Episode 73: Mecca Shines, Soho House Takeover, How Rich is the Top 1%, Adam's Book Club, and How Important is a Brand Name?
The guys discuss Mecca's powers, the price of Sydney property, a Soho House business deep-dive, Adam's belated book club, and what to think about when you're creating a business name.
The Contrarians catchup
Everyone agrees that you can’t park in a disabled parking spot if you’re able-bodied, but the guys discuss whether a disabled public toilet is up for grabs if there are no other options.
The guys share the results of their recent LinkedIn surveys. Adam described his as a Saddam Hussein-style landslide, but Adir said the survey was a Saddam Hussein-style-of-democracy. After an argument about who runs a better survey, we want to know who you think below!
Adir has very little interest in discussing the world’s richest people, but Adam segways the conversation by asking who has more wealth between Microsoft’s first two CEOs, Bill Gates or Steve Ballmer.
Adam recommends a great book that many readers/listeners would already have on their bookshelf: Shoe Dog: A Memoir by the Creator of Nike by Phil Knight. Adir’s recommendation this week (which probably isn’t on your bookshelf): Daoist Master Changchun's Journey to the West To the Court of Chinggis Qan and B: To the Court of Chinggis Qan and Back.
This week, Richard “Dick” Parsons passed away. Dick was an American business executive, notably the chairman of Citigroup and the chairman and CEO of Time Warner. Parsons had also been the interim CEO of the Los Angeles Clippers NBA franchise and interim chairman of the CBS Board.
Adir discusses a Breakthrough Victoria-funded med-tech company, Seer Medical, entering administration.
No one knows the sports data space better than Adir, who is very curious about the recent acquisition of Foxtel by DAZN, which is run by a CEO from the sports betting world. Adir sees a fast convergence between sports streaming and betting.
Mecca makes consumers blush
Adir visited Chadstone Shopping Centre on a Sunday afternoon and was impressed that Mecca was one of the few stores not on sale, yet many of their products were sold out.
Mecca is an Australian beauty retailer founded by Jo Horgan in 1997. It has over 100 stores across Australia and New Zealand and an online store.
Adir: “The experience that people have when they go into Mecca, in terms of the way staff will give you a full service, do your make-up etc. That’s what every female talks about when I talk to them about Mecca. It’s done such a good job of giving them brand equity and it makes it really difficult for their competitors to overcome.”
Adir: “What’s happened with the internet is that there used to be two types of retail. One was straight utility - what’s close to me and where can I go to buy it. And the other one is retail experiences. And the internet has removed the first category. Unless you need something right now, nobody is going into a retail store to buy something for utilitous reasons.”
Adam: “The fact they’re not discounting shows they have a great brand. Great brands allow you to maintain margin, so they’ve been able to maintain a great margin because of the brand they’ve built.”
Listen for the scaling challenges of direct-to-consumer retail businesses versus SaaS businesses!
How much wealth do you need to be in Australia’s top 1%?
The answer: $7M.
Australia now ranks seventh in the world for the money required to be in the top 1% of wealthiest people, falling from its ranking of third last year. Membership into the top 1% club of wealthiest people in Australia has become slightly easier, with the threshold falling from a net individual wealth of US$5.5M in 2022 to US$4.7M in 2023, according to the findings of Knight Frank’s just-released The Wealth Report 2024.
One thing that boosts Australia’s top 1% is Sydney real estate, which sits third on a price list behind Hong Kong and London.
Soho House Takeover
Soho House is an international private members’ club focusing on the media, arts, and fashion industries. Membership is selective, and the company operates clubs, hotels, restaurants, and other venues. The original location is 40 Greek Street in Soho, London, and it currently operates 42 club locations worldwide.
Last week, Soho House received an offer from a new third-party consortium to acquire the company. It was not revealed who the buyers are, but the price tag is US $1.7B brand.
Adir: “The best restaurants are restaurants that charge like fine dining but they’re not fine dining, because they’re cool. Which is exactly what this is. They have a hotel component which is presumably profitable given how hard it is to book a room. And on top of that you have a membership fee. It’s like Costco but with a much bigger membership fee and more expensive products. Why is this not the greatest business ever?”
Listener question
How important is your brand name and can it make or break your business?
Adir: “Puns are a bit dangerous, names that don’t age well. If Amazon had’ve called themselves books.com, that would’ve been problematic over time. The more generic your name, the more expensive and time consuming it is to get people to know who you are, so that’s the trade off. Unless you make a terrible decision, I don’t think the name is a make or break for your business.”
Adam: “You think of the greatest names and they’ve built their brand equity from zero - Google, Coca-Cola, Microsoft etc.”
Adam: “We have a lot of people tell us that Luxury Escapes is a great name, but it’s taken a long time to trademark it. The problem with our name is that people think they can’t afford it. We’re generally a great value brand, so we actually do ourselves a disservice with our brand name.”
