Episode 66: Joe Aston Joins The Contrarians, Australia's Most Promising Companies and the End of Horse Racing
The guys chat to Joe Aston about The Chairman's Lounge, Adir looks back on Australia's most promising companies from 2003, and has the Melbourne Cup Carnival jumped the shark.
The Contrarians catchup
The guys recorded this episode earlier than usual to get Joe Aston into the studio, so they steer clear of talking about US politics knowing it will be shared after the result is well known.
Adir’s not a big horse racing fan, but the guys reminisce about the Melbourne Cup’s glory days and the rise of the Emirates brand through the early Birdcage marquee. Because of “the whole animal issue”, Adir said “it’s hard for me to imagine that racing will survive Gen Z”.
Adir says that “gambling is the Australian national pastime. It always shocks people when I tell them that the highest per capita spend on sports betting in the world is in Australia, by a margin. I mean, honestly, would anybody watch horse racing if you couldn't bet on them?”
A quick plug for The 924 Cocktail Co, founded by a friend of Adir’s, whose premium barrel aged Negroni blend comes together in Camberwell, Victoria.
The latest book recommendation from Adir (found in an op shop): ‘The Most Promising Companies in Australia’, by Corporate Research Foundation. The book is from 2003 and talks about Sensis (now Thryv), the publisher of the Yellow Pages and White Pages, which was once Telstra's wholly owned advertising and directories arm and in 2003 weren’t convinced the internet would take off (plus a bunch of other amusing predictions).
How does Safety Culture become profitable?
One of Australia's most highly-valued scale-ups, Safety Culture, announced revenue of $161M in FY24, while generating a $36M loss. The business raised $185M last year in a round led by Airtree, creating a valuation of $2.5B.
Adam: “Is there something I'm missing here? We've got a business that’s growing at 30% annually and a 15x revenue multiple. How does a business get 15 times revenue that loses money on that sort of growth. What is going on?”
Adir: “We should reiterate this. I always say no valuation is real unless somebody is pocketing cash. We don't know if that secondary valuation was the same. It might be lower. We can assume that there are preference shares in here, so providing protection to investors. So that means the valuation with preference shares is not the real valuation of common stock. And so I think a chunk of that is there, but in fairness to them 30% growth on $160M revenue. It's actually very good, I know some people might be paying for that growth, I suspect.”
Joe Aston Joins The Contrarians
From 2011 to 2023, Joe Aston was the chief writer of the much-loved rear window column in the Australian Financial Review.
Much of this time, Joe was both the most loved and the most feared journalist in the country, taking what was largely a gossip column and turning it into the best example of crusading brave investigative journalism in Australia.
Joe joins The Contrarians live to discuss his new book, ‘The Chairman's Lounge: The inside story of how Qantas sold us out’.
Topics covered:
Whether ‘The Chairman's Lounge’ is in the top three books alongside Harry Potter and the Bible, and in which environments Joe gets stopped by the general public.
How business journalism is more “reverential” than political journalism: “ I don't think many CEOs would last five seconds as a member of Parliament because they just get shit canned on a daily basis.”
Joe’s takedown of “The Naked CEO”. Alex Malley is the former chief executive of CPA Australia and was removed by the board of directors after controversy regarding his salary and the use of CPA funds for self-promotion of his book and TV program.
The problems Qantas and the chairman’s lounge (see: the title of the book).
The types of books Joe read growing up (mostly literary fiction).
Lots, lots more.
Five other stories worth following:
Bitcoin hit a record $80K after Trump’s win last week. On the campaign trail, he said he’d create a national bitcoin reserve and make the US “the crypto capital of the planet.” Trump also said he’d fire SEC Chief Gary Gensler, who led a crypto crackdown.
Goldman Sachs is projecting a 20% spike in mergers and acquisitions next year, following the Biden admin’s tough antitrust scrutiny. Elon Musk has said that FTC Chair Lina Khan would be fired, and Trump is expected to replace the DOJ’s antitrust chief as well.
Remember Houseparty? Ben Rubin, who sold the video chat app to Epic Games for $35M in 2019, is back with Towns. Towns allows users to send messages in groups, akin to Discord, but only users who match certain criteria are allowed to post, while other users can only follow along.
Warner Bros. Discovery said Max saw 7.2M new global subscribers in Q3 - the biggest quarterly growth for the streaming platform since it launched - reaching 110.5M total subscribers as of the end of September.
Lucid Motors is taking orders for its Gravity SUV, a new EV with a range of 440+ miles and two electric motors delivering the equivalent of 828 horsepower. The Touring model costs ~$80K, while the Grand Touring comes in at ~$95K.