Episode 77: Wesfarmers Catch of the Day Disaster, Netflix Brilliant Strategy, Bumble's Troubles and ROKT Triumphs
The guys discuss Wesfarmer's $800M horror, Netflix's incredible growth story, Bumble's founder returns as online dating continues to struggle, and the brilliant execution of Bruce Buchanan at ROKT.
The Contrarians catchup
Adir is in Mumbai (or is it Bombay? He’s not sure) and had it in his head that the city would be crazy, dirty, and scary from watching movies but has found it very orderly and a region of endless economic opportunity. Adam is on a tiny Fijian island.
The guys discuss the complexities of flying a helicopter versus a plane and a flying feature Adir was fond of: Bluetooth connectivity for his headphones as a replacement for those little adaptors.
Adir is flying on one of the last Emirates flights from Singapore to Melbourne, opening up a discussion about Singapore Airlines troubles at the moment (Adir: “They should rebrand as the delay airline"”)
Adam on airline loyalty programs: “They're so good at the branding. Emirates did it brilliantly with the racing sponsorship and the tennis. Qantas has done a great job as well with just exuding luxury. The luxury they exude is actually far better than what you experience.”
Wesfarmers Catch of the Day Disaster
In a move that stunned a lot of people, Wesfarmers announced they’re completely shutting the once dominant Catch of the Day ecommerce business.
The West Australian-based conglomerate is behind big retailers such as Kmart, Bunnings, and Officeworks. Wesfarmers acquired Catch for $230M in 2019 amid surging demand for online shopping. Since then, it has faced increased competition from Amazon, Shein, and Temu.
Adam references an article Adir wrote for the AFR in 2022, titled ‘How Wesfarmers bungled the Catch opportunity’.
Adir: “What Rob Scott has pretty much said is that we haven't really been very good at running this business and now it's got even harder to run this business, so we should stop running this business.”
Adam: “We've talked about great acquisitions on our show before. They pretty much always leave the business alone and say ‘you guys run it’, and eventually you see it slowly comes back in.”
Adam: “I think Rob Scott has to go. I think this is illustrative of a guy who shouldn't be running the business. Obviously, ex-Olympian, is well liked, big guy, he’s charismatic. When you destroy hundreds of jobs and a great brand in Catch, it just shows incompetence.”
Adir: “He's delivered you an 88% TSR over five years with a relatively low risk of capital loss. I’d take that. And so I don't think he's going anywhere until he wants to go somewhere.”
Netflix and Thrill
Amazingly, Netflix has almost doubled in the last 12 months, up 2x to a valuation of $407B. They added 19M subscribers in the last quarter of 2024 and now have over 300M subscribers globally. Revenue was up 16% year on year and earnings were US $1.9B last quarter.
Netflix was responsible for the most-streamed sports event ever with the Tyson v Paul fight and hosted two Christmas Day NFL games, which averaged 30M global viewers.
Adam: “I love the fact that they're doing live sport, I think it’s perfect. They've got the lowest distribution cost. They can afford to pay the most and it increases their TAM massively. This is a business that's creating a cornered resource.”
Bumble's Troubles
Bumble, the once-high-flying dating app, continues to struggle. Last week, the company announced founder Whitney Wolfe Herd is returning as CEO. Bumble has dropped 90% in value since 2021, despite revenue increasing from US $532M to $844M.
Adam: “I think the broader question is, are these dating apps real businesses? Obviously, you've got the problem that the better it does, the more churn you have because people get hooked up and don't need the site anymore. So you've got that natural churn built into the business, which is a problem. Is it a possibility they just aren't great businesses?”
Adir: “My only guess can be that with each sub generation of people dating, they want to use an app that the older generation didn't use, or something new becomes cool. Maybe these apps are much more like your nightclub example than they are like a traditional consumer subscription business. And that is why you struggle to get any long term traction. Because once you become mainstream, the next generation of consumers wants to use something different that's not mainstream.”
The brilliant execution of Bruce Buchanan
Rokt are going through a secondary round, so people are buying shares of existing employees, raising $500M at a valuation of $5.6B. This makes Rokt the third most successful Australian tech startup ever behind Canva and Atlassian.
Adir: “It is a great business and I take nothing away from Rokt and it's creating real economic value, and that's why it's worth so much. But in terms of contributing to the potential of the internet and technology, I just don't think you can put in the same category as Canva and Atlassian.”
Adam: “Rokt essentially competes against Google and Facebook in selling leads to customers. No one competes with Google and wins. And these guys from Australia. This is a triple-pike three-somersault off a 10-meter board. This is hard, and they've done an incredible job.”
Five other stories worth following:
While most Big Tech stocks have popped this year, Apple is down 11% in 2025, wiping out $450B in value. Last week, Nvidia surpassed Apple for the sixth time as the world’s most valuable company.
Tesla and GM report as Trump plans to scrap electric incentives like the $7.5K tax credit. Tesla delivered a record 496K cars in Q4, though that growth was lower than expected. Last year, GM became America’s number-two EV seller behind Tesla, whose US market share dipped below 50% for the first time.
Shares of booze giant Diageo foamed up after Bloomberg reported it’s considering spinning off or selling Guinness, which could be worth $10B+.
Fitbit will pay a $12.25M civil penalty for delaying reports that the lithium-ion battery in its Ionic smartwatch can overheat and cause burns. Reports of the issue began in 2018, but the company didn't voluntarily recall the watch until March 2022.
UnitedHealthcare named Tim Noel, a company exec, as CEO following last month’s murder of former CEO Brian Thompson. It also revealed that a 2024 cyberattack affected the data of 190M people, the largest health care breach in US history.