age of 45 who doesn’t want to die of bowel cancer and just enjoys the greatest sleep and relaxaton of their life.
The guys nervously await the US election results and discuss the accuracy of polling and whether the left’s projected votes are inflated, and the right’s are deflated. Also: the insanity of the the Electoral College.
If someone is on a call in a busy cafe and they have their phone on speaker on the table, should it be punishable with jail time and why is the answer ‘of course’?
IYKYK, Nerds Gummy Clusters have exploded in popularity. Parent brand, Nerds, was doing $50M in annual revenue before its Gummy Clusters came along, which are doing $500M alone.
Did you know that Australian chocolate has an ingredient that prevents it from melting in a warmer climate?
Lights (not taxis) will guide you home
Adam went to his fourth Coldplay concert in Melbourne this week and was surprised how many young people were there for a band that formed in 1997. A couple of disasters from the evening:
There were so many cabs outside Marvel Stadium that Ubers couldn’t get to users.
Melbourne taxis have been deregulated and can essentially charge whatever they want. Adam’s $11 Uber couldn’t get to him, so he was quoted $60 by two taxis.
Adam: “There are kids, there are people can't afford to get places. Taxis are a service that are limited and licensed and the government is just going, you’ve got free rein to rip off whoever you want to rip off, because they're at a time of need. This is just stupidity writ large.”
Is Roblox “an X-rated pedophile hellscape”?
Roblox has been the subject of multiple short-seller attacks. The company has 80M users and is currently valued at US $33B, down around 60% from its pandemic high.
One high-profile short seller described Roblox as an “X-rated pedophile hellscape”, “replete with attempting to groom our avatars groups, openly trading child pornography and wildly accessible sex games following content and extremely abusive speech, all of which is open to young children.”
Adir: “Based on long conversations over the years with my daughter, who's a big Roblox fan, those allegations and that behaviour has been rumoured on the platform by users for years.
Adir: “The first thing I want to say about this business is something I say about a lot of businesses in tech. The dream was you get to scale and it rains cash because of course profit is so high. Well, Roblox is going to do $4.5B of revenue and it's going to lose money.”
Adam: “This goes with that eighth power we talk about. The product wizardry or whatever - we haven't gotten to naming it yet. How has Nintendo or HBO been able to consistently come up with great products that people love over a long time period.”
Adam: “You can’t compare enterprise switching costs to consumer switching costs. But let's look at our business. Two years ago we had zero switching cost because somebody could go to Booking.com by typing a URL. If I'm using Robux, I've got my account set up, they’re a hassle to set up, the kids are pestering you.”
Is Temple & Webster okay?
Temple & Webster are still worth a remarkable $1.35B, despite announcing uninspiring results at its recent AGM. Sales growth was 21% year on year and 60% of orders were from repeat customers.
Adir: “EBITDA margin of 1 to 3%, which is a range of 300%. So there's a pretty big difference between $1 of EBITDA or $3. And then we just multiply that out by our entire revenue line. If I went to the market and I said, I've got a company and it's going to make a profit, and I'm not sure what it's going to be, it'll be somewhere in the range of 50 to $150M. The market wouldn't be seeing this guidance. It would be too broad of a range.”
Adir: “The time has come for this business to fire people, to make some money, to start focusing, in my view, on contribution margin. That means start driving profitable growth, at least on an advertising basis.”
Five other stories worth following:
Starbucks just reported that its sales fell for a third straight quarter, with US transactions dropping 10%. New CEO Brian Niccol said Starbucks will return to its community-coffeeshop roots by bringing back the condiment bar, reviving handwritten names on cups, and serving java in ceramic mugs.
Prediction markets are popping off as folks bet on who’ll become the next POTUS. Election markets are going mainstream, with $150M+ legally wagered on Harris vs. Trump on prediction market Kalshi. On rival Polymarket (which doesn’t operate in the US), the betting pool’s in the billions — though there’ve been reports of inorganic trading.
Apple will acquire Pixelmator, a Lithuania-based company, pending regulatory approval. The image editor app is a popular Adobe Photoshop rival that retails for ~$50, no subscription required.
Humane has struggled to sell its poorly reviewed AI Pin. Now, it’s recalling a wireless charging case, sold separately, due to a fire risk posed by its battery. The recall affects ~10.5K units.
TGI Fridays Inc. filed for Chapter 11 bankruptcy to protect 39 of its remaining 163 restaurants not operated by franchisees. The chain said it never recovered financially from the pandemic.