Investment Realisation of the Year…
Goes to relatively little-known Chinese entrepreneur Eric Li. Li, the son of poor farmers in eastern China founded a business called Geely in 1986, making spare refrigerator parts. In 2010, Geely purchased carmaker Volvo for the knockdown price of US$1.8 billion (Ford, the prior owner, paid three times as much).
As part of the purchase, it picked up a tiny electric carmaker called Polestar. Volvo is now listed and worth US$39 billion. Polestar is separately listed and worth more than US$10 billion. Quite the turnaround.
Understatement of the Year…
Goes to legendary business scribe Robert Gottliebsen, who, in his profile of Melbourne establishment scion Bails Myer, dryly noted that “Bails Myer had a deep inner conservatism and he insisted that to help fund the Grace acquisition Myer should sell its Chadstone shopping centre. In hindsight that decision was a mistake, but it became the base of the great John Gandel retail shopping centre fortune.”
A mistake is certainly one way to put it. The Chadstone shopping centre, which was sold for $37 million, is now the largest in the southern hemisphere, worth upwards of $6 billion (Gandel’s personal fortune is estimated to be $6.45 billion). The entire Myer business, including Grace Bros, is worth a trifling $533 million by comparison.
Entitled Aristocrat of the Year…
Goes to British TV personality Kirstie Allsopp, the daughter of an English baron and presenter of several property programs. Allsopp, whose husband is a wealthy property developer, was “enraged” that younger Britons claimed they couldn’t afford a home, noting they should give up luxuries like daily coffee, Netflix and holidays (a similar trope to what Australians have been told by wealthy property developers for years).
As Bloomberg percipiently calculated, even if one were to buy a daily latte, subscribe to Netflix, Spotify and Disney+ and go on a vacation, that would total about £2000 a year — about 1/30th of the money needed to fund the average deposit for a first home.
Reserve Bank Prediction of the Year…
Goes to T Rabi Sankar, a deputy governor of the Reserve Bank of India, who noted in happier times (way back in February when Bitcoin was trading at US$44,000) that cryptocurrencies have been “specifically developed to bypass the regulated financial system [and] are not amenable to definition as a currency, asset or commodity; they have no underlying cashflows, they have no intrinsic value; that they are akin to Ponzi schemes, and may even be worse.”
Sankar’s comments came just one day after Sam Bankman-Fried’s FTX, which appears to be one of history’s largest Ponzi schemes, spent US$6.5 million on a now infamous Super Bowl ad featuring Larry David.
Unfortunate Wrong Prediction of the Year…
Goes to one-time faux billionaire Steve Jobs wannabee and now convicted fraudster Elizabeth Holmes. Holmes, who founded the now-dead blood-testing business Theranos, once told a consultant at Walgreens (who was also defrauded by Holmes) that “they don’t put pretty people like me in jail”. Sadly for Holmes, a US judge didn’t appear to agree, sentencing the Stanford dropout in November to 11 years’ prison.
Contradiction of the Year…
Goes to devoted “work from home” acolyte and billionaire co-founder of Atlassian Scott Farquhar. Farquhar became an outspoken advocate of super flexible work practices, allowing Atlassian staff to work from anywhere in the world, even picking a fight with Elon Musk and at one point claiming that “remote work at Atlassian has been key for our continued growth” while asking if any Tesla employees are interested in joining the company. (Hopefully someone at some point tells Farquhar that almost every Atlassian engineer working from home has a full-time side hustle, but we digress.)
While Farquhar, who works from his magnificent $100 million mansion overlooking Sydney Harbour, was encouraging his team to avoid the office, Atlassian was developing a $1.4 billion, 75,000sqm, 40-storey office in Sydney, which will presumably become a China-style ghost city when it is completed.
Responsible Lender of the Year…
Goes to Afterpay founders Nick Molnar and Ant Eisen, who launched an impassioned defence of the buy-now-pay-later business model. The billionaires noted, not unreasonably, that “while some Australians pay off their credit cards in full each month and avoid interest rates of 20% or more, credit cards would simply not exist if all customers did this”.
They said the business model “is predicated on a large proportion of customers getting large credit limits, then revolving in debt over the long term. This is the world of regulated credit.”
It was somewhat surprising that no fewer than seven days later Afterpay announced it was launching a personal finance product offering “US consumers credit on purchases between US$400 and US$4000 for up to 12 months on annual percentage rates (APR) capped at a maximum of 35.99%”.
CEO of the Year (good)…
Goes to the founder and CEO of Rokt (and the former CEO of Jetstar) Bruce Buchanan, who was one of the few tech leaders to increase the value of their business during a torrid year for valuations.
Rokt, a fast-growing and profitable adtech business, saw its valuation leap from $2.75 billion in 2021 to $3.5 billion in a recent capital round led by respected local venture capitalists Square Peg and investment firm Wellington Management. Rokt also announced that it would join “Pledge 1%”, where businesses seek to make a positive social impact by donating 1% of their time, product, equity or profit, in any combination, to charitable initiatives.
CEO of the Year (bad)…
Goes to Jack Dorsey, who achieved the rather rare feat of screwing up not one but two mega companies during the year. Dorsey had the unusual position of being CEO of both Block and Twitter. He did such a bad job at Twitter over almost a decade that Elon Musk was convinced to swoop on and make a now infamous $54 billion takeover offer (in which Dorsey was a small participant).
Meanwhile, Dorsey’s “good” company, Square, changed its name to Block (reflecting its commitment to the blockchain), shortly before the crypto market crashed. Block’s share price has fallen from $281 in August 2021 to $102 now.
University of the Year…
Goes to US west coast institution Stanford (which is often wrongly confused with the prestigious Samford University) has long been an incubator for tech genius. Musk, Evan Spiegel, Netflix chief Reed Hastings and PayPal cofounder Peter Thiel all attended. The gloss has certainly vanished from the third-ranked US (business) school this year. Holmes (see above) was an infamous Stanford dropout. Then there’s Bankman-Fried, whose parents are both professors at Stanford (Bankman-Fried is being legally represented by another Stanford professor). Meanwhile, Stanford is also being sued by the parents of soccer star Katie Meyer, who died by suicide, and its president is being investigated for altering images in his research.
Fallen Angel of the Year
In a year where technology shares crashed around the world, Australia’s Atlassian was a standout performer. The former market darling SaaS business saw its market value slump from A$99 billion (which made it, briefly, Australia’s third most valuable company) to A$47 billion, meaning Atlassian lost more market value in four months than any other Aussie business has lost, well, ever. Even worse, in December research firm New Constructs added Atlassian to its zombie list, noting that “with only $1.8 billion of cash on the books as of September 30 2022, Atlassian can only sustain its TTM [trailing 12-month] burn rate for another 23 months from the end of October 2022… In other words, Atlassian will need either a capital raise or a significant change in business operations to remain a going concern.”
Well-Timed Share Sale of the Year
This is a hard-fought category in light of the tech sector implosion, but it would be difficult to top the genius of aforementioned Afterpay founders Molnar and Eisen. The two convinced Dorsey’s Square (now Block) to buy Australia’s buy-now-pay-later giant in a deal that initially valued Afterpay at A$39 billion and represented the epoch of the BNPL/Crypto mania. By the time the deal was eventually done (it was slowed due to European regulatory requirements), based on Square’s share price, Afterpay was worth about A$17 billion, making it one of the most successful Australia exits in history. Even better, Molnar and Eisen are understood to have shrewdly avoided any escrow restrictions, meaning they could anonymously sell their entire shareholdings. Fast-forward to November this year and Block embarrassingly conceded that Afterpay’s gross profit fell year-on-year by 3% to $234 million as BNPL margins were squeezed, with some analysts now believing Afterpay is now worthless.
Honorary mention to Dean Mintz, the founder and CEO of online fashion business Cettire. Mintz offloaded $47 million worth of Cettire shares in March when Cettire was trading at about $1.50 a share. At the time, Mintz claimed that “Cettire is a huge part of my life, it has a phenomenal market opportunity and I remain fully committed to continuing to lead the company to grow shareholder value”. By June, Cettire’s share price had slumped to 33 cents, before bizarrely rebounding to $1.91 in November. On November 17, Mintz shrewdly took the opportunity to offload a further $60 million worth of shares. In the weeks since Mintz sold his second tranche, the company’s valuation has fallen by another 25%, once again showing that Cettire shareholders very much deserve to be parted from their money.
