Latest / What the Flux / Coles brings in the robots | Adidas takes White Fox to court | SpaceX's $40B chip deal

Transcript

Coles brings in the robots | Adidas takes White Fox to court | SpaceX's $40B chip deal · What the Flux

• 0:01
  Speaker 1: Thank you. This is What The Flux.
• 0:06
  Speaker 2: I'm Brett. And I'm Justin. And it's Friday the 9th
• 0:08
  Speaker 2: of October.
• 0:09
  Speaker 1: Jazzy boy, Australia's property market is running at two speeds
• 0:12
  Speaker 1: right now according to realestate.com.au. Listings in Sydney and Melbourne
• 0:15
  Speaker 1: dropped 16% in the three months to September compared with
• 0:19
  Speaker 1: last year. While Brisbane, Perth and Adelaide jumped 17%.
• 0:23
  Speaker 2: But even so, REA.
• 0:24
  Speaker 1: Reckons that house prices will keep sliding after last week's
• 0:28
  Speaker 1: rate hike.
• 0:28
  Speaker 2: Fluxam, we've got a very big podcast coming up. But
• 0:31
  Speaker 2: before we jump in, I've got a little announcement of
• 0:33
  Speaker 2: my own. As I've mentioned over the last couple of weeks,
• 0:35
  Speaker 2: today will officially be my last episode of What The Flux. Now,
• 0:38
  Speaker 2: when Brent and I started this podcast six years ago,
• 0:41
  Speaker 2: we had one pretty simple belief. Business news didn't have
• 0:43
  Speaker 2: to be boring and it didn't have to be confusing.
• 0:45
  Speaker 2: We wanted to give you just enough of the story
• 0:47
  Speaker 2: that you could walk into the office or a family
• 0:49
  Speaker 2: dinner and keep up with the conversation. But not so
• 0:51
  Speaker 2: long that he didn't actually make it to the end.
• 0:53
  Speaker 2: So Fluxam, while I'm hanging up the microphone, the show
• 0:55
  Speaker 2: is in very good hands with Brent, Larissa and the
• 0:58
  Speaker 2: rest of the Flux team. So this isn't goodbye to
• 1:00
  Speaker 2: What The Flux. It's just goodbye from me behind the mic. Now, B-Man,
• 1:03
  Speaker 2: enough of that emotional stuff. We've still got some business
• 1:06
  Speaker 2: news to get through.
• 1:07
  Speaker 1: Three unforgettable stories today, Jazzy Boy.
• 1:10
  Speaker 2: Let's do it.
• 1:10
  Speaker 1: For our first, Coles is reportedly in talks to bring
• 1:13
  Speaker 1: robots into one of its supermarkets, turning part of the
• 1:17
  Speaker 1: store into a mini warehouse.
• 1:18
  Speaker 2: Getting really R2-D2 Star Wars-y around here, B-Man. So what's
• 1:21
  Speaker 2: going on?
• 1:22
  Speaker 1: So Coles is one half of Australia's supermarket duopoly alongside Woolies.
• 1:26
  Speaker 2: Between them, they own more than 60... 65% market share
• 1:28
  Speaker 2: in Australia.
• 1:29
  Speaker 1: And jazzy boy for Kohl's, its online business is its
• 1:31
  Speaker 1: fastest growing part.
• 1:32
  Speaker 2: Of the business. Yeah, sales were up 26% to $ 5. 6
• 1:35
  Speaker 2: billion last financial year.
• 1:36
  Speaker 1: But Kohl's is reportedly eyeing some new staff, robots, from
• 1:40
  Speaker 1: a tech company called Ocado.
• 1:42
  Speaker 2: Finally being a colleague who never takes a break or
• 1:45
  Speaker 2: gossips about other people in the office.
• 1:46
  Speaker 1: But unlike the robots that currently work in Kohl's distribution centres,
• 1:49
  Speaker 1: these robots are a little bit different.
• 1:51
  Speaker 2: Yeah, they'd pick and pack online orders within local supermarkets.
• 1:54
  Speaker 1: So your trolley will now need to battle against robots?
• 1:57
  Speaker 2: Not quite. They'll be in a closed off section of
• 1:59
  Speaker 2: each of the local supermarkets.
• 2:01
  Speaker 1: And while no deal's been signed yet, Coles is definitely
• 2:03
  Speaker 1: under pressure in the online delivery space.
• 2:05
  Speaker 2: Yeah.
• 2:05
  Speaker 1: Which means the grocery wars are being fought in a
• 2:08
  Speaker 1: part of the store you'll never actually see thanks to micro-fulfillment.
• 2:11
  Speaker 2: So what is the key learning here?
• 2:13
  Speaker 1: Micro-fulfillment is basically a shrunken down version of a robot warehouse. Yeah.
• 2:17
  Speaker 2: Instead of building one enormous fulfillment center out in the
• 2:20
  Speaker 2: city fringe, you squeeze a smaller automated warehouse inside or
• 2:23
  Speaker 2: next to a normal supermarket.
• 2:25
  Speaker 1: And why not just keep building the big warehouses?
• 2:27
  Speaker 2: Because they're usually out in the sticks.
• 2:30
  Speaker 1: The mini warehouses, it means the goods are picked, packed,
• 2:32
  Speaker 1: and delivered faster to customers.
• 2:34
  Speaker 2: And because it's in a closed off section of the supermarket,
• 2:36
  Speaker 2: it means these nifty little robots can move fast.
• 2:39
  Speaker 1: No trolleys, no screaming toddlers.
• 2:41
  Speaker 2: No blokes standing directly in front of the milk for
• 2:43
  Speaker 2: seven minutes comparing two identical customers.
• 2:45
  Speaker 1: And the pressure's on, Jazzy Boy. Kohl's did $ 5. 6 billion
• 2:48
  Speaker 1: in online sales last financial year.
• 2:50
  Speaker 2: Woolies did $ 10. 6 billion, nearly double.
• 2:53
  Speaker 1: So they kind of need to get this micro-fulfillment strategy right.
• 2:57
  Speaker 2: For our second story, Adidas is taking Aussie fashion label
• 3:00
  Speaker 2: White Fox to court, claiming their four-stripe trackies are a
• 3:03
  Speaker 2: little too close to the famous three.
• 3:05
  Speaker 1: Ooh, Adidas reckon someone's trying to earn them.
• 3:07
  Speaker 2: They're stripes, the easy way. Tell me more. So White
• 3:09
  Speaker 2: Fox is the Sydney-born online brand behind those bubble font
• 3:12
  Speaker 2: hoodies and trackies.
• 3:14
  Speaker 1: And you literally can't catch a bus without seeing one
• 3:16
  Speaker 1: of their ads.
• 3:16
  Speaker 2: Yeah, and B-Man, this isn't some tiny Instagram brand operating
• 3:19
  Speaker 2: out of someone's spare bedroom.
• 3:20
  Speaker 1: Nope. White Fox did a lazy $ 542 million in sales
• 3:24
  Speaker 1: across Australia and the US last financial year.
• 3:26
  Speaker 2: But back in January this year, White Fox started selling
• 3:28
  Speaker 2: clothes featuring four stripes.
• 3:30
  Speaker 1: Which sounds quite harmless.
• 3:31
  Speaker 2: Unless, of course, you are Adidas.
• 3:33
  Speaker 1: Yep, and Adidas, which has owned three stripes since 1952,
• 3:37
  Speaker 1: is not amused.
• 3:37
  Speaker 2: Nah, it's now suing in the federal court, claiming that
• 3:40
  Speaker 2: White Fox's gear is, quote, deceptively similar to its own.
• 3:43
  Speaker 2: Fun fact, B-Man, the first hearing is today in front
• 3:45
  Speaker 2: of Justice Ian Jackman, Hugh Jackman's brother.
• 3:48
  Speaker 1: Wolverine's brother ruling on this claws-out fashion brawl over the
• 3:51
  Speaker 1: value of a brand.
• 3:53
  Speaker 2: So what is the key learning here?
• 3:54
  Speaker 1: For some companies, the most valuable thing they own isn't
• 3:57
  Speaker 1: a factory. It's three little lines.
• 3:59
  Speaker 2: But man, brand equity is the extra value that people
• 4:02
  Speaker 2: place on a name or a logo.
• 4:03
  Speaker 1: It's why you'll pay more for a hoodie with stripes
• 4:06
  Speaker 1: than one without. And the Adidas brand alone was valued
• 4:08
  Speaker 1: at $ 17. 4 billion in 2025. Does Adidas, the global brand,
• 4:13
  Speaker 1: really care about white fox?
• 4:14
  Speaker 2: Yes. Yes, they do. Because every lookalike that you let
• 4:18
  Speaker 2: slide makes your logo mean a little bit less.
• 4:20
  Speaker 1: Or as they like to call it in the brand world,
• 4:22
  Speaker 1: brand dilution.
• 4:23
  Speaker 2: But B-Man, these court cases don't always work.
• 4:26
  Speaker 1: Nope. Remember when Adidas lost a stripe fight to designer
• 4:29
  Speaker 1: Tom Brown?
• 4:29
  Speaker 2: I do. But on the other hand, they won a
• 4:31
  Speaker 2: stripe fight back in 2013 against Pacific Brands. which was
• 4:34
  Speaker 2: selling shoes with four stripes under the Dunlop brand.
• 4:37
  Speaker 1: And the court found three of the 12 shoe styles
• 4:39
  Speaker 1: infringed Adidas' trademark.
• 4:41
  Speaker 2: So, B-Man, with White Fox spending $ 52 million a year
• 4:44
  Speaker 2: on marketing, it's fair to say this one is a
• 4:46
  Speaker 2: heavyweight fight.
• 4:47
  Speaker 1: For our third and final story, SpaceX is reportedly lining
• 4:51
  Speaker 1: up a $ 40 billion loan to buy Nvidia chips, and
• 4:55
  Speaker 1: the chips themselves could be the collateral.
• 4:57
  Speaker 2: SpaceX's debt pile is reaching a Next level speed, P-Man.
• 5:00
  Speaker 2: So tell me more.
• 5:00
  Speaker 1: So SpaceX is Elon Musk's rocket company, which listed in
• 5:03
  Speaker 1: June this year in a $ 1. 8 trillion US IPO.
• 5:07
  Speaker 2: But these days, it's also running some of the world's
• 5:08
  Speaker 2: biggest AI data centers.
• 5:10
  Speaker 1: And Jazzy Boy, apparently these days, there is no such
• 5:12
  Speaker 1: thing as too many NVIDIA chips. Now, SpaceX is in
• 5:14
  Speaker 1: talks with asset management firm Apollo and a bunch of
• 5:17
  Speaker 1: banks to borrow, get.
• 5:18
  Speaker 2: This, $ 40 billion US dollars.
• 5:20
  Speaker 1: All to buy NVIDIA chips.
• 5:21
  Speaker 2: And they'll use the chips as security for the loan.
• 5:24
  Speaker 1: So if they default, the banks can take control of
• 5:26
  Speaker 1: the chippies.
• 5:27
  Speaker 2: Exactly.
• 5:27
  Speaker 1: Didn't they just borrow $ 25 billion in bonds in June
• 5:31
  Speaker 1: this year?
• 5:31
  Speaker 2: They did, just two weeks after their IPO. And B-Man,
• 5:34
  Speaker 2: the race to get bank debt for AR chips is
• 5:36
  Speaker 2: nearly getting as competitive as sourcing the chips themselves.
• 5:39
  Speaker 1: So what's the key learning here?
• 5:41
  Speaker 2: The AI boom runs on chips, but those chips are
• 5:44
  Speaker 2: running more and more on borrowed money.
• 5:46
  Speaker 1: Guys, we know that building AI is very expensive. We're
• 5:49
  Speaker 1: talking the cost of AI chips. We're talking the cost
• 5:51
  Speaker 1: of running data centers. And then, of course, there's actually
• 5:53
  Speaker 1: the power to run the AI compute. And for years,
• 5:56
  Speaker 1: big tech paid for these costs out of its own pocket.
• 5:59
  Speaker 1: But the bill becomes so big that even big tech
• 6:01
  Speaker 1: is now ringing up their banker friends. Get this one.
• 6:03
  Speaker 1: Morgan Stanley reckons AI-related debt sold globally could hit nearly
• 6:08
  Speaker 1: $ 570 billion this year.
• 6:10
  Speaker 2: And that's more than double what the debt was last year.
• 6:12
  Speaker 1: But here's the thing, Jazzy Boy. Lenders are getting pickier.
• 6:15
  Speaker 2: Yeah. They want more interest on their loans if they're
• 6:17
  Speaker 2: going to keep dishing out the AI muller.
• 6:18
  Speaker 1: This week, JP Morgan offered a $ 5 billion AI data
• 6:22
  Speaker 1: center loan paying around 11% interest.
• 6:25
  Speaker 2: Wow. 11% is heading into personal loan territory.
• 6:28
  Speaker 1: So, SpaceX's $ 40 billion. billion dollar deal would be one
• 6:31
  Speaker 1: of the biggest examples of how expensive it's becoming to
• 6:34
  Speaker 1: buy AI chips.
• 6:36
  Speaker 2: Fox fam, as mentioned on the top of the pod,
• 6:37
  Speaker 2: this will be my last episode recording the podcast. When
• 6:40
  Speaker 2: Brett and I started this podcast six years ago, we
• 6:41
  Speaker 2: wanted to make business news bite-sized and something you'd actually
• 6:44
  Speaker 2: look forward to listening to. And after six years, millions
• 6:47
  Speaker 2: of downloads and more business stories that I could possibly count.
• 6:50
  Speaker 2: I think it's fair to say our simple belief was
• 6:52
  Speaker 2: bang on. B-Man, we've recorded this podcast rain, hail or shine. Yep.
• 6:55
  Speaker 2: From our beds on a very questionable rocky trestle table. Yep.
• 6:58
  Speaker 2: Under doonas, in cupboards, in foreign countries.
• 7:01
  Speaker 1: Yep.
• 7:01
  Speaker 2: And might I say, even in an old toilet cubicle,
• 7:04
  Speaker 2: this somehow became our podcast studio. Very glamorous. Very media
• 7:08
  Speaker 2: mogul of us. But through all of this, there was
• 7:09
  Speaker 2: one constant, The Flux Fam. You've tuned in, shared the
• 7:12
  Speaker 2: pod with mates, sent us messages, laughed at our terrible jokes,
• 7:15
  Speaker 2: and made this little idea into something so much bigger
• 7:18
  Speaker 2: than we ever imagined. And so while this might be
• 7:20
  Speaker 2: my last episode behind the mic, I'm bloody excited to
• 7:22
  Speaker 2: watch the next chapter of What The Flux from the
• 7:24
  Speaker 2: other side. So Flux Fam, thank you for listening. Thanks
• 7:27
  Speaker 2: for backing us. And thanks for letting me talk business
• 7:29
  Speaker 2: into your ears multiple mornings per week for the past
• 7:31
  Speaker 2: six years.
• 7:32
  Speaker 1: And thank you, Jazzy Boy. We will miss you, but
• 7:34
  Speaker 1: we know you'll be watching from the other side.
• 7:36
  Speaker 2: We certainly will.
• 7:37
  Speaker 1: And most of all, thanks for listening. And Larissa and
• 7:40
  Speaker 1: I will see you on Wednesday.