Episode 85: BYD Smokes Tesla, SpaceX Saves the Day, Premier Investments Deep Dive, has Exec Rem Gone too Far and Special Guest John Stensholt Reveals Rich List Secrets
The guys discuss Tesla's woes and the rise of BYD, Premier investments, Xero CEO's big payday, exec remuneration jumping the shark, and Rich List editor John Stensholt joins to chat the Rich List.
The Contrarians catchup
Adam gives a shout out to a friend of a friend named Dave, who is the definition of a "mensch" (or "mentsch") - "a person of integrity and honour” in Yiddish. Dave visited Adam on the operating table in Canada last week and drove him five hours to Vancouver so he could fly back to Australia safely.
The guys discuss where premium economy sits between economy and business class. Adam: “I used to fly premium. I thought it was such a great experience. It was business-like in many ways. Now I think it's much more like economy but they charge like business so it's sort of been stretched both ways.”
Adir: “Behavioural economics is just psychology. It's like the psychology of how people make decisions and one of the big decisions is about money and so it became economics.”
Adir discusses Lovable, which uses AI to create an app in seconds. In just three months, Lovable has achieved $17M in annual recurring revenue (yes, that’s a cheeky way to report revenue).
Adir on Boeing’s woes: “When you see a couple of things happen and they're unusual and they're closely correlated in type and in time. Generally speaking, they're going to be correlated to one underlying cause.”
Crunching the numbers with Cal AI
Cal AI, a calorie tracking app founded by two 18-year-olds, has generated over 5M downloads in eight months. They also brought in over $2M in revenue last month and have a customer retention rate over 30%, making their growth sweeter than a honey cookie.
Cal AI has a 4.8-star rating on the Apple App Store, with 66,000 reviews, and over 1M downloads on Google Play with a 4.8-star rating on nearly 75,000 reviews.
Adir: “The most annoying thing about MyFitnessPal is it's quite cumbersome to enter into the data all the time. If I'm going to eat pasta, I will literally like scan the box of the pasta and then I'll get like a cup and I'll weigh it on a kitchen scale and I'll know exactly how much pasta I'm eating.”
Full charge ahead for BYD
The leading Chinese electric carmaker BYD has soared in value after it said its latest batteries charge fast enough to add 400km of range in only five minutes.
Shares have tripled since January and hit an all-time high this week after announcing it sold more than 318K vehicles last month. By contrast, Tesla's China shipments plunged 49% in February to just 30K vehicles.
Adam: “If you look at Tesla five years ago, my great worry was the BMWs, the Volkswagens would catch up, and all the legacy car companies would kill it. Turns out that theory didn't prove to be correct. What's killed it is all these Chinese companies. BYD is absolutely destroying Tesla.”
Adir: “China's innovation has gone through the roof in all sectors. I mean, their military innovation is looking a bit scary. Their civilian innovation is unbelievable. And they've got this enormous domestic market. Everybody else has to sell overseas. Historically, the US have been a bit blind to overseas growth because the American market is so big. But you have this move to the middle class in China, where it's just so enormous that they have this domestic market that makes them rich.”
CEO's big payday has Xero chill
Xero shares are down 15% from their peak, but Adir points out that if you compare with the start of 2023, they’re up 130%.
CEO Sukhinder Singh Cassidy’s remuneration is what caught Adir’s attention though, because despite a base salary of US $540K, her FY26 value is around $15M and there’s a one-off grant worth $27M, indicating every $10 their share price rises above $171 gives Cassidy around $6M.
Adir: “She’s is effectively running an Australian business. I mean the Kiwis would call it a New Zealand business. But it's not an international business. I think New Zealand is about one fifth of the size of the Australian business. It's like a state basically. I'm going to just make this call right now: Xero is never going to succeed in the United States.”
Adam: “I think the bigger question is how important is a CEO in this case, at this business's stage in life to value growth?”
Adir: “People over index for charisma in choosing CEOs and the correlation between charisma and performance is just not there.”
Premier Investments deep dive
Premier Investments’ is up 4% after the release of the retail conglomerate's half year results. Premier Investments posted a 1.8% decline in sales to $455M and a 12.7% drop in net profit before tax.
Adir: “They certainly offloaded the right stuff. But the stuff they kept is having a tough time. Going down 1.8% where you've got six new store openings for Peter Alexander and minus two for Smiggle, it’s not great.
John Stensholt Reveals Rich List Secrets
The “number one list guy in the world”, The Australian’s John Stensholt, who released “the number one list in history”, joined The Contrarians to go behind the scenes with this year’s ‘Australia's Richest 250’.
ICYMI, here’s the top 10:
Gina Rinehart – $46.34B
Harry Triguboff – $31.48B
Mike Cannon-Brookes – $29.45B
Scott Farquhar – $29.19B
Anthony Pratt & Family – $28.57B
Clive Palmer – $22.32B
Nicola Forrest – $16.06B
Andrew Forrest – $15.01B
Richard White – $14.82B
Cliff Obrecht – $14.02B
John: “The incredible amount of engagement we get from the readers and all the new subs that we see, this is the biggest subscription driver of the year, and the biggest readership of the year.”
Adam: “It's really a list about humans and about how people have been able to succeed and beat the odds when you least expect it. And a lot of that is luck for sure, but just that grit and perseverance is what you encapsulate so beautifully. And it really is so inspiring for budding entrepreneurs or for founders like us who are looking to these people for inspiration.”
Five other stories worth following:
Prime Minister Mark Carney called for economically-motivated parliamentary elections to take place next month. The vote was originally scheduled for October 20 but Carney, a former central banker for Canada, wants a mandate from the people as he prepares to fight a trade war with the US.
The US is targeting a truce agreement between Russia and Ukraine by April 20 (Easter in Western and Orthodox churches this year). US and Ukrainian delegations met yesterday, while US and Russian officials will meet in Riyadh today.
George Foreman died on Friday at the age of 76 and left behind a lasting boxing legacy that included two stints as world heavyweight champion, the last one secured at the age of 45. But for a generation of health-conscious chefs and resourceful college students, he will be known primarily for his popular namesake grills.
DoorDash will join rival Grubhub in allowing customers to use buy now, pay later service Klarna to pay for their food in four interest-free instalments or at a “date that aligns with their paycheck schedules.” Klarna reported a 24% revenue increase in 2024 and is preparing for an IPO in April.
London’s Heathrow Airport came to a standstill after a fire at an electrical substation took out its power for two days, leading to travel disruptions that could cost airlines millions. Heathrow is the world’s fourth busiest airport, seeing 83.9M passengers.