Episode 96: Mecca's Loyalty Win, Tony's Chocolonely, Waymo, Pet Circle Struggles, Netflix and Would You Have Dinner with Warren Buffett?
The guys discuss Mecca's rise, Teun van de Keuken's story, Waymo and self driving, Pet Circle's horror losses, how Netflix brought back docos, and the guys argue about how great Warren Buffett is.
The Contrarians catchup
Adam went to Mecca for the first time to buy his wife a Mother’s Day present (he’s still yet to visit a Costco, despite loving their business model).
The guys discuss the power of Mother’s Day for retail, but also the trend to make it easier to unsubscribe from Mother’s Day-related EDMs for those with negative connotations surrounding the day.
Back to Mecca, the guys rave about Mecca’s Beauty Loop, the loyalty program that has become a yardstick for successful loyalty programs with its access to “extra gifts, exclusive offers, deluxe samples, in-store experiences” and leopard print skincare headbands.
Despite Adam trashing the valuation of Apple since The Contrarians started, he named them as the one brand he uses regularly and loves.
Adir is brand agnostic to the point of being “disloyal” when it comes to headphones.
Adir: “The problem that exists in AI today is that the reason these AI businesses are generating so much revenue, but losing so much money, is that it's the typical VC approach to life, which is reverse Robinhood - the rich subsidising the poor.”
Waymo or the Highway
The Luxury Escapes CTO was in San Francisco and shared with Adam the seamlessness of using Waymo driver-less cars around the city, raising that the price per ride is 50-60% higher than Uber.
Adir: “I'm happy about that. It tells you two things. It's positioned itself as a premium offering that people are paying the true cost of the service and some margin for the company to make a profit. And that is a much higher likelihood of this being sustainable over the long term.”
Adam: “What it tells you is they can charge more because people prefer it over Uber. There were questions on whether people would want autonomous vehicles. To me this completely vindicates every dollar invested in self-driving. And also it says to me that in 10 years, maybe sooner, we are going to get to the point where nobody drives.”
Tony's Chocolonely
Adir shares the story of Teun van de Keuken, a Dutch producer of television and radio programs who established a reputation investigating fair trade and production practices in the food industry. He then founded the chocolate company Tony's Chocolonely and debuted in 2017 as a novelist.
Adir: “It's kind of reminiscent of what Elon Musk did with Tesla at one point with the patents at Tesla. He basically says that he can't fight this war by himself of having better-sourced chocolate. So I just have to go and find partners and bring them into this alliance where we're all going to get it. I'm going to give away my competitive differentiation so I can go and drive this movement to source more ethical chocolate.”
Pet Circle fetches less
Losses at Pet Circle, one of Australia’s biggest start-ups, rose to $26.4M last year despite its sales almost reaching $400M.
The online pet supplies business was one of several Australian start-ups that received a $1B valuation in 2021 after it raised $125M from investors including AirTree Ventures and TDM Growth Partners.
Adir: “I prefer retail businesses that sell their own stuff. And I don't like businesses that sell other people’s stuff. I'm going to make a comment with a very high degree of confidence and a very low level of information. When I hear about what you said about this business, what you can say is the following. They must have a lot of customers, and if I've got lots of customers and a brand people trust, but I'm struggling to make margin, then what I should do is figure out how I can get some product where I've got it might be a quasi-corporate resource, and I can make real margins on it.”
Would You Have Dinner with Warren Buffett?
The Berkshire Hathaway board voted unanimously to make Greg Abel president and CEO and for Warren Buffett, 94, to remain as chairman.
Buffett shocked Berkshire shareholders by announcing in the final minutes of the company’s annual shareholder meeting that he would be asking the board to replace him as CEO at year-end with the current vice chairman of non-insurance operations for Berkshire.
Adir: “My most hated line in business is ‘we want to be the Berkshire Hathaway of Australia.”
Adir: “People don't understand the true meaning of life. And maybe I'm going to criticise you and say you don't understand the fundamental rule of life. You've only got one life, and you've got to make it count. And collecting way more gold coins and stacking them up is not a way to have a good life.”
Adam: “There’s the Andrew Carnegie way, which is to give away as much money as you can while you're alive, so I’d argue the Warren Buffett way is far less selfish. He was able to give a lot more away by sacrificing that happiness he would have achieved by giving it away.”
Five other stories worth following:
Elizabeth Holmes’s partner is venturing into blood testing. Billy Evans, who shares two children with the imprisoned Theranos founder, is seeking investors for a new company that tests blood, saliva, and urine.
President Trump plans to reduce prescription costs. He announced a most-favoured-nation policy with drugmakers, predicting price drops of 30% to 80%. Pharma companies argue it would slash revenue and stifle lifesaving drug development.
Japan’s customs officials are alarmed by the volume of gold leaving the country. About 20 metric tons are exported monthly, despite annual production being only 100 tons, raising concerns about organised crime smuggling.
The Flow, a minimalist electric trailer from startup Pebble, is now in production. Its standout features include self-hitching capability and a one-touch auto-setup that finds level ground and sets up camp.
Pope Leo XIV referenced AI in the choice of his papal name, comparing his AI-era leadership to that of Pope Leo XIII during the industrial revolution.