Episode 80: Spotify's Genius, Is Chemist Warehouse Overvalued, Exclusive Canva News, Temple & Webster's Rebound and Correcting Last Week's Mistakes
The guys go deep into Spotify's incredible run, whether Chemist Warehouse should be worth $32B, Adir breaks some Canva news, Mike's PlayStation disappointment, and Temple & Webster confounds again.
The Contrarians catchup
Adir starts with a banger: “When you do it once, I call that leadership. When you do it twice, I call that operations.”
Adir talks about how he talks to his mum every day and meets his dad at the market every weekend, boosted by the advice from a friend that “you should picture yourself in the future where things are worse, where everyone is much older, and you get to go back to when things were better, and here you are.”
Adir “gifted” a book to Adam after a recent trip to India, ‘Tata: The Global Corporation That Built Indian Capitalism’, and provided a detailed history of the business.
The guys will be recording a live podcast on April 1st at SmartCompany’s Growth Summit in Sydney. “This full-day summit brings together Australia’s top business minds and global innovators to share actionable insights on securing funding, scaling businesses, expanding internationally, and leveraging cutting-edge technologies like AI.”
Producer Mike shared a bad customer success story (Adir: “That's what everyone is listening for, your personal problems”) where his PS5 controller just stopped working and Sony wouldn’t do anything to help (Adir: “I feel like the phrase storm in a teacup may have been made for this.”)
Adir said physical stores should be doing two things: “converting hesitant customers and elevating the brand.”
Adam shared his own customer horror story where Coles failed to heed his request for delivery three times, to which Adir responded with a Gandhi quote.
Temple & Webster Continues to Confound
Adir: “Did you see their results? It’s possible I’m a moron. In no way am I targeting the individuals. The reason I say I might be a moron is because I'm so bearish on this, and it's so obvious to me what the issues are here and how nothing is as it appears.”
Sales at Temple & Webster, Australia’s largest online furniture and homewares retailer, rose by almost a quarter over the last six months. Sales reached $313.7M in the second half of 2024, off a forecast of $310.2M.
Adir: “One of the things that they boasted about in their results is that 65% or something of all of their customer service queries are now going through AI and they’re now able to significantly reduce the cost of employees in the customer service team. Very interesting and yet $4M of extra people costs.”
[This newsletter will be too long to include Adir’s full breakdown about his dislikes from Temple & Webster’s results. Listen in from around the 37th minute for an impressive real-time business analysis.]
Melbourne > Sydney
Melbourne is home to the most expensive house ever sold in Australia, with landmark Toorak estate Coonac selling for about $150M in a low-key deal that has surpassed the previous national house record by some $20M.
Adir: “I'll say there's something that people can't disagree with because there are something called facts. And the facts are that somebody that sells a house that they bought for $1M and they sell it for $2M and they get a million dollars tax free ends up falling further and further behind someone who bought a house for $12M and sold of $150M and gets $138M tax free.”
Is Chemist Warehouse Worth $32B?
Among all of the incredible financial metrics Adam shared in his failed quiz to get Adir to guess Chemist Warehouse (he doesn’t read the run sheet, as we know), the most impressive might be that each Chemist Warehouse store is worth around $53M.
Adam: “It's a great, incredible business. It's just not, in my mind, anywhere near a $32B business.”
Adir: “I find this business terribly boring. I find retail very interesting, but the reason I find this business boring is because it's effectively a distribution business selling other people's products super cheaply and then monetising eyeballs from their suppliers.”
Adir’s Canva leak
Adir is very bullish on Canva after discovering in their numbers that their ARR has grown from $2B to around $3B, they’re north of the rule of 60, and their free cash margins are in the 15-20% range.
Adir: “If you said to me, this should be worth a $100B US dollars, I'd say probably. I think they're going to have no problem with an IPO valuation.”
Spotify's Genius is Note-worthy
Spotify’s latest results have caught some attention lately: 18 years after its inception, they recorded their first profitable year and shares are up 29%.
For the record, Adam uses Apple Music, Adir uses YouTube Music, and Mike uses Spotify.
Adir: “The trick is you have to either produce your own content or not have to pay much for content. And then you can be an ad supported platform. But the minute you have to start paying some serious money for content, it doesn't work to be ad supported anymore.”
Adam: “In terms of great founders, I would put Daniel Ek right up the top, like as in top 10 of all time. This is incredibly competitive. Apple should have won - they bought Beats and came real hard. But Spotify just did it better. He competed against the best in the world and won.”
Five other stories worth following:
The US Department of Health and Human Services’s plans to slash headcount appear to be moving ahead as 700 probationary employees at the CDC and an undisclosed number at the FDA received termination notices.
Marvel’s Captain America: Brave New World was a runaway No. 1 hit at the global box office over the weekend, with Walt Disney Studios expecting it to bring in $192.4M by the end of today.
Saturday Night Live celebrated its 50th anniversary with a three-hour live special. Dozens of alum, as well as famous friends of the show and its creator, Lorne Michaels, appeared on a Sunday night special broadcast live from Rockefeller Center’s Studio 8H in front of an in-house audience.
A new Apple product could arrive this week after CEO Tim Cook tweeted a cryptic teaser last week: “Get ready to meet the newest member of the family.” Apple fanboys are predicting the next-generation iPhone SE, a new MacBook Air, an updated iPad, or a new smart home command centre.
Elon Musk says Grok 3 from xAI will be the “smartest AI on Earth”. It’s the latest salvo in the AI chatbot wars and comes just weeks after China’s DeepSeek sent shockwaves through Silicon Valley with its chatbot that cost a fraction of what American companies have spent on their own AI assistants.