Temple & Webster Deep Dive Special Episode

I'm Adam Schwoll, I'm a dear shiftman and this is the Contrarians with Adam and Adiere. And we are back episode 155. A very, very special episode, Adiere. We are on camera. It's got, oh I was about to say it's got a video that's already special. I want video for every episode. I know you do, but one of us is traveling 90% of the time. It makes it a bit hard. Which one? Well, each of us is actually going to the UK soon, so that's my fault, but usually it's your fault. I don't have a video in the UK I've heard. I don't know, but it's different. We obviously don't appreciate it, it's not the same. And it's a very, so we've got a very good friend of the pod, Scott from Terrem Capital, with us today. So how good is it to have the main man himself in the room? It's exciting. It's exciting and I think we're doing a bit of a special deep dive. We are doing a very special, obviously, Terrem Capital sponsor our deep dive segment every week. So I thought, why don't we do, this is such a special deep dive, talking about Temple and Webster, one of our memes, our muses of the contrarians. So we've got Scott in, we've got a deer in person, and we've got the camera's rolling. So what, just before we get onto it. Didn't you say it's a monumental, is that what you say? Mementus, one of those was a vent, because I've pre-read something. I've read it, I've read it, so I think it's sort of spreadsheet on your computer as well. I do. The first time I'm looking at these numbers is not as we're talking about it. Never seen, that's appropriate. Scott, before we start on Temple, why don't you give us a quick deep dive into Terrem and what you guys do? Yeah, for sure. So I started Terrem Capital about 13, 14 years ago now and built the group up through cash flow profitability, doing technology development for other companies. And then over that time, I realized we were learning a lot from our customers and these are kind of, the NYBs of the world, other private equity back businesses pet circle. And we realized that we'd learned a whole bunch and we said, all right, let's use our cash flow and our balance sheet to start doing acquisitions. And so we acquired a, we'll spun out a business out of AEG about three years ago in enterprise contact center software. We sold that to a NASDAQ listed software firm, who I still can't name. What was the name? What was our name because the name started to pronounce? I won't get the remainder of the urn out. It's probably the right. Was it not disclosedable by them? They don't want it to be disclosed. What was there multiple you guys? I can't say that either. Unfortunately, yeah, yeah, we'll wait till the urn out start and maybe. The last trick was 50x. The last time I heard an investor say, I can't say who bought our company, and I can't say what we sold it for. I think there was a liquidation of it. Well, it wasn't that bad. It wasn't that bad. It was what happened to Rolls-Royce earlier, so I think it was wrong, yeah. And then I think there was a bit of a moment for me where I asked what I want to do with my life. And I just love the business of technology every bit of it. And so I said about, really kind of was already on the journey of the holding company, but then this models become a bit kind of popular now, I suppose, and available in some circles. And so I said, this is a great, like it mainly gives a bit of a framework for what I was already thinking. And I said, let's this is the model we want to pursue and keep doing acquisitions. Obviously, there's VC, there's PA, there's Search. How would you categorize yourself in this sort of through a private money? It sits under private equity. It's a form of private equity where instead of going for the three to five-year exit, so you're a bit more earnings focused, like private equity might be a bit more stability focused over growth. And then the holding company model really came out of private equity having, you know, you've got your periods of fun life and saying, well, hang on a second, if you remove fun life, there's greater returns to be made here potentially, and also a bit more flexibility. And so this is where the holding company model really came out of. And yeah, that's that's the model we're pursuing. How old, I mean, you spoke about that business at Span and AI, I.G. And we bought a facilities management software company. So how old was that business? How old was which business? The business we sold? Well, no, the business you bought the facilities management business, like how long has that been around for? So that's separate to the AI. So the business that we bought, FMI, the facilities management business, it'd been around for about 15 years. Okay, so that's what I thought. By the way, do you realize you just said the name of a business? I mean, that's problematic for you. Is that, you know, let us say the name of No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no 15 was longer, I thought you were going to say 10, but that to me feels like potentially a sweet spot. Is that right? Where business has been running for a long time, they've built up somewhat of a business, but they're not going to be anything like a unicorn and the owners may be looking for an exit. Yeah, this is a really good sweet spot and partly this thinking that there's just hundreds of companies out there in technology, but in any industry, that private equity isn't the right home, VC isn't the right next step for them, but they've got great customers. They're solving a really specific problem for them, they're doing a great job, they're not going to be the next Canva, but we look at like 1 to 10 million in revenue. And especially in B2B where we like to play, there's some really great, honestly great businesses doing great profitability. You look at building constellations off-wearing somewhere. Yeah, 100%. Yeah, I don't think you're going to be constellation today, do you? No, that's a huge share price for. Yes, they have, but they're still, like if you look at over the lifetime, they're still like a 50 billion dollar business, whatever, I'm still an incredible story, just obviously not 100. I think 100 billion in one way. But you say it's not for PE, probably because it's too small for PE. It's not for VC because it doesn't have the growth curve of VC. And so, and the reason people are transacting with you is because they're tired. Is that why? Could be tired. Could be a special situation, like so the business we bought, it was part of a bigger, much bigger business that sold to Autodesk, so pay-ups is the name of the group. They sold to Autodesk. Oh, it's a share on it, perhaps. And as part of that, well, you're a beneficiary of one of our acquisitions. You were a beneficiary of the Pittance, that's a part of that. I don't know, I guess that's a nice one, but yeah, you know those extra three cents of return that you got? That's the score. What was left of the business after the trends, actually really good. It was the first business, I forget what was called, that was, this is Asta, and the perhaps guys came and fixed it, so it was a tough, hard, unbelievable job. So credit to him, that was a great result. Yeah. So in that case, how much of the management team comes with it to you? Well, ideally we want the whole management team to come, but that's not always, especially if you've got founders in the picture, they may want to go. They want to go. I think for us, it's more we want the business to be able to run at arm's length independently. Yeah. So I don't want to have to be, I don't want to have to be, I'll put the cap on for a short period of time and can, but largely that's a kind of, that's a failing if we've ended up in that position. So you're the one buffered up Australia, really? Well, let's say everyone wants to be that, so congratulations on you. Thank you so much for the title for now, now you just have to, you know, get the return. It feels like anything I say in the deep dive coming up next will be extra screwed, not that kind of set up. Well, I don't want to make you feel nervous, but even though it feels like there are maybe five or six people in the room now, you're actually talking to probably 40 or 50,000 people, so don't feel stressed out about that at all. No, more nervous that you've actually come prepared. This is going to be nervous, shock, you're going to sprint. So I'm at no, we'll get into it, and obviously this M&A deep dive brought to you by Terram Capital, as you know, he's got a choir's technology companies to grow sustainably over decades. If you think you have selling gifts, got a call, he's just here, or slash Warren Buffett. And that crashing sound you heard last week guys, that wasn't Constellation Brands. That was the sound of inevitability, and that was, of course, Templin and Webster share price finally coming back to, as your better interest, that's a bit poetic this way. Well, it's, we had a pretty good week last week. If you think you're like, I don't think it's been a better week of victory laps in a web scene last week between Temple, Drone Shield, the RBA interest rates, the RBA credit card search. We've had a pretty good run, and this was probably the culmination. So last week at the company's AGM, it's shocked investors by announcing revenue had grown for the last four months by, I was like, only 18%, because the market was expecting 23%. So this was a big mess. And the question is whether, by the way, on that, you know, when you go and wrap up four months of performance into one number, you don't know what the last one month or two months were. And it's very possible that they started off strongly that they did. And then it weakened dramatically, which would be more worrying than the reverse, right? And ABC Capital, ABC Capital Markets analyst and friend of the pod, Weweng Chen, said that the weaker than forecast result raised the risk of further softness and Weweng noted, December is typically a quite a month, and with Black Friday and some Monday still to cycle, we see potential for additional deceleration over the remainder of the half. Couple shares have dropped from there in same peak of $29 in August, to only $15.50, which is a near 50% drawdown, albeit they are still well above their 2020-23 low, which is only three dollars a share, which I've actually forgot to drop that light. Jerry, I remember when, in our seriousness, I talked to an investor, it's 15 cents a year, at like 12 cents. That was a negative AV. Yeah. And that investor was adamant to me that the Australian market didn't know how to value this company. It was right. That was true. It was a company called Kinderhook. Okay. I don't know if you've heard of it. No. Anyway. I met them in a diner in New York when they drove in Jersey, yeah, very early in the morning. I was very interested. I was trying to get them to buy into catapult, which was not worth much more. I don't think so. It was worth more than zero. I appreciate that. But they, they, they, they, they, certainly bought it into a template, but they didn't write it all the way to $29. Yeah. But they wrote it to a few dollars, I think. Yeah. So people definitely, they were once upon a time undervalued. Oh, totally. When there was zero, they were clearly undervalued. All right. Well, that's true. I can argue with that. Jerry Harvey, obviously, the legendary retailer couldn't resist twisting in the night for his own AGM when he heard the news, which I think was the same day. And he said, temple and webster is overpriced to a buggery. I've never understood how people flock to it. The PR machine there is extraordinary. The public has been jubed into believing the propaganda by some of these online retailers. And he was nasty about Kogan, which I thought wasn't fair. Yeah. And Kogan's falling really well for an inexperceptive. And that was, I think the Kogan temple dichotomy was always the most bizarre one. Kogan, which makes like $40 million plus a year, was being valued at a tenth of temple that makes like a third of that. Kogan, I know I don't talk about Kogan, but basically, their Australian business is doing really well. The New Zealand business is struggling. Yeah. I think they'll turn around their New Zealand business. Yeah. I mean, it's already hard. It's not fair comparison. Yeah, that's right. Anyway. So that's pretty much where I act. So Scott, what are you? What do you kick us off with your top dark in looking at this business? Yeah. We've just started. Because for a long time, we've been, well, I've maybe been the chief. You were more bearish than me. Yes, I was more bearish. 100 mil-value, I had a 300 mil-value. A 300 billion. There is a, I want to say, there is a bull case on this stock that I came to when I was analysing it. I don't believe it. And even if it happened, I'm not sure you'd make money at the current share price on an objective basis. I'm looking forward to seeing this bull case. But I've been very bearish on this. I've been had a fairytale for a while. Yeah. That's how I did this bull. But when you look at this, what are your first instincts about this business? I always wanted to think because I always jump to the, looking at hundreds of these a day. And I haven't looked at Temple and Web Strikes. So for listening to you guys talk about it. So it was interesting to me to jump in for the first time. I always skip it. All the management section, straight to the PNL, to try and understand the metrics. And I always wish that people would just put that on the front line. There's a reason for that. Yeah. Need a bit less story and a bit of like, let's get, let's get to the numbers, then tell me the story. In fairness, that is the structure of like, especially the annual report. Like, even, like, our numbers have been very strong at catapult, but still there's an order of the way. Yeah. I get it. The more revealing thing is, when you look at the investor deck that accompanies the results announcement, what is and isn't in that investment? Yeah. Let me tell you the slide order of that investor deck. A lot of thought has gone into that slide order. So the thing, it's interesting to you talking about the share price historically. So I got in and started looking back historically around trends and patterns. So that's where my immediate go to. And the bit that really peaked my interest was back in FY21, FY22, the profitability of the business-- Four days. Well, yeah, and in terms of what they were producing, they got profit before tax, excluding their interest income, which was minimal at the time, was like 18 million on significantly less revenue. Yeah. That's kind of gone backwards in pursuing growth in profitability terms. And then they're getting back to that whole amount. So I started just looking at that. I got fascinated with that. I think what's also interesting is if you go back to '21, what was their revenue? The revenue in 2021 was 326. So about half of what it currently is, making the same amount. Making the same amount. Making the same amount of profit. Yeah, but then so the magical bit that comes into it, love a good adjustment, is if you look at the interest income that they were earning back in '21, '22, it was only $438,000, I think, is the number I've got here. Is there a COVID opportunity to raise $100,000,000? Well, they had $97,000,000 cash in bank, but the interest rate-- Oh, because the rate was so low. The interest rate was so low. And what checked money means. Yeah, then if you come forward to where they're at today, on the same amount of money at bank, they're making $65,000. I mean by the way, as you probably imagine, that interest income, that gets you just as straight out of all of my numbers. I've got no interest in that. It's a lot of money. And it wasn't trying to make a pump, but like that, that is just, I mean, in fairness to them, they do break it out in their profit. $100,000. $100,000. But that just goes in-- It's against accounting standard. How much cash do they have? The fact that you can count interest, you're not-- this has nothing to do with the operation there. And you can count it up above as revenue. It's crazy. I'm going to take a counter position to that, partly because what you do there, as well, is if you've got a business that has a negative working capital profile, so it's part of the business you get part of. And you're an amp. As we do, it's SaaS companies do. We get this cash. I can't dividend it out to myself because it's not our cash. Most companies want a little bit of life, but not for it. So it's part of it. If you have a negative working capital business, it's part of the ordinary operation of business to have this interest income. Yes, I agree when it's raised. I've been going raise $100 million in COVID and whack it on your balance sheet and then periodically use it for buybacks. The buyback thing's a different thing. I'm sorry. I mean, this is the inefficient use of shareholders fund. But they also have a negative working capital business. Already bearish from the growth. But if we are a bit generous to that, that you can do that. I'll take your point of business. It's only for a couple of months that that floats really there. It's not the $400 million that you're, it's only customer prepayments that you're earning that interest. Like in terms of the operations of your business. If you look at our business, we have 150 million in the bank, what about it? It's constantly rolling. As we grow, as we grow it, it goes. Well, let's just end this conversation with the following remark. When it represents two thirds of your operating profit before tax, it probably is something you should pay attention to. I'm not saying it should be Nord. That's the bottom line. I think your point is right in that when you're comparing 2021 to now, it's really relevant now. On the plus side, it was five-sixths of their profit before tax law in 2024. So at least the percentage has gone down to little bits. It's worth unpacking why, maybe just for those that aren't familiar as to why we're calling out the interest income, because as an investor, you can take that money and go and sit it in the bank account. And yourself, and a six or seven percent, but if you're putting it into a company, and then ultimately, if all it's giving back to you is six or seven percent, you're taking a lot of risk and you're probably actually buying only a portion of that six or seven percent. In this case, for example. Yeah. Well, is that in the fact that a third of their credit, they claim, which is the same as it was, is the, so really, the profitability is dropped significantly because of the investing view. I'll get to my views on why that's happened, by the way, that's not, but we're just trying to work out if the actual operating business is any good, and how good it is. And going and polluting, you use EBITDA, because you're a believer in that stuff, but I use profit before tax. I made myself more than you. Are you talking about? I use profit before tax. That's a piece. I don't even know that. No, because in fairness to them, the appreciation and amortization is, they're not aggressive on that. No, they're great with that. Yeah. I mean, one of the things that did stand out is they do, they're, one of the things you've got to have to do. They call all this stuff out, in other ways, you can often see it hidden, but it's quite, it's quite well called out for you to make your own, and they're following accounting standards by putting it where it's been. Yeah. And all these liability stuff, they're really clear on. I don't know, they're good with that stuff. Yeah. So we should say a few top level metrics recently. So the financial year is just an Australian standard financial year, and it's 30th of June. So 2024, they did just under 500 million, 2025, they grew 21% or so, and did 601 mil, that's like their revenue line. I've got lots of feelings about the stuff underneath that revenue line, but maybe I'll make these two overarching comments. In 2025, although they achieved increasing revenue and increasing profit before tax, which we'll get to, what they managed to also achieve is declining gross margins from 33.3% to 32.9%, so not a big drop, but it's a perverse drop, because their own brands went from 43% to 45% of transactions, and so you'd expect margins to improve as their own brands rise, so I thought that was perverse. I know you're about to say something about that. I'll say my second point, which is, and then, so, and you like to use marketing as a percentage of gross profit, which I think is relevant in this case, because their gross margins are so low. So their marketing as a percentage of GP went from 47% in 2024 to 49.5% in 2025, I was surprised by that increase in marketing spend, frankly, as a percentage in 2025. You agree? Like how do you do brand stuff as well? I'm not interested in that. Well, just one of the things that does stand out is that there's some good discipline going on in this business, which really needs to be recognized, really good discipline in terms of holding, I did marketing as a percentage of revenue, and they've held it at 16% to hold that at this scale of business and be able to manage that well, gives a little, I think it gives you that. Are you generous? Why big generous? Because marketing as a percentage of revenue is a bit interesting, but not when your gross margin is going backwards. I did say there's, there's doing things right and then doing the right thing is like to separate two things. I go and sell it $2 Apple, and I spend $0.50 marketing it, and it's a dollar of profit, let's say. So I've got $0.50 profit, and then I sell the same $2 Apple next year, and I spend $0.50 marketing it, but now I'm only going to keep $0.90 a profit, and now I'm going to represent a $0.40, right? And so that's not the same, like basically I'm unsympathetic to flat marketing on declining gross margin. Well, if you look at the marketing, just the last year, so this is a couple years of increasing marketing, but one of the things we shouted at six months ago when we looked at 10, we thought oh, they've broken this nexus between increasing marketing, increasing growth JP, but if you look at over the year, the FRI last year, marketing went from 77 to 98, so 21 million bucks up. And GP only went from 166 to 198, so they barely were able to scale out of their marketing. And this is, so I'm comparing to us again. So we do in top line about double what these guys do, just under double, and we spend about half of what they spend in marketing. So this is a terribly inefficient marketing business. So if you look back at FY22 and FY21, I know there's a bit of COVID stuff mixed in there, but for 13% revenue, they were producing 31% growth, which kind of like, it's interesting to think about. Off the lower base. Off the lower base. Yeah, yeah. But you should say something. You can say another generous comment about their cost control because there is another thing you definitely can say, which is true about their disciplines, their fixed costs have been relatively fixed. Yeah. So they do have some fixed cost discipline, I mean, like, I just say there's basically three kinds of expenses in this business. Oh, you say that. Cogs, marketing and other, and they're other went from 87 to 91 million. That's pretty flat. Well, the employer benefits went up from 45 to 51, so it's not massive. That's still 6 million extra. I know. A lot of that costs. So they definitely were not firing people, but a lot of that was probably, of which, four million, I'm wondering if they're probably wanting to FY 25 with that run rate or not far off it potentially. So, but my biggest issue with this business is as follows. So they generated an extra $32 million in gross profit in FY 25. Okay, that's good. So that's my, it's called my incremental gross profit. Yeah. I like these numbers, right? What's happens to the increments? And so 20 mil go straight to marketing. Goodbye. So that's 20 of 32 good night marketing, at least that's not 32 or 32. I mean, they were running. Was it FY 23? All of the incremental profit went to gross profit and to marketing for whatever it was. One of those years. And so, and then there's a little bit of other bits and pieces. But in the end, they keep 25% of their incremental gross profit as incremental profit before tax. That seems good, right? And that's like, that's actually not bad. And so that means I can work with that number, because then I can start modeling out. And I can say, well, where do I think they need to get to on profit before tax? And if they're keeping 25% of every incremental gross profit dollar, and even if I assume gross margins are going to stay flat, I think it's a massive assumption, then how many incremental revenue dollars do they need to get to the incremental profit before tax to make this business like fair value? That's how I think through this. I'm not sure that works when you come off such a low base though, because they made so little profit last year. Well, I just basically say effectively, you could say last year, 500 mil revenue. They made six mil of probably that was such a bad year, because they went nuts on marketing. I'm not sure that's the right year. Well, whatever, you can use this year. So, 601 mil of revenue. They made 15 mil of profit with four tax, of which six was interest. Well, this is the numbers. They made nine mill of profit with four tax on $601 million. And that means they incremented $8 million on $32 million. That's 25%. I can use those numbers to calculate where I think the business is going. And then I can make some assumptions. And the two assumptions I would make, modeling this out, are what's the revenue growth assumption? And what percentage of that gross profit are they going to keep? For your assumptions, I think there's some really interesting, almost like constant. If I'm thinking in programming terms and variables and stuff, there's a couple of constants that seem to be emerging. If you look at the marketing, around the marketing metrics, the average order value seems to be hovering around the 450 mark. And I'm not sure. But did you look at the average order value by dividing the revenue by their 1.5 customers? I'm using their numbers of average order value because they've got to publish. I don't know. If you look at them, they. I think what's fascinating about that number, your 450? So they said they had 1.3 million customers. So I tried. I couldn't work at average order value. I could work at average customer spend and that ended up to be 4.62 and if the average is 4.50, it means people are buying once a year, that's what it means. 1.01. So I think that's an interesting metric that customers that come and buy by once a year. What makes sense? It's a furniture. How often do you buy furniture? Well, it's a low. So I thought that average order value was low. If you're fitting out a route and buy a whole lot more, I don't think it's cheap. Do you think it's lower? Well. I thought it was high. I know what you think. What does he think? I mean, it's interesting to think about the different segments actually. Right? Just think about it. Now, the average order value maybe doesn't tell us that much because really you want to know if someone's just buying a lamp for a room, that's kind of one segment of customer. It would be interesting to know what's that average order value and then how often are people fitting out of order? It's all just per person. Yeah, I mean, it's much more real for me than I am. It points very valid. I tell you some of the interesting metrics about this if you picked up on these metrics. So I try to work out what the average, I could only do customer, but it's going to be the same as order because they're the same thing. So the average gross profits is $152. Per customer? Per customer? Yeah. And so it'll be similar per order. There's something going on with their gross margin. Well, they're getting worse. That's what's going on. But at a high level, it's been about 67% for three years. But it's too precise. Now, you mean the inverse of 67%. Sorry. Sorry. Yeah. Sorry. Yeah. It's been about 67%. Which at first I was like, oh, this is great. They're super disciplined. And then I started going, hang on. At this scale of business, something doesn't feel right. I'm not getting it. With that. With that number. 67% cost. I don't get that a bit. I'm not sure I get that a bit. No, but it's in gross margin. Take, take, take. I'm a, I'm a temple and webster customer. I ordered a, um, I ordered a cabinet. Yeah. The cabinet came in. How much was that? There was, I think it might have been around $455,000. There you go. There you go. There you go. There you go. There you go. But that cabinet had a defect. And to their credit, the customer service was excellent. We sent a photo. They confirmed it was, there was a defect. They sent us a new cabinet. We still have the old cabinet. I'm happy to return it if they're listening. Cost of auction to return. Yeah, yeah, yeah. But the, um, it's just interesting to me. And I know I'm probably not alone in that experience. If the return, like, it can't be that exact because either everything goes out almost perfectly or they've precisely modeled their return count. They're going to, I don't know, but it just feels too exact. Well, I, well, I would take the opposite view on that, which is, I think they have 600 dollars in total scale. Yeah. And so it becomes predictable at scale. Yeah. I think that's my guess. It does cost money to return the defective product. Do you have to pay? No, they pay for it. They just left it. They just left it. They just left it. They just left it. Oh, they gave the Amazon trick. Don't worry about it. They don't want to. Keep the junk in your house. Yeah. This is how he is. We had a direct competitor called the home and we sold it together in Hezzy. But partly for this, like, it's just a thought man. You've had everything. It's mostly in work. That's not one business that he's basically a rocket heading to Mars. And then it leaves other businesses here, like head in the hands. Oh, God, I can't believe we've learned. It's really true. Yeah. Then we'd learn he's born, menu log, and pay-ups, and arrow-cut. Yeah. You did a right menu log. That was just unjustified. You did a wrong menu. To one other, so to other metrics quickly. So of that $152 gross profit, half of it gets spent on CAC. And you might say, that's all right, because their model is building scale, getting repeat customers. But I've got some bad news for you. I think their repeat customers went from 57% of orders to 59% of orders. That's not good news. If you're going and keeping one-third of your revenue as a gross profit, and then spending half of it on marketing to acquire, and you're barely increasing your repeat customer count, like that to me is-- Well, they're increasing total customers, no. No. But they're not making money off the first time customer. No, yeah. So you want-- I think it's very likely you can see the cut-down losing money on the first time customer. Well, could I cast it? This is so-- Well, it's too possible. Not very likely. They do publish an ROI on first transaction and time to-- I think it's like-- it was too-- they use a number of two-- I forget what the measure was, but maybe it's like-- and then it was declining, though, because of all the brand-spend. Yeah, I'm out to-- That was my part. I wish you. They-- to their credit, they disclose this. Look at how this brand-spend, anyway, spend is not direct response, I suspect. Well, why is there such a thing as that? Why every bit of dot-- Well, you do add a home, don't you? Yeah, but every bit of out-of-home should have a component that drives some response. I do not believe in putting anything and saying, well, this doesn't have to do any heavy lifting for sales. Maybe 20% of it-- I'd still call that brand-spend, if that-- I'd still call out-of-home whatever it's on there as brand-spend, even if you've got some sort of-- Well, how long do you wait for all of this money to start having an effect on your sales? What's your time frame? There is a bit of a list they go, which is kind of to the brand or merging channels, which I assume is everything that's not paid performance, like Google search. Yeah. And they said that's 27% of their marketing-- or total spend, which I didn't know was marketing or just total, but I assume marketing. And they list as TV, out-of-home, be-vod, online video, audio, paid social display. Feel it's fun. Yeah. Basically, everything that's not Google ad. So I find-- this is how I feel about this whole conversation. I tell you why I find this overwhelmingly boring, because basically, what Adam-- you know, let's go to the old merger of Hamilton, Helmer, and the Contrarians. What's the point of brand? One, pricing power. Two, reduce CAC. Three, forgiveness. Now, they don't need forgiveness at this time. Can Templin Webster have pricing power? No. So TV went up 3%. Can they get reduced CAC? No. It went from 47% of GP to 49.5% of GP, which you generously have said is the same percentage of revenue. But even that is not reduced CAC. I'll start-- Look at the CAC in a second. I've got a better catch story than this. All this brand spend is not delivering the two bad-- Well, they don't even-- They have brand-- I don't even say brand-- like Coca-Cola built their business on brand spend. That's $200 million a business. I'm like, you can't say brand spends a waste time, because these guys are bad. I'm saying it's not working for them. I agree. Start working with them. You want to hear your CAC? I want brand equity. I love it. I love brand equity. So it turns the CAC stuff. So they do this really interesting chart in the-- in both the annual report and they re-published it. I don't know why it re-published it. It's like re-publishing you got down from pedophilia. I don't understand. Right. It's like-- Well, let it escalate quickly. In 2002. And, hey, I lose the way for it. And we're CAC. That's the clarify. I don't think anybody here is a pedophile. Oh, guys. We like it. Well, that makes it better. Let's do it. But this will be a great podcast for 1890. Nobody would have any issues with this conversation at 1890, although the internet might confuse them slightly. So they actually tell you that they're cost-effective, they're CAC. And they also tell you that it looks like they're ROI, on first place. They do. Yeah, that's what Scott was saying. In June 21, their CAC was $58. This is COVID, man. Yeah, getting it. It was cheaper for everyone back then. Yeah. 22. Up to $69. Yeah. 23. So, up to $72. So, yeah. Flattish. 24. Brand span kicks in. Your famous brand span. Yeah. 88 dollars. CAC. 25. 101 dollars. Yes, sir. This is $101. Yeah. If you take that $450 auto value, take away $101. What are you getting down to? No, but the problem is-- No, that's top revenue not margin. What's the margin? Yeah, that's what I'm trying to work out, what's the margin? Well, the 34. Yeah, they claim 1.4 X on first page. Well, the 34. It's pretty easy. It's 150. 150. So, yeah. So, it was $2.3. Yeah. But if you look at that, this makes the Titanic look good. This has gone from $58 to $101 CAC. This is-- so, you have this CAC basically doubling. And then you've got revenue-- and this is one of the shape prices. You know what the retort, the retort, will be. Well, you shouldn't include our brand spin in CAC, because it's for future acquisition. And then you see revenue only increasing by 18% and it was $20,000. So, you've got revenue dropping, so revenue growth dropping, CAC ridiculous. This is disaster. Yeah. Just to take the contrarian point. The contrarian contrarian? That's what we're here for. There's a lot of things to like about the steadiness of their metrics. Like, if you just take share price out of the picture for a second. Then you go, you've got-- which I know is difficult to do. Let's just take it out and go, we've got a business that's got some pretty kind of steady metrics. It can be profitable. It's producing cash flow, positive cash flow. I mean, maybe-- they've got 21% top line growth. I mean, percent now. So, it's interesting to say, well, what if you sacrifice-- because a lot of what they're doing from looking at it from my lens is like, they're trying to get that growth in and being the growth category. If you believe that, narrative. Yeah, but if you-- Narrative and killed last week. I don't-- because I never-- I never-- because you're saying this is not a bad business. I agree with you. Yeah, that's a lot of bad business. There's some good things. So, I think it's a bad business run by really smart people that have made it the best it can ask absolutely. But this isn't-- this isn't what I sold our business, because there's a sheep business. But it's got free draws. All right. It went from one mill of profit before tax adjusted without the interest stuff to nine mill year on year. That's not a bad business. It wasn't 18 to three years ago. That's a bad business. If you've gone backwards way, if doubled revenue, that's the definition of a bad business. But it was 18. Yeah, that's-- Oh, well, I'll bring back COVID, and I'll do much better. Don't do much better. You know what? You become premium. You look everything down. I promise you, temple and webster will fly. But the-- if you take the-- just to play out another path, putting the sheep across to one side, but if you say, well, yeah, what if you-- instead of trying to run it for maximum growth, which it looks like it's being run for the best growth it can get with a very small contribution-- Staying in an EBITDA band of whatever their band is. What is it, one to 3% or 3% or 5% or whatever it is? Well, it's almost like break even. You just try to show that you're not a lost making business, but you're really going for growth. If you took that back, you're actually producing a whole bunch of cashflow. That I kind of didn't get to. I don't believe that narrative. Like, I do not believe that the business would keep growing without that spin. Yeah, right. Yeah. Well, I think Scott's saying is-- Does it need to? Does it need to? Well, at 601 Mill, it did 9 Mill of EBITDA for tax. Well, I don't know. Do you need-- Like, if you just put a share price aside-- Like, why don't you feel safe? You get into a business-- It did 4-10 Mill, a proper one. No, no, it did 15 with 6 Mill of interesting money. I did 18 with 6 Mill of EBITDA. No, no, no, no, I don't use that metric. Profit before tax. OK. Profit before tax. And so 9 Mill adjust the profit before tax. And so you want to buy a business that does a 1 1/2% profit before tax margin with declining gross margins and increasing marketing spin as a percentage of gross profit. Let's just 1 1/2% is your margin of safety. No, but it is your way. It is. No, no, no, no, no, it's gross. It's gross as what's the price. Yeah, but also that a lot of that margin disappearing is coming-- like, what's hard to pull apart is how much of the margin disappearing is the gross-- So what do you say about sales? But just so specifically, if they turn off-- If they turn off the 20-mill incremental-- Just to pay the click. Next year. Yeah, just to-- Yeah, yeah, yeah. Let's get a bit simple. Do you think they might be able to achieve flat revenue next year? So 601 again? Well, then if you take away marketing, if you reduce marketing-- Yeah, it's more than-- reduce marketing. So you've got 98 million max-- say 30 million stupid brands-- It's still going to be because of waste of time. Yeah, well, then you're going to-- What Scott and I are saying, just to SEM, take 30 million bucks off. This business could make 40 million bucks potentially. For how long? Yeah, you're pushing a lot after that. Or probably grow it slightly. Yeah, we've got a lot after that. Well, you're Warren Buffett, aren't you? So this is a perfect business for you, because this is the cigarette butt business when you do that. That's right. Hang on, hang on. How's it? Because it's going to be going backwards. So how's it going to be going backwards? But you're assuming that all of a sudden, if all we're doing is spinning on ads, and then it starts going-- Well, no, it's performance marketing. I don't think we're backwards. So we're saying we're juiced to brand spend. Keep the Google spend. There's going to be mine again. It's going to be inflation spent, growth. You understand what Google spend does when you don't have any brand-- No, no, we're not saying, get rid of the brand. You don't have to spend-- Hang on, hang on. You understand what Google-- It's got some brand. Let me finish this sentence. When you don't spend-- When you run performance marketing, and you don't spend tons of money on your so-called brand marketing, then the cost of your performance marketing acquisition goes through the rules. When you quit assessing brand marketing three minutes ago, yeah, I wouldn't-- If it's like you're controlling it in yourself. I wouldn't break it. I wouldn't break it out. I'm surprisingly being consistent, which is-- I'm expected. But basically, what I'm saying is, this brand marketing can't be sent into its own market, because it reduces the cack from performance. Because people see the brand around, and I bet you, I bet you will never know the answer this, because I sure as hell not going to tell me. But I bet you, the 59% repeat purchases, they are not coming direct to the brand. They are going through performance channels, almost all of them. I bet you they're paying a cack on the 59% of repeat purchases. And now you're saying, I want to run this business, but I just want to turn everything else off and just do performance marketing. And what I think is almost every customer that you get is coming through performance marketing, somewhat mediated by the brand spent. You turn that off. I'm not sure you'll spend much less money on the performance marketing. I think you will. Because you saw a big jumping cack. I know there was the COVID impact between 3. Well, we're never going to know, because I ain't trying this strategy. I'll give you that. But what I think the question we come to is, what do we value this business? Well, hang on, can I just talk about cash first? OK, we haven't talked about this. I think you'll love this. So, cash. This year, they produced $42 million of cash after I take out their little buyback, which is insanity. We now know it's insanity. They were buying at the top of that. That was a great call, right? Yeah, when you criticized the buyback. I did not like that buyback. But you were the only one to criticize the buyback. And when it was $28 a share, they were buying that shares. And the same time, Mark and come up with selling shares. Buy high sell low. That's the policy of the buyback. So I got rid of buyback and tax. I tried to-- because the tax last year was really high for some abnormality, so whatever. So they generated $42 million before the buyback and tax. Now, what's your favorite thing we've got to immediately pretend is there, which is, like, what do you hate, leases? No, you hate being someone getting paid with something. I don't do much of that. Share-based payments are $5 million. Not much, but-- Where's $5 million share-based payments? I don't know, in the documentation. I don't see it in the cash flow. Yeah, well, it's only in the cash flow, because it's not cash. Of course. But, like, that's-- So, $5 million of the $42 million we paid with shares instead of cash. Is that right? I could have thought-- Did you have share-based payments? I do, but I know Mark gets a lot of shares, but he gets $5 million. That would have been an adjustment, though. So, that was FY255 million share-based payments, OK? I think they told us share-based payments. The tax that's due on them is some crazy number, like it went from $14 million to $43 million, because probably because of share price appreciation. So, anyway, $5 million is share-based payments. You agree, OK? It's good? Yeah, yeah, yeah, yeah. So, $42, $5 of it, they would have paid, but they paid it in stock, OK? Yeah, OK, yeah, yeah. So, now, I want to say this little preamble for people before we get into the detail. So, cash, we talked about cash with Droneshield. And so, now we see why that was cash receipts, but cash, it seems very real cash, but it is so unreal, because there are two ways that you can make cash. One way is that you can bring in cash and not pay out so much cash when you're just generally trading. And another way you can make cash is by not paying some things and bringing some other money in faster. And so, for example, with your cash. You've just ruined that long-time phrase of revenues, vanity, profit, sanity, and cash is king. Now we're going to come up with something new. Cash is king, but there are many ways to get on the throne. That's what you might say. And so, let's say that if you owed people money, and then in 2025, you owed them more money than you owed them in 2024, maybe $19 million more, then maybe $19 of that $42 million would just be money that you should have paid people that you hadn't paid people. So, just on this point, if you look at the cash balance year-on-year, it only moves by about three to four percent. Not what did it move? 34 percent in the last financial year. So, just going more to your, there's definitely a portion of that amount that is future. - Well, we're going to get to that portion, because one way is not paying people. - I don't increase a lot. So, I thought we were from 107 to 144. - It increased $42 million to cash. That's right. - It increased much more than the EBITDA number. - Yeah, it increased more than the EBITDA number, but also just going back historically with like kind of similar numbers. - Yeah. - The cash balance end of year hasn't been moving so much. - Yeah, it's the usual year, it's right there. - Yeah, and so that's 19 mil of their 42. And five was, we paid stock, but I'm actually a bit more relaxed about that. And how about this? Sometimes, you charge customers in this business. You love this business, 'cause it's got negative working capital. I'm not sure if it is or it's not, but basically, you can charge customers before you have to deliver this. - It's got some negative working capital. - And so, in FY25, there was $6 million more than FY24 where they charge customers and take in the cash. - Which makes sense with the growth. - It's growing, yeah. - Okay, I'm not saying it's bad. I'm just saying that's another six mil of the cash growth. And so, increasing payables and taking more deferred revenue, that's $25 million, but they did buy $3 million or inventory, and one mil increased receivables. So, money they were, I was thinking. And so, if you take it all and you even include the share, if you don't include the share-based payments, the 42 drops to 26. If you include the share-based, 19 and 6 is 25, so payables 19 deferred revenue six, that makes 25 of free cash, minus three for inventory is 22, and then minus receivables. - Over 25, yeah. - So, 21 mil of their cash, is just balance sheet movements. And then if you chucked in the share-based payments, you could do that if you wanted to. That would take it to 26 of the 42. So, definitely, they're increasing cash 'cause they're negative working capital. Like, this is a nice cash-generating business, but it ain't a $42 million cash-generating business. - No one's smart looking at $42 million, trading with anything other than disdain. - Well, you know, there's also six mil of interest. Like, that's factored in. So, this is a business where it pays to look in at the detail of what's going on. And like, I think that you're basically paying a valuation today of close to $2 billion. - For a $1.5 as we speak. - Is it? - It's dropped off. - All right, well, I think it's more than 1.5. You're saying enterprise value, but I don't care about the cash in the bank. - It's about equity value. - Like, let's say 1.8 billion of a business is doing 10 to 16, 1.8 billion. - 1.8 billion, share price. - After being negative working capital, and that I think is doing 9 mil of adjusted profit before tax, once you take out interest. And so, the question is, like, will that ever be, what would make, like, what valuation could you get to, right? - What do you buy right? Let's say that. - Well, I did a few models. And my models basically had a couple of variables. So, I said, let's just take two variables. The growth rate of revenue. And what percentage of the incremental growth of this profit was going to be kept as profit before tax. So, currently, it's 25%. Now, I'll tell you the bullish, the most bullish of bull cases that I could come up with for this business. That I modeled for FY26, 27.28. And then I thought, maybe we could find a way for this share price to be justified in FY, at the end of FY28. Let's try and get there. That would be a good outcome for me, 'cause I think it's so overvalued. So, I said, what if we imagined that they kept growing at 20% a year on the top line for the next three years? That's faster than their current growth rate. And they kept that 25% margin of gross profit to profit before tax, which I think is going to be tough to maintain. But let's say they did that. Where would you end up? And at the end of FY28, you would end up with more than a billion dollars of revenue. And about 120 million dollars of profit before tax. That's a big number. And you would end up with more than an 11% profit for a four-tax margin, to, I'm not including all the interest stuff, which is like 10x, the cut, not quite, but 8x, the current margin. I find the whole thing totally implausible. But if you did that, and what would you pay for that 20 times in-pat, let's say a P of 20, would you pay for that business? Yes. Let's say you pay that, then I can get you to a $14 share price. Actually, you pay 25 times, but yeah. Would you, okay, so you can add another, what's add another quarter onto that? So what, $3.50. So I can get you to a $17 plus share price. What's the current share price? $14? One second. So there I think that I can give you a higher share price. $14.80. I can give you, you could make some money if you're held on, on my reasonable multiples, on Adam's 25x, which I wouldn't pay as well. And what are we counting on specifically to have happen? You have to drop it, right? We have to 20% per annum for the next three years. Yeah. Higher than current. Marketing's staying the same. Well, I don't know. Well, I just want to cleanse the outcome and to say that keeping the same 25% of gross profit to profit before tax, so I don't, so I think neither of those is plausible, but they're possible. And so if they did those for three years, I think the share price today would be a bit undervalued or right in three years time, in three. That's my bull case. Is that, you got a bit of bull case on that, Scott? It's that bull case has already well-beautiful. Yeah, impossible. But I'm trying to find something where I can say, there's no justification for this product. Well, that is, what is it, what do you think? But hang on. Someone in the market will believe there's more or less in the market. All right, well, that is true. But there's more runs everywhere, I don't know if you've noticed. But like, so you could have 20% growth. There'll be people that believe this can do 20% revenue growth. I think Mark, call to probably believe this can do 20% revenue growth for 26, 27, 28. And that will pass a billion dollars. That's his medium-term target. And someone in the market will believe that this can continue to keep 25% of its gross profit passing through pre-tax. And so if you believe those, and if someone will pay 20 or 25% PE on those, then by the end of 28, yes, you'll get to this kind of share price. And I don't, so I don't think that's a zero percent chance of happening. Do you think this is better than the, well, since we say zero, the business zero with the X? You've got to view about that business. Do you think there's more of a chance of this doing 20% growth, 25% keeping between zero and zero? Oh, zero is an infinitely better business than this. Because that's what's a bigger chance of hitting its objectives. That thing or the zero out? What are you assuming zero's objectives are here? That the US will kick in and justify the share price. It's both, they're both thinking that. As neither is an average going to happen. Approaching zero, right? OK, what was your best bull case, Scott? I actually didn't even bother doing the bull case. I just kind of get past the valuation and the cash flow production ability of the business with where it's at. How do you value the business? Well, I think of comparables. And I think a great comparable, because it's actually almost what's happening here is, if, let's say, we bought the whole business, what did we say? The current market cap or enterprise value was like a billion. No, no, much more than a billion. 1.7? It is an interesting factoid. The equity value of Templin Webster is exactly the same as the equity value of another company. We've been to a million bucks. Draw and shield. Draw and shield. Both 1.78 billion. Weirdly, I just remember that that was Throne Shield, but also, like, I know that Drain Shield is like branded on your brain currently. So I knew that's what it was going to be. So I was using less Drain Shields. I'd rather own Templin Webster than Drain Shields. Of course, yes, you're great. Absolutely. Let's say you pay 1.7 and you buy the whole business. Yeah. Your current production of a year old is like, if I just took that 1.7 and a six or seven percent on it in a bank account, that's a real comparable here, because that's what's happening with the cash production. I don't say six or seven percent. Just take 5 percent. So if you go to NAB and you get 5 percent from them, which is the same thing. I'm going to give them 1.7. Or maybe we can make around another $5 million, right? Yeah, $85 million, and I'll give you 9 if you buy a Templin Webster. I'm not including the cash in the bank. Like, it takes a lot of 9s to get to $85. That's the problem that you're flagging. It's a bad use of capital. Yeah, yeah. So what's the good use of capital? And what point would you guys be buying? Where's the flip to the buy? Everything's got a price. Who can I tell you my most bearish of bear cases? Goes under. No, no, well, OK. That would be the most bearish. I think most bearish-- I mean, still is a decent business. It grows revenue for the next three years at 15% of years. It's your most bearish. I'm just going to give you-- That's not bearish. Well, that's the most bearish I've done. That's what it's basically doing now. No, it's doing 18 now. No, but it's dropping. It's dropping. So probably it's doing 15 at the moment. Well, I want to tell you, this will be bad enough, OK? So basically-- It's too generously a bear scenario. No, let's say it does 15% of your growth for the next three years. 15%. But I think that's not a bear scenario. I'm going to say 5%. I'm going to say you have bad this is, and then you're going to have that. The bear you were saying before is flat. Like if you were saying you could be-- That's my bull case. No, no, no, the flat revenue. Yeah. That's true. Well, that was because you wanted to hack their revenue-- [LAUGHTER] You wanted to just stop-- I gave you that on stopping the incremental marketing spend, and I'm not sure it's achievable, by the way. But so if you did 15% a year revenue growth, and instead of keeping 25% of their growth profit, they keep 15% of their growth profit. So significant margin erosion-- I think that's bearish. That is bearish. That is bearish. Maybe you have similar margin, but lower growth. That's more realistic. And so maybe I would pay-- let's say someone was prepared to pay 15 times in pat for that business. It would be expensive. Well, let's say you paid it, OK? You paid the revenue growth, right? I'm going to tell you what this share price is at 15 times in pat at the end of 26, 27, and 28. At the end of 28, it's $5. At the end of 27, it's $3.50. And at the end of 26, it's $2, approximately. So I think that if it did that, then it would be currently worth about $2. So I haven't budge on my view of it, right? Like I said to you, I think this is 90% to 95% overvalued at its peak. I think that's-- I haven't really changed. Now, I think-- you don't think that's such a bear case. I think that's worse than they're going to do. But my point is-- I think we just-- I don't think the marginal rate, I think the revenue will drop. Whatever the number I think this is is irrelevant. I think it remains a short. It's always going to be a short. And like-- Until it hits 300 mil market cap, then you're probably-- Where's my-- I think at 200 mil, I still think this is a pretty decent buy. I think it can make 30 to 40 mil flat. No growth. OK, it feels like a new year. That's like a completely-- The thing is to get to that point where it becomes what you're talking about, Adam. That's like a completely different business. Totally. It's a complete-- It's the last market we've had in the year. Equity value. Yes, not enterprise. Because they've almost got that much cash in it. Well, half of that cash in the bank, right? They've always-- Take that away. Yeah, I agree. 300 mil is return the cash and pay $3 for the stock, $2.53. But with the cash in the bank-- because this business has the cash in the bank. So with 300 mil valuation with this cash in the bank, it's like $1.50 share price, including it's a reverse of that, right? Sorry, it's a $4.50 share price. So it doesn't matter if you think this is worth $2, $3, $4, $5, $6, $7, $8, $9, $10, it's a short. Because it's worth $15 at the moment. I thought you were selling furniture at the market. It doesn't matter. It's a fact that I'm sorry for you. Yeah, it doesn't matter. If it hits any of those numbers, this is still a short, even after the $50, $5, $3, $4. So if you're looking on a cash kind of basis in a lot of ways like we are, how's it producing profits? I think the hard thing is if you're in the hot seat, and I've always got huge respect for anyone in the hot seat that's not being fraudulent, and so you think if you're in the hot seat and you're just doing your best thing, you are stuck between a rock and a hard place. Because you're in this gross stock territory where you're really meant to deliver a huge revenue growth. I agree, but then what do you do? What's the difference between this hot seat and the zero hot seat and the answer is. Well, I'm not in either of them. Well, I'll tell you the answer. The zero hot seat, someone's set on that chair while it was already on fire. And it was very hot. Here, the CEO of Templin Webster set the seat on fire himself. He is the one that had this growth path. He is the one that jacked the share price to $29. Well, that's when I say jacked, "Look, unlawfully." It's not his fault that investors are moral. His narrative is. So, basically what I'm saying is, he created an narrative that got investors very excited, and then he found himself with a $29 or $14 share price. Actually, the difference is irrelevant for the purposes of this. What it means is, if we take the fair road that you are advocating and that Adam is advocating, this share price tanks. It's the Atlassian problem, not so much anymore. Zero. A bit of a zero problem. It's all of these problems, which is, if we run this business for moderate growth, generating great profit and cash margins, we will tank the share price. And no CEO and Chairman wants to do that, especially when they've got an awful lot of those shares. Yes, exactly. And so, this is what we end up with. And there was a time when I said, "If I had to use my own balance sheet, I wouldn't take this business for free, because it could bankrupt me with a 2% turn around in margins." That's the risk of this business. And it's such a hard business. I think we talk about this every time we talk about them, but this is such a hard business to run. If this share price had never got a $3.9 billion, and they were just $300 or $400 million, we'd be saying, "These guys are unbelievable. They've taken a business of worth $0 to $400 million. They're some of the best operators in Australia, but because they got so out of hand and went to the comical $2.9 billion, which is just like AMP at $40 in 2001. Right? Because it got so out of hand, we now sort of have forced, not because it was in the management, we're criticizing this sort of business, really, but it's nothing to do with the underlying business. The underlying business was never worth more than $300 million, but it just got sent to the moon because of the voting machine, weighing machine thing. Yeah. And so, I think, you know, you know how much this is leveraged to top-line growth by the reaction to the share price going from one point to the next. Still 18% growth. 21% to 18%. It wasn't even a big fall, right? Yeah, but like the share price got slushed. We're from 26. They thought it was me 23 and it ended up being 18. So there was a bit of a gap, but it was more that this is being priced for beyond perfection. It was being priced for like, unobtainable perfection. And so I think the downside, so the beauty of this is, you can short this, and like obviously I'm not shorting it, but you can short this stock on this thesis. And I think your downside, that is how much could it go up, I don't think it's doubling again. Like how could that euphoria come back on this stock? I think in my view, even if it did 20% a year of top-line growth and still continue to keep that 20% 5% of growth margin, I don't think the share price is worth much more than the current share price in three years' time. It's only insanity that would leave you deeply down. And so I think if you had time and you weren't going to get margin calls on shorting it, you could shoot it with a high degree of confidence that you were never going to end up too badly wrong. Like it's a very asymmetric bet to bet on this thing in my view. Interesting. Are you going to bet? I know people who have shorter this, it's not easy to short this stock. Like there's not much stock to short, and like I don't really do it, and like to be honest with you, it was a much easier short at 29 dollars than, well, I don't know much easier. It was an easier short at 29 dollars than at 15 dollars, but I still think that this is a lay down short when I look at it. So the lessons in this interesting though for like the CEO, executive teams and investors, which is, if you're going to create a, you've got to be careful with the rod that you create for yourself and the narrative that you go with investors because it can come back. Yeah, well, you know, there's a book that you might have heard of called Frankenstein. I think the lesson is, if you're Dr. Frankenstein and you create Frankenstein monster, there might be some consequences after their monster's created. And that's what has happened here with all of these businesses. They've just created Frankenstein's monster. These are the lessons I would learn out of all of this one. When you do this to a share price, sell as much of it as you possibly can. I think they learned that lesson. That could've sold more. Oh, no, I think they saw quite a lot, didn't they? They saw it. I mean, they didn't sell drawings, you know what's above the joints? You're about God. That's above the joints below the joints, but the other lesson is, share buybacks do not prop up share prices. Yes. I don't know how many times people have to learn that lesson. That's just so dumb. They do not prop up share prices. You're just on the share buybacks one. I think what was it? It was like 20 million spend over two years. It was such an insignificant. Yeah. And they haven't bought for a while in fairness. They've got an open share buyback. They haven't done that before. Yeah. But they don't work. So share buybacks don't work. What other lessons could you? I think the fundamental lesson about this is, as an investor, you need to know. So I think essentially this, people love gambling. I don't know if you know how popular gambling is. It's very popular. And so like anyone, if you want to create it, like there isn't enough to have a license for gambling, it's because if I set up something tomorrow and I say, "Give me money." And you've got a chance to win money. I would be rich in the blink of an eye. Everyone would give me money because people love gambling. And I think the stock market has started to replace casinos as a gambling method. And so the people that have bought Temple & Webster, by and large, in my view, are gambling right? And so I think as an investor, you need to decide, just be honest with yourself. Am I investing because I understand this business and I have a clear thesis for what's going to happen? And if so, I have to keep checking it. And so I think that's the reason why I think that's the reason why I think that's the reason, why I think that's the reason why I think that's the reason why I think that's the reason Thanks, us two amateurs. And thank you all for listening. This is emergency, deep dive on such an important topic of temple and web star agency. Absolutely, friend of the pod. So thank you, Scott. Thank you, idea again. We'll be back for our Ask Us Anything episode on Saturday. Thanks for having me, guys. Right to you. - Right to you. (upbeat music)