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The Contrarians catchup
The special episode where Will interviews Adam is out now on YouTube and podcast platforms. Adir is next, so drop any questions you want Will to put to him in the comments (best biceps exercises, etc).
Will on why liking and subscribing matters: “Our YouTube is up to 10,000 subscribers. We’re doing a quarter of a million views on a monthly basis. Last month our subscribers grew 5%, which on a pretty big number is material. But we really want to push that 5% up.” You know what to do, folks…
The Contrarians Live is back on December 8, hosted by BlueRock. 26% of tickets had sold within a week of the announcement. Five free scholarship tickets are available to university or school students who aren’t working: the first five to message us on LinkedIn get them. Adir: “If they can’t figure out how to message us, they don’t deserve a ticket.”
Airbnb will bar hosts from requiring guests to strip beds, wash dishes, start laundry or take rubbish off-site, for bookings made from November 20. One host complained guests lose the “personal touch”. Adir: “Well, that is the worst sales pitch I’ve ever heard.” Adam: “They’re going to protect whichever side of the market needs more. So this implies there are some demand issues with Airbnb.”
PE and VC carry: from 23.5% to 47%
The AFR reported that private equity and venture capital partners face up to 47% tax on their carried interest, the share of fund profits paid to managers, under the CGT changes. The 2026-27 Federal Budget removes the 50% CGT discount for gains accruing from 1 July 2027, replacing it with cost base indexation and a 30% minimum tax on capital gains. Adir used venture capital to explain it, because that’s where the concession is written into law: since 2002, carried interest paid to general partners of venture capital limited partnerships has been treated as a capital gain, for a top effective rate of about 23.5%. Because managers have only a nominal cost base in their carry, that rate can now rise to as much as 47%, unless the investment qualifies for Treasury’s proposed innovation concession for eligible startups. Carry that becomes payable after July 2027 can be caught even where the underlying investment was made years earlier.
Adir: “Unlike in the fund manager world, there is a specific clause in the legislation that effectively says that is treated as a capital gain. It’s as if they put money in and derived a return on their investment.”
Adir on private equity: “Private equity does this as well, but they do it in a different way, because they weave their way through with structures.”
Adam: “I’ve never been a fan of the carried interest exemption.”
Adir: “No one really outside the industry realised how good this is. But unfortunately for them, it’s now on the front page of the news, and you don’t want good stuff that no one knows about to be on the front page of the paper. Because then people try to take it away from you.”
France and the inverted pyramid
Adam brought a quiz from a post by fund manager Chris Joye ranking countries by government spending as a share of GDP, citing IMF figures, and a thread by Arnaud Bertrand on who receives France’s social spending. The discussion widened into ageing populations, housing affordability and the protests in France.
Adam: “It’s 57%. I told you they were socialist states.”
Adam: “People over 60 in France are a quarter of the population and own 60% of France’s wealth. That same quarter, who are the wealthiest quarter, received two-thirds of all social spending.”
Adam: “We can’t keep funding old people who are now living longer. We’re going to make decisions: either people have to die younger or die poorer.”
Adir: “In a Western country, the job of the far left and their violence is to pave the way for the rise of the far right. That’s what they do.”
Adir on what he’d be angry about if he were young: “What’s going on around the world is these aristocrats essentially throwing crumbs to regular people. That is just going to make the pitchforks and the torches come out more.”
Canva builds a frontier image model, and asks creatives to come back
Canva launched Craft on October 22, its first image-generation model built and trained in-house by Canva Research. It debuted fourth on the DesignArena image leaderboard. The same week, Adir forwarded Adam and Will a Canva marketing email with a subject line about creatives coming back to Canva.
Adir: “They have built a genuinely homegrown model that seems to be very good at imagery. The reviews are that it’s surprisingly no worse than the frontier models at creating imagery, which is astonishing. And we should feel enthusiastic and proud about that coming out of Australia, because not many countries can pull that off.”
Adir on the email: “When you’ve put that in an email subject, you’ve accepted the reality that you’ve lost a lot of customers to churn, and you’re trying to get them back.”
Adam: “They’ve come up against this wall of frontier models with unlimited funding and these irrational valuations. It’s just not Canva’s fault.”
Adam: “There’s no switching cost for Canva. They’re not a real SaaS business. They’re a sort of semi-SaaS business.”
Adam: “I used to use Canva for investor presentations. It was a slog. Now I can literally run something through Claude Design and get an ASX-style presentation in 10 minutes.”
Adir: “Now they’re running against players that are not just much better capitalised, but they’re definitely not dumber than Canva. That is a totally different game to play.”
NextDC loses 42% in a day, and the hyperscalers hold all the cards
NEXTDC (ASX: NXT) cut its FY27 underlying EBITDA guidance to $245M–$265M, from $385M–$410M, after Jemena suspended grid works for its M3 Melbourne data centre in West Footscray amid community opposition. Jemena has told NEXTDC it doesn’t intend to restart before February. The shares closed down 41.7% at $5.35, their lowest level since 2018. Adir used the fall to walk through the economics of deals like IREN’s five-year, US$9.7B AI cloud contract with Microsoft.
Adam: “This has been an absolute disaster of a week for anything related to data centres, which I think you predicted a while ago.”
Adir: “The constraint is not on the side of the data centres. The constraint is on the side of the five hyperscalers and their power to anoint.”
Adir on Microsoft: “What they’re doing, in my view, is buying compute at 85 cents in the dollar and selling it to a frontier model at two dollars in the dollar. It’s just an arbitrage on the way through.”
Adir: “The main problem is it’s linear depreciation. There is no way this curve is linear. If you want to make the easiest bet in this whole industry, just bet on hundreds of billions of dollars of write-downs to hyperscalers in two years’ time.”
Temple & Webster jumps 30% on revenue that’s still going backwards
At its October 23 AGM, Temple & Webster (ASX: TPW) said revenue from 1 July to 19 October was down 8% on the prior year while contribution margin dollars were up 16%, after it cut promotions and raised some prices. New CEO Susie Sugden said the revenue run-rate since August had improved to -4%, from -13% at the August update, and the company expects to return to growth from mid-February. It reaffirmed FY27 EBITDA guidance of $33M–$40M. The shares jumped around 30% on the day.
Adam: “Admittedly, the August update was so horrid the bar was pretty low.”
Adir: “The next day they released this work of fiction. I mean, it’s not fiction. It’s based on a true story, we can say. They’re not lying. Everything in that release I suspect is completely true.”
Adir: “They’re building their entire investment case around this EBITDA number. I think that is the absolute wrong thing.”
Adam: “It’s kind of a junk number.”
Adir: “I think the argument for shorting this business, not investment advice, has increased further. I think this announcement makes me more confident about my thesis.”
Adam: “Really well-run business in just a really tough sector. They’ve got every headwind you can possibly imagine.”
Five other stories worth following:
AI wearables startup Nirva raised an $8M seed round led by Lightspeed and South Park Commons. It makes AI jewellery designed to be worn all day, building a running record of the wearer’s life as a memory layer for personal AI apps.
Meta launched about $35B of stock offerings to fund its AI build-out, with only $12.5B arriving upfront and a further $60B at-the-market program planned for 2027. Nvidia, AMD and Broadcom have expressed non-binding interest in buying up to $5B of the shares between them. Meta’s Q3 capex of $34.9B ran ahead of its operating cash flow.
Major US banks are restricting third-party AI agents from accessing customer accounts. Citi now blocks outside agents from logging in or transacting, while still allowing read-only access through open-banking providers, and Bank of America’s Brian Moynihan says a human should authorise any money leaving an account. JPMorgan’s Jamie Dimon says his bank will restrict outside agents too.
Elvis Presley’s music rightsholders, led by Authentic Brands Group, have sued Anthropic in California, alleging it trained Claude on lyrics to 274 Presley songs without a licence and generated infringing output. The complaint puts statutory damages at about $41M, or $48.6M including DMCA claims, and seeks an injunction.
Lula won Brazil’s presidential runoff 51.8% to 48.2% over Flávio Bolsonaro, securing a fourth, non-consecutive term after trailing Bolsonaro in the first round. Bolsonaro has refused to recognise the result and says he will seek to have it annulled.