News

26 Nov, 2020
Redbubble names new chief executive
Inside Retail

 

Art marketplace Redbubble has announced Michael Ilczynski will take up the role of the business’ chief executive effective 27 January 2021.

Ilczynski formerly worked as CEO of employment site Seek, and will bring his years of experience turning that site into a global force to Redbubble.

“That track-record, including the successful development of his team, evolution of the product and scaling of the business, are the right combination to continue Redbubble’s transition from a niche to mainstream global consumer marketplace,” Redbubble chair Anne Ward said.

“Seek is one of the few companies in Australia to have been down this path before Redbubble, and we are delighted to be able to attract a proven, senior leader of Michael’s calibre to join Redbubble.”

Ilczynski said he is very thankful for having been given the opportunity, and that he sees opportunities to build on Redbubble’s three-sided marketplace offer.

Interim CEO and founder Martin Hosking said the appointment is the next milestone in Redbubble’s ambition to pursue the growing global e-commerce opportunity.

“As founder and as a director, like the rest of the board I was determined that our next CEO had the experience, skills and passion for growing our global community of independent artists and customers, plus the leadership track record and spark to inspire and develop our incredible global team,” Hosking said.

“Michael is that person.”

The search for a new CEO came about when former CEO Barry Newstead was ousted by the board in February, after it decided a change of leadership was necessary.

20 Nov, 2020
Amazon US launches online pharmacy in new contest with drug retail
Inside Retail

Amazon.com has launched an online pharmacy for delivering prescription medications in the US, increasing competition with drug retailers such as Walgreens, CVS Health and Walmart.

Called Amazon Pharmacy, the new store lets customers price-compare as they buy drugs on the company’s website or app. Shoppers can toggle at checkout between their co-pay and a non-insurance option, heavily discounted for members of its loyalty club Prime.

The move builds on the web retailer’s 2018 acquisition of PillPack, which Amazon said will remain separate for customers needing pre-sorted doses of multiple drugs.

Shares of pharmacy chains, drug wholesalers and grocers fell in afternoon trading. Amazon’s shares were up nearly 1 per cent.

Over the past two years, Amazon has worked to secure more state licenses for shipping prescriptions across the country, which had been an obstacle to its expansion into the drug supply chain, according to analyst notes from Jefferies Equity Research.

The company founded as an online bookseller has disrupted industries including retail, computing and now potentially pharmaceuticals, drawing criticism of its size and power from labor groups and lawmakers along the way.

TJ Parker, PillPack’s CEO and vice president of Amazon Pharmacy, said in a statement the retailer aimed to bring “customer obsession to an industry that can be inconvenient and confusing.”

The company faces entrenched competition from Walgreens Boots Alliance Inc, CVS Health, Walmart, Rite Aid, Kroger and others. Take-up of online ordering of drugs has been low, according to market research from JD Power.

“Amazon’s launch of an online pharmacy is a meaningful threat to brick and mortar pharmacies,” Northwestern University’s Kellogg School of Management professor Craig Garthwaite said.

“These retail pharmacies must now offer more than just easy access to a prescription.”

Shares of Walgreens Boots Alliance, Rite Aid and CVS tumbled between 8 and 15 per cent, while those of drug distributors McKesson, Cardinal Health and AmerisourceBergen were down 3 to 7 per cent.

Amazon injects a new look and feel into a space that has been dominated by a few large mail order pharmacies like CVS, Cigna and UnitedHealth’s Optum, analysts from brokerage Evercore ISI said in a note.

“New entrants to the highly competitive pharmacy market come as no surprise to us,” CVS Health said in a statement. “While pharmacy is a core component of our business, CVS Health is so much more than your corner drug store.”

Walgreens said in a statement it already provides a full and growing range of pharmacy, health and wellness solutions to its customers and patients, and offers free same-day and next-day delivery options.

Should Prime members prefer buying in person, Amazon said its discounts on non-insurance purchases apply at more than 50,000 brick-and-mortar pharmacies – including those run by rivals. Inside Rx, a subsidiary of Cigna’s Evernorth, administers that benefit, Amazon said.

Still, the pandemic may help bring drug orders online. E-commerce has surged this year as governments told people to stay home to stave off infections of Covid-19, and Prime members – more than 150 million globally – may be receptive to buying medication online now that it’s from Amazon.

The company said Prime subscribers get up to 80 per cent off generic and up to 40 per cent off brand drugs when they pay without insurance, as well as two-day delivery.

Amazon’s online pharmacy is not yet available in Illinois, Minnesota, Louisiana, Kentucky, and Hawaii, a spokeswoman said.

18 Nov, 2020
Gen Z is set to take over the economy in a decade, despite potentially losing $10 trillion in earnings because of the pandemic
Business Insider Australia

In a little over a decade, Gen Z will be taking over the economy.

Gen Z currently earns $US7 trillion across its 2.5 billion-person cohort, according to a Bank of America Research primer on the generation, called “OK Zoomer.” By 2025, that income will grow to $US17 trillion, and by 2030, it will reach $US33 trillion, representing 27% of the world’s income and surpassing that of millennials the following year.

The report defines Gen Z as those born between 1996 and 2016. The oldest of Gen Z turn 23 in 2020, and the oldest millennials turn 39 this year. The youngest generation has the fastest-growing income, per the report, led by the US, closely followed by China.

This earnings growth is short of what it would be without the pandemic, of course. Gen Z students could lose $US10 trillion of lifecycle earnings due to Covid lockdowns, the World Bank has estimated.

Repeating millennials’ rocky career paths

American Gen Zers and millennials have been financially hardest hit in the coronavirus recession, suffering from unemployment rates greater than those during the peak of the Great Recession. But Gen Z is repeating the same rocky start to their careers as the oldest millennials: graduating into a recession.

Stanford research shows that recession graduates typically see stagnant wages, lasting for up to 15 years. The author behind this research, Hannes Schwandt, assistant professor at Northwestern University’s School of Education and Social Policy, previously told Business Insider that this the delay in wealth accumulation isn’t necessarily due to lack of jobs, but that recession graduates typically start at “lower quality” jobs.

A potential upside to this, Schwandt said, is that graduates job-hop to play financial catch-up, which can make them more flexible and help advance their career.

“Over time, what you see in these cohorts is a higher degree of mobility from one employer to the next,” Schwandt said. “It helps them climb up the quality ladder.”

Gen Z may want to look to millennials for an idea of what’s to come, as the so-called “job-hopping generation” graduated into the 2008 financial crisis, then entered the 2020 recession before their oldest members turned 40 years old. Now, before the economy has even recovered from the effects of the pandemic, millennials have just another decade left as the major driving force of the economy.

18 Nov, 2020
Ruslan Kogan lobbies shareholders for $90m options bonanza
Financial Review

Online retailer Kogan.com holds its annual general meeting on Friday and its founder Ruslan Kogan has been working the phones in the lead-up to the deadline for proxy votes, lobbying shareholders to support the package of 6 million options being granted to him and CFO David Shafer.

The grant is worth $90 million at Tuesday’s closing price. These are spring-loaded options, in that the $5.29 strike price was announced on May 12 but was based on the volume weighted average price of Kogan.com shares in the previous three months (to April 30), which just so happened to incorporate most of the ASX’s worst quarter in 33 years. And the only vesting requirement is Kogan’s and Shafer’s continued service until 2023.

The board excluding Kogan and Shafer – which leaves only chairman Greg Ridder and non-executive director Harry Debney – “believes it is in the best interests of the company and shareholders to incentivise Mr Kogan and Mr Shafer to remain in their positions for the next three years”. As if already owning 20.8 per cent of the company between them and Ruslan having his name emblazoned on the door wasn’t incentive enough.

Since the IPO four years ago, Kogan and Shafer have trousered more than $350 million selling their shares in the company. Why the hell should shareholders be diluted to hand them even more?

All three proxy houses – ISS, CGI Glass Lewis and Ownership Matters – are recommending shareholders vote against the resolution to approve the options package. Kogan and Shafer cannot vote their shares.

If on Friday shareholders disagree that the lavish options grant is in the best interests of the company and they vote it down, Ridder and Debney have already committed to paying the equivalent value in cash or using a loophole in the ASX Listing Rules to give Kogan and Shafer 6 million shares anyway, by buying them on-market.

Having disregarded in advance the verdict of their shareholders it takes a special kind of monomaniac to then seek their validation. But Kogan’s persuasive efforts, like the man himself, are irrepressible.

He starts with charm, then tries reassurance (there’s nothing new in the options bonanza – everyone else is doing it), a little gaslighting (“many other shareholders” support the grant) and then progresses to anger, haughtily invoking the inviolability of contracts (funny given his contract cannot constructively be invalidated by direction of the company’s owners). Finally, Kogan concludes his polemic with the threat of resignation. Which would save everyone $60 million.

Pity the junior analysts at major value funds now second-guessing themselves after copping such a symphony.

It is so telling that Kogan himself, not Kogan.com’s chairman, conducted this 11th hour round of investor engagement. That Rusty even deemed it necessary suggests the proxy votes have been tracking badly for him.

If the resolution is defeated, this will be a genuine test for the Australian Securities and Investments Commission. Section 211 of the Corporations Act deals with paying “reasonable remuneration” to executives without shareholder approval. Why is the statutory provision even there if a board can hand their CEO and CFO the equivalent of two years’ earnings after investors have expressly repudiated the proposal? We can only hope ASIC dusts off its rule book rather than being another study in inaction.

12 Nov, 2020
Uber delivers a miss in third-quarter earnings as it slowly recovers from the pandemic
Business Insider Australia

Uber’s pandemic recovery isn’t happening as quickly as investors would like.

The ride-hailing giant on Thursday revealed third-quarter financials that fell below analyst expectations and sent shares lower in late trading.

Overall losses for the quarter ended Sept. 31 totaled $US1.09 billion, on adjusted revenues of $US2.81 billion. Analysts polled by Bloomberg had expected an adjusted net loss of $US876 million on revenues of $US2.82 billion. Losses not including taxes and depreciation were smaller than last quarter, but greater than a year ago.

Uber’s stock price sank as much as 5% following the announcement, paring sharp gains from earlier in the week after the company got a pivotal victory in California. Voters there approved Prop. 22 on Tuesday, a controversial measure that allows gig-work companies to classify workers as contractors rather than employees, while also guaranteeing some benefits like minimum earnings and healthcare stipends.

“Despite an uneven pandemic response and broader economic uncertainty, our global scope, diversification, and the team’s tireless execution delivered steadily improving results,” chief executive Dara Khosrowshahi said in a press release.

Deliveries continue to be a bright spot for Uber during the pandemic, with revenues from that segment more than doubling compared to last year.

Uber has yet to turn a profit in its more than 10-year history, though executives have said it will be able to in 2021 on an adjusted basis despite the pandemic, though that milestone was not included in Thursday’s release. Executives are likely to be pushed for clarification on that timeline during a conference call with investors later Thursday.

“Rome was not built in a day … and neither will the ridesharing recovery,” Dan Ives, an analyst at Wedbush, told clients earlier this week. “The overall environment is starting to considerably improve for Uber over the coming quarters with 2Q marking a clear trough in volumes and fundamentals in our opinion.”

Lyft, Uber’s largest competitor, will report results next week.

4 Nov, 2020
Marley Spoon in snap $56m raising
Financial Review

ASX-listed meal kit service Marley Spoon was getting in front of funds after market on Thursday evening with a capital raising to finance its growth.

The company was on the hunt for $56 million via a placement of new shares.

Canaccord Genuity – which was at hand for Marley Spoon's raising in May and helped float it in 2018 – was lead manager and underwriter on the deal, while Wilsons was chipping in as co-manager.

The placement was priced at $3.22 a share, which represented a 5 per cent discount to Marley Spoon's one-day volume weighted average price.

The capital raising coincided with the release of Marley Spoon's results for the September quarter.

The company was expected to unveil big growth in its US business, including a 163 per cent rise in revenue compared to the September 2019 quarter.

At the end of the September quarter Marley Spoon had 362,000 active customers and quarterly revenue hit €69.3 million ($115.8 million), a 109 per cent increase on the September quarter last year.

The bulk of Marley Spoon's revenue come from the United States and the company upgraded and expanded its capacity at its east coast facility during the quarter.

4 Nov, 2020
E-commerce darlings slide as pandemic gloom lifts
Financial Review

A brutal sell-off in e-commerce and retail shares continued on Tuesday as investors questioned their lofty valuations ahead of Melbourne's staged release from physical lockdown restrictions.

Other risks and uncertainties around the US election outcome, the potential for the Reserve Bank to cut rates on Melbourne Cup Day, and ballooning COVID-19 case numbers in the US and Europe combined to drag the S&P/ASX 200 1.9 per cent lower on Tuesday afternoon.

"I don't think it's just e-commerce," said Ben Clark, portfolio manager at TMS Capital. "I think there's a growing view out there that the businesses that had a big earnings sugar hit from COVID and ran very hard on the back of it are declining."

Market darlings in the home delivery and retail space such as Temple & Webster, Kogan, Redbubble, Breville, and Marley Spoon all added to recent losses, as investors bet the worst of Australia's movement restrictions were over.

"It's unlikely we'll see another lockdown in Australia," said Mr Clark. "Never say never, but the market looks a year or two forward, and what it's saying is that in 2021 and 2022 these trends we've seen in the last six months are going to normalise.

"Yesterday [Monday], Nick Scali had a profit upgrade and got sold down 7 per cent. It's a combination of the good news is well and truly factored into the share prices and the market's kind of saying 'you're over-earning at the moment' and as consumer behaviour normalises over the next couple of years the benefit isn't going to last."

Fund managers also have booked profits on the winners that have benefited from coronavirus-induced restrictions or government cash handouts as cash rotates into travel and infrastructure stocks, according to Mr Clark.

On Tuesday it was announced NSW residents can travel to Tasmania without quarantine from November 6. Quarantine-free travel between South Australia and other states (except Victoria) has been allowed since October 24.

"What we're seeing is the fundies and maybe the long-short funds starting to look at getting out of the 'COVID winners' and pick up stocks that've been hammered by COVID," Mr Clark said.

"So I think there's more of a rotation going on. We're getting close to vaccine announcements, and that's probably going to be the catalyst for that trade to keep going."

IPO rush

After an initial public offer (IPO) priced at $6.75 and listing last Thursday, online-only retailer Adore Beauty has swung between a low of $5.51 and a high of $7.42 over four volatile trading days.

Another e-commerce retailer that listed last week, MyDeal, plunged 13.7 per cent to $1.33 on Tuesday, after posting an intra-day high of $2.20 on its October 22 ASX debut.

Dean Fergie, a portfolio manager at Cyan Investment Management, questioned Adore's $635 million valuation on 181 times estimated profits, when an omni-channel retailer trades on 10 to 20 times estimated profits.

"It was crazy, you've got a business making 1 million or 2 million bucks," Mr Cyan said of Adore. "[It's] selling third-party cosmetics through a website. There's no large barriers to entry for that. No way. You've got reputation, customer experience, brand, but they're reselling products.

"MyDeal we thought was a second-rate Kogan and it started trading at a 100 per cent premium, again with no profitability.

"There's starting to be a reality check. Investors are like, maybe we don't need a portfolio full of these things on ridiculous valuations. We've had a good time of it, maybe it's time to take a few chips off the table."

Mr Fergie noted, though, that some IPOs had impressed, including Credit Clear and protective equipment manufacturer CleanSpace. Last week CleanSpace raised $131.4 million at an IPO price of $4.41 and traded at $6.90 on Tuesday.

The lockdown-leveraged buy now, pay later sector also plunged on Tuesday. Market leader Afterpay shed 4.3 per cent and Zip Co fell 6 per cent to $5.99 – its lowest since September 25.

30 Oct, 2020
'It's really magical when you give kids opportunity to make their own decisions': Finance app Spriggy helps parents manage their kids' money in a cashless world
Business Insider Australia

Spriggy founders Mario Hasanakos and Alex Badran never set out to make a financial app for kids.

A physicist and mathematician respectively, the duo could have gone down very different paths before a serendipitous meeting at Citibank led them to strike out on their own.

“Banking was a crash course in how money works and we realised there’s so much complexity that separates people from their money,” Hasanakos told Business Insider Australia. “We initially wanted to help adults be better with their money, but quickly realised that we had to start a lot younger.”

The concept for Spriggy was born, which essentially attaches training wheels to personal finance. For $30 a year, kids are issued with prepaid debit cards that can be topped up and controlled via the Spriggy app.

“They can set up chores for the kids to complete in order to earn pocket money, and kids get a version of the app that teaches them about spending and saving,” Badran said.

It’s an idea that has found a groundswell of interest in Australia, amassing more than 430,000 users since it was launched in 2016, and garnered investment from the likes of Grok Ventures, Atlassian founder Mike Cannon-Brookes’ private investment fund.

“What we try to do is provide the kind of functionality so that parents with their kids can make their own decisions,” Badran said, noting the “sweet spot” is with kids between eight and 14 years of age. “It’s really magical when you give kids as much opportunity to make their own decisions and at the same time make it safe.”

“You see all the different family personalities and types of parenting coming through. It’s very cool to see how the hoarders, the spenders, the shufflers, the parents who are accountants, how they all use the app.”

The card blocks all types of transactions that would be deemed inappropriate and allows instant transfers to help out families who find themselves in a pickle.

“I can’t tell you the number of times we’ve had just really grateful parents messaging to us and say this really was an absolute lifesaver for them because a child was in soccer practice and something happened and they couldn’t get a lift,” Hasanakos said.

“Instead, the child was able to grab a taxi and pay with a Spriggy card with money that parents sent to them in real-time. You just can’t do with cash.”

Therein lies perhaps one of the key drivers behind the app’s success. While cash was already in decline prior to COVID-19, it has completely disappeared from many households during the pandemic

It has taken the tangibility of money with it. Instead of being armed with dollars and cents to remind their kids of the value of money and how to use it, parents are in desperate need of a way to teach the fundamentals of money in an increasingly cashless world.

“Anecdotally, we’re hearing families who are dropping cash for the first time and finding a way to pay their pocket money to kids digitally, and giving Spriggy a try.” said.

“I think the impact of COVID like it has in so many sectors has only accelerated our uptake and got people used to what is really going to be the future of money.”

The appetite has both looking to spread Spriggy further afield and taking financial education global.

“Some of the things we’ve learned are central to making a difference around the world and that’s definitely one of our goals, to take this show on the road and reach more young families,” Hasanakos said.

While the change is propelling the app forward, many things remain the same.

“One of the most controversial subjects we come across is families trying to figure out whether they should pay kids for doing jobs around the house or whether the kids should do their chores simply as part of being part of the household,” Hasanakos said.

“We don’t pick a side. We just allow families to make those decisions on their own.”

30 Oct, 2020
The boom in sales and e-commerce during the pandemic has led to big gains for some retail bosses in this year's AFR Rich List
Business Insider Australia

When the ship steadies from the coronavirus pandemic and we start returning to some semblance of normality, retail is one of the sectors which will change permanently.

The advent of lockdowns and social distancing saw Australians accelerate a long trend toward e-commerce and online retail. According to research by Deloitte, Australia enjoyed a $4 billion e-commerce boom during the pandemic, with online small businesses seeing a boon from the country’s supercharged online spending habits.

Of course, it’s not the small business strivers who end up emblazoned on the glossy pages of The Australian Financial Review’s 2020 Rich List.

The Rich List, which lands in full on Friday, has seen big gains for Australia’s e-commerce barons, who have profited off the coronavirus bump.

Ruslan Kogan, founder and CEO of Kogan, has reentered the Rich List after falling off it in 2019 thanks to a low share price at the time. Following vigorous growth as entertainment-starved, locked down Australians turned to online retailers to get their fix – Kogan’s sales were up 39.3% compared to the 2019 financial year – Ruslan’s net wealth currently sits at $575 million.

Similar boons went to Harvey Norman boss Gerry Harvey, who saw his wealth surge by 35% to $2.57 billion. Though Harvey Norman is best known as a bricks-and-mortar retailer, it too capitalised on e-commerce when its stores shut down nationally, and then again in Melbourne.

The company reported a 7.6% increase in total revenue and a 19.4% jump in net profit, which Harvey said was the best results he’d seen in over 60 years of retailing. Of course, the famously ornery executive was quick to dismiss the role of e-commerce, despite not breaking it out in the company results.

“People get out there and talk about how [online is] going to take over all the sales, and it’s going to be 70 per cent of refrigerator sales or something, and I said that’s a con, and I still maintain it’s a con,” he told the Sydney Morning Herald.

Either way, he’s done well for himself out of the pandemic – a fact which got him in social media hot water back in March when he celebrated that fact while dismissing the seriousness of the virus.

The middlemen of the e-commerce world also saw big gains. Afterpay founder Nick Molnar – who became Australia’s youngest self-made billionaire after the buy now, pay later company’s remarkable share rally – now sits at number 50 on the Rich List with a net worth of $1.86 billion.

Competitor Zip also saw its co-founder Larry Diamond debut at with an estimated fortune of $552 million.

Expect to see more online sellers worm their way onto the Rich List in the coming years.

30 Oct, 2020
Amazon expands in Melbourne at Dexus estate
Financial Review

Amazon Australia is stepping up its operations in Victoria, doubling its footprint with a second distribution centre to be built at a Dexus-managed industrial estate in Melbourne's west.

The expansion in Melbourne comes just four months after the US online sales platform confirmed plans for a $500 million robot-run facility in Sydney's west.

However, the new Melbourne "fulfilment centre" at Ravenhall, worth $65 million to $70 million, will be run by people with around 300 jobs created when it opens late next year. Covering 37,000 square metres, the facility will have enough capacity to house up to 6 million items from Amazon's online platform.

Along with a distribution centre in Dandenong South, the first warehouse Amazon opened in Australia, the expansion at Ravenhall will increase the proportion of items the e-commerce giant can ship directly to its Victorian customers from Melbourne and enable quicker delivery. 

"We have invested significantly in our Victorian operations this year to ensure we can continue to improve delivery promises to customers in the state," said Amazon Australia's director of operations, Craig Fuller.

Along with the Dandenong facility, Amazon Australia has two other manual fulfilment centres: one at Moorebank in Sydney, which is 45,000 sq m, and at Perth’s Airport Precinct. It also plans to open a fourth centre at Lytton in Brisbane, of 25,000 sq m, before Christmas.

While the latest Melbourne facility will not rely on robotics, a series of innovations will be deployed to boost the pickers' speed of packing and accuracy in delivery.

"This includes box-sizing algorithms, [and] picking optimisation that that determines the shortest, most efficient walking route from one place to another when picking products," Mr Fuller said.

Amazon is an existing customer of ASX-listed Dexus, recently striking a lease for a 4000sq m facility at its Regents Park estate in Sydney's west.

The new Melbourne facility will be built at the Horizon 3023 estate in Ravenhall which is owned by Dexus along with the wholesale property fund it manages and Dexus' partner, GIC, in a logistics trust.

The 127-hectare site will ultimately be home to as much as 400,000 sq m of commercial and industrial property, worth around $500 million as it is built out over the next five to seven years.

The Amazon lease takes commitments at Horizon 3023 to around 100,000sq m. The estate's first tenant,  food manufacturer and distributor Scalzo Foods, was secured last year and its 35,300sq m purpose-built facility is due for completion in December. Meal-kit company Hello Fresh has also signed up as a tenant.

29 Oct, 2020
Adore Beauty founder feels pride as junior grows up
Financial Review

Adore Beauty founder Kate Morris says there's no hint of "empty nest" syndrome as the business she started two decades ago in a garage attracts a brighter spotlight on the ASX as an online retailing business worth $650 million-plus.

In the lead-up to the ASX listing last week, she'd already stepped back to become an executive director of the online beauty products and cosmetics business leaving Tennealle O'Shannessy, a former boss of SEEK America, as chief executive to drive the next phase of growth.

Morris is determined that public company status won't alter the ethos of the group, although she accepts that it will bring extra pressure. The stock closed at $5.81 on Tuesday, 14 per cent lower than its issue price.

"I don’t think the listing on the ASX changes the foundations of our business, our strategy or our values,'' she says.

"It’s true that as a public company, our financial and operational performance will clearly be more visible in the market."

But she insists that will also bring more opportunities to ''publicly celebrate'' the next lot of milestones with staff and new shareholders.

"An ASX listing was definitely not something I imagined from my garage 20 years ago. Even five years ago, I couldn’t have imagined that this was a possibility,'' she says.

But Adore has been built with a strong foundation and she dismisses talk of an e-commerce bubble.

"I always set out to build a company that will last, so this IPO is absolutely the logical next step to make sure we can continue to grow for the next 20 years and beyond,'' she says.

Morris says innovation is in Adore Beauty's DNA and sustainable growth is at the forefront of the group's thinking.

Morris and fellow co-founder James Height had a $92 million payday from the float, with the entrepreneurs selling down 40 per cent of their shares through the listing. They each retain a 10.84 per cent stake.

But the debut on the ASX on October 23 still brought plenty of emotion.

"I couldn't be prouder to see my ‘baby’ all grown up,'' she says.

COVID-19 has delivered ideal conditions for well-run online retailing businesses to thrive, with a structural shift away from bricks and mortar accelerating fast. Morris says there's plenty of upside to come.

"While we were certainly on a pathway towards a structural shift to online retail, Australia has always been a long way behind markets like the UK and United States."

She points to growth rates in parts of Australia where government restrictions have eased, with no let up in sales as bricks and mortar rivals open again.

"Our sales have remained significantly higher than pre-COVID levels,'' she says.

Adore Beauty is also looking closely at the stimulus measures from the federal budget and how they might enhance the operations.

"We are assessing budget measures to ensure that we as a business, take advantage of what is available to us, providing they are aligned with Adore Beauty’s strategy and values,'' she says.

She says the instant tax write-off for the purchase of eligible assets, JobMaker hiring credits for new young recruits and R&D incentives are ''currently being reviewed''.

But Morris says while the budget was overall good for the economy, she was disappointed there were no special measures for women, who've been affected more by the pandemic.

"I did feel these measures were lacking when it came to support for
women, when you consider the disproportional impact that job loss has had on women,'' she says.

"I would've liked to have seen greater support for childcare and for industries that are weighted towards women and have suffered the most throughout COVID."

Morris thinks that a further Reserve Bank of Australia interest rate cut might bring a small benefit.

"Across the country there will inevitably be a mix of behaviours that arise from rate cuts depending on individual circumstances,'' she says.

"Generally speaking, I would expect that Adore Beauty customers would certainly welcome further reductions to interest rates given our core
demographics."

She bypasses questions about whether the Victorian government led by Premier Daniel Andrews should be moving faster to open up the state's economy.

"We have had our heads down ensuring that our customers are happy and that we keep delivering to them at a time when they really need us,'' she says.

She says new Ms O'Shannessy has an ''incredible" track record in working with founders of digital businesses and has a strong set of leadership skills.

"She and I have worked very closely together over a good part of the year
and particularly throughout the IPO. That has simply increased my conviction that she is the perfect person to lead the team during the next phase of growth."

26 Oct, 2020
'The year's hottest IPO': Fund managers pucker up for Adore's listing
SOURCE:
The Age
The Age

Adore Beauty's upcoming listing is this year's biggest and most anticipated initial public offering but fund managers warn just like many of the items stocked on the online beauty retailer's platform, the premium product comes at a premium price.

Adore, which stocks cult self-care brands including Aspect, The Ordinary and Aesop, will land on the ASX with a valuation of $616 million on Friday.

Adore is raising $269.5 million at $6.75 a share, including $40 million in new shares with private equity heavyweight Quadrant and Adore's co-founders Kate Morris and her partner James Height set to cash in part of their stakes.

"I guess it probably is the year's hottest IPO," Oscar Oberg, lead portfolio manager at Wilson Asset Management, said.

"To be fair it's the largest and I think it's probably the most anticipated. We are very positive on the business," he added. "We think that Kate [Morris] and [chief executive] Tennealle [O'Shannessy] and Adore management are very good and we love investing in businesses alongside founders that own a significant portion of the shares."

While Adore's hefty valuation, at 3.9 times forecast 2020 calendar year revenue of $158.2 million, has come under scrutiny Mr Oberg said the company's future growth potential was a major drawcard for potential investors.

"Clearly they are a small fish in a very big pond," he said. "So if this momentum continues I think the valuation will actually look, in one or two years time, very reasonable."

Mr Oberg pointed to MyDeal's initial public offering on Thursday, during which the retail marketplace listed at $1 a share and jumped as high as 120 per cent to $2.20, as a good example of investors backing e-commerce businesses.

However, Adore's high valuation does pose some risk, he added.

"The biggest risk is you have a lot of offshore peers in this e-commerce sector in the US and in Europe that are trading at much higher multiples than their Australian peers are now, if you get a period where those valuations come off that may impact the Australian stocks," he said.

Andrew Mitchell, senior portfolio manager at Ophir Asset Management, said Adore's e-commerce credentials were a strong selling point for the company.

"In the current market you are going to have to pay a pretty penny for an industry-leading online business but that is just the reality at the moment and we think it’s worth it in this case."

Another trend working in Adore's favour, according to Mr Mitchell, was customer loyalt

"Repeat business is high with Adore creating a great customer experience, not least of which is the sugar hit you get with the Tim Tam in every delivery," he said.

"Next up for Adore will be a further extension of the product categories that can be sold to this sticky customer base."

21 Oct, 2020
Apple unveiled its first 5G iPhones, including a $1,200 iPhone 12 mini, and a new HomePod mini at its biggest event of the year
Business Insider Australia

Apple’s anticipated iPhone 12 lineup has finally arrived.

Apple unveiled its first 5G iPhone, called the iPhone 12, during its event on Tuesday. As expected, the company announced four versions of the iPhone 12: the standard model, a 5.4-inch version called the iPhone 12 mini, the 6.1-inch iPhone 12 Pro, and the 6.7-inch iPhone 12 Pro Max.

The iPhone 12 mini and iPhone 12 Pro Max will be launching on November 13, while the iPhone 12 and iPhone 12 Pro will become available on October 23 in Australia.

Apple typically introduces its new iPhones every September, but the company said back in July that it expected supply of its iPhone to arrive several weeks later because of the coronavirus pandemic.

Analysts are expecting the iPhone 12 to be one of Apple’s biggest iPhone launches in years, primarily because a larger than usual number of active iPhones around the world are due for an upgrade.

The company also introduced a brand-new smart speaker called the HomePod mini, which costs $149 in Australia and launches in November.

Here’s everything Apple announced at its iPhone event.

Apple finally unveiled the iPhone 12, one of the four new 5G smartphones the company announced on Tuesday.

The iPhone 12 comes with a number of other improvements, such as a new design with flat, smooth edges, an upgrade to Apple’s Super Retina XDR OLED screen – which offers richer contrast and deeper black tones than the iPhone 11’s LCD screen – and a new Ceramic Shield front cover.

Apple claims the Ceramic Shield technology quadruples drop performance, meaning it should be much better at withstanding accidental falls. The standard iPhone 12 comes with a 6.1-inch screen, making it around the same size as the iPhone 11.

All iPhone models in the United States, including the standard iPhone 12, will support millimetre wave 5G, the higher frequency version of the network. Apple brought Hans Vestberg, Verizon Communication’s CEO and chairman, to discuss 5G.

All new iPhones run on Apple’s A14 Bionic chip, which Apple announced last month when introducing the iPad Air. The iPhone 12 features a dual camera system that the company claims is much better at taking in light, making it perform better in dim scenarios.

The iPhone 12 comes in blue, green, black, white, and red and starts at $1,349 in Australia.

The iPhone 12 mini

Apple is also launching its new iPhone in an all-new size with the introduction of the iPhone 12 mini.

The iPhone 12 mini has all of the same features as the iPhone 12, from its dual camera to its colour options, Ceramic Shield, and A14 Bionic processor.

But as its name implies, the iPhone 12 mini comes with a smaller 5.4-inch screen. The iPhone 12, by comparison, features a 6.1-inch display.

The iPhone 12 mini is available in the same colours as the iPhone 12, but starts at a lower price of $1,199 in Australia.

The iPhone 12 Pro and iPhone 12 Pro Max

The new iPhone 12 Pro and iPhone 12 Pro Max are the latest generation of Apple’s high-end devices. Like the lower-cost iPhone 12, the Pro models feature a new design with sleek, squared-off edges, similar to the latest iPad Pro. The devices come in four colours: silver, graphite, gold, and Pacific blue.

Like the iPhone 11 Pro and Pro Max, both new devices will have an OLED display, which will provide for deeper blacks and brighter colours than LCD screens. The glass in the Pro models also uses the new Ceramic Shield technique.

The iPhone 12 Pro will have a 6.1-inch display, while the iPhone 12 Pro Max will have a 6.7-inch display, which is the largest-ever on an iPhone.

Both devices will run on the A14 Bionic chip, which Apple says should provide better performance with improved energy efficiency. The devices will also have a three-camera array that includes a wide lens, ultra-wide lens, and telephoto lens capable of 4X optical zoom. When it comes to video, the iPhone 12 Pro and Pro Max will be able to record in Dolby Vision HDR.

The Pro and Pro Max will also come equipped with a Lidar sensor, which is able to build a depth map of a scene to aid with mapping, augmented reality, and photos and videos. The devices will have faster autofocus and improved night mode thanks to the Lidar sensor.

Like the iPhone 12, both devices will be 5G-enabled.

The iPhone 12 Pro and iPhone 12 Pro Max will have a starting storage of 128 GB. The iPhone 12 Pro will start at $1,699 in Australia and will be available to preorder on October 16 – it will start shipping October 23. The iPhone 12 Pro Max will start at $1,849 in Australia and will be available to preorder on November 6 for shipping on November 13.

A new HomePod mini

Apple also announced a follow-up to the HomePod smart speaker it launched in 2017: the HomePod mini which will cost $149 in Australia.

As its name implies, the HomePod mini is much more compact than the original version and also features a more rounded shape. One of its marquee new features is Intercom, a capability that lets users send messages or notifications to other Apple devices throughout the home.

Like its predecessor, Apple is also touting the HomePod mini’s audio, saying that it offers 360-degree sound so that the audio will remain consistent no matter where you place it in the home. It will also be compatible with iHeartRadio, TuneIn, radio.com, Pandora, and Amazon Music.

That addresses a big shortcoming of the original HomePod, which was criticised for its limited compatibility.

The HomePod mini launches during the week of November 16.

New MagSafe accessories

Apple announced more than just new iPhones on Tuesday. It’s also introducing a line of new accessories and chargers powered by its MagSafe technology.

MagSafe accessories, as the name implies, use magnets and a wireless charging coil to snap to the back of the iPhone. Apple is launching a MagSafe charger for the iPhone and a dual charger meant to power both the iPhone and Apple Watch, but the company says third-party accessory makers will be able to create their own products as well.

Other MagSafe accessories Apple showcased on Tuesday include cases and a wallet that easily snap on to the back of the iPhone.

21 Oct, 2020
The Iconic launches Home of Beauty
Inside Retail

Online fashion retailer The Iconic has launched a dedicated beauty destination. 

Besides fashion and sport selections, shoppers from Australia and New Zealand now can choose from a selection of beauty products from both international and local brands via The Iconic Beauty. 

The Iconic’s beauty destination features more than 80 brands, including Aesop, Foreo, L’Occitane and Dyson. The products include skincare, makeup, body-care lines and fragrances. 

“Having pioneered fast and on-time delivery, free returns and the best curation of fashion, sport and kids brands, beauty is a natural progression for The Iconic,” said CEO Erica Berchtold.

“It’s a category our customers have been asking for and an initiative we have been working hard on delivering for some time, before accelerating its launch in response to Covid-19.”

The company said it will add more beauty brands to the lineup, including Clarins, Elizabeth Arden and The Ordinary. 

The new beauty destination follows the launch of The Iconic’s Wellness offering last month.

21 Oct, 2020
H&M is now in every Australian household
SOURCE:
Ragtrader
Ragtrader

H&M has today launched its Australian website, after announcing the venture in January this year.

From today, Australian customers will be able to shop the H&M range across women's, men's and kids' clothing, footwear and accessories.

Launching with a focus on sustainability and transparency, customers will be able to easily find the origin of a product, the countries it was produced in and the suppliers and factories where it was made on the website.

H&M Australia country manager Thomas Coellner said the business is thrilled to expand its omni-channel offering.

"We are very excited to finally launch H&M online in Australia and to be able to offer our fashion collections to customers nationwide anytime, anywhere.

"We now have 40 stores across the country and this significant milestone extends H&M’s omni-channel offering," he said.

For the first time globally, H&M's Australian website is launching online at the same time as its loyalty program, H&M Member.

To celebrate, customers will receive a discount off their first purchase when joining the program and will be able to access personalised discounts, invitations to exclusive events, free shipping with purchases over $60 and free returns for all online orders.

Members will also receive a digital membership card in the H&M mobile app which will allow them to pay using buy now pay later solution, Klarna.

21 Oct, 2020
Universal Store joins the club, secures IPO at 14x profit
Financial Review

Non-disclosure agreements (NDAs) are flying around fund manager land like never before.

With the avalanche of IPOs – most of them sub $200 million, some better than others – issuers and bankers have to do what they can to grab and hold fundie attention.

So club deals are all the rage.

Bankers ask fundies to sign an NDA, send over a pathfinder prospectus, book them in for a confidential management presentation, and ask them to bid for stock in a private bookbuild a few days later.

The deals come together pretty quickly which is good for institutional investors with 20 deals on their watchlists, more certain for issuers who may be having trouble firming up forecasts in light of the economic environment, and helpful for bankers trying to underwrite deals in markets that are still more volatile than normal.

Street Talk is aware of three club deals going on this week – and that's not including bigwig Dalrymple Bay's cornerstone investor search.

Youth clothing retailer Universal Store joined the club when it quietly ruled off a $145 million raising in a deal that would see it list with a $290 million market capitalisation on Tuesday.

While Universal Store's IPO is yet to launch, it's already wrapped up. Done. Locked in. Book covered. Secured at $3.80 a share or 14-times forecast profit (a small discount to small-cap listed comps Accent Group and Adairs) thanks to a tight cornerstone process run by JPMorgan and UBS.

Non-bank lender Harmoney and loyalty program Cashrewards are going down a similar path this week.

So far, fund managers reckon it pays to be in the club. It's a free option for them to get a close look at a company they mightn't get to meet otherwise, and the chance to get set if they like the look the story.

At some stage, market sentiment will turn and it will prove costly to be in the club. Until then, a quick deal's a good deal.

20 Oct, 2020
Shareholders optional in Kogan's options grab
Financial Review

On Thursday, Kogan.com lodged the notice of its annual general meeting on November 20.

The online retailer is seeking shareholder approval for the 6 million options it granted founder Ruslan Kogan and finance director David Shafer on May 12.

The terms of these options render them equivalent to being kissed on the d--- by a rainbow, and the next best thing to Afterpay options. Kogan’s board derived their $5.29 strike price by using the three-month volume weighted average price to April 30, which helpfully incorporated two-thirds of the ASX’s worst quarter in 33 years.

So the options were already deeply in the money on day one, with Kogan stock closing on May 12 at $8.85 (67 per cent higher than the exercise price). But that was nothing. Just five months later, they have appreciated 367 per cent over the exercise price and are worth in excess of $100 million.

Kogan’s two non-executive directors, Greg Ridder and Harry Debney, are now holding a gun at the heads of Kogan’s shareholders – excluding Kogan and Shafer themselves, who between them own 20.76 per cent of the company but are ineligible to vote on their own remuneration.

“If shareholder approval is not obtained for the grant of the retention options,” the notice of meeting states, “the company has agreed to grant [them] to Mr Kogan and Mr Shafer [anyway] within 10 business days of the meeting.”

The company will simply “purchase the relevant shares on-market” or, if for some reason that’s not possible, “the board will provide [the duo] a cash payment… equal to the value of the shares that would have been issued”. Which is currently $60.7 million for Kogan and $40.5 million for Shafer.

Incredibly, the agreement struck between the non-executive directors and Kogan’s two executive directors required the former to hand the latter their treasure regardless of whether shareholders like it or not.

Independent report

Section 211 of the Corporations Act allows a public company to give remuneration to a company officer without shareholder approval if that benefit “would be reasonable given the circumstances of the public company and the [officer’s] circumstances”. And Ridder and Debney have rustled up an independent report from the Melbourne Jewish establishment’s favourite fixer, Barry Lewin of SLM Corporate, which – luckily enough! – deemed the options grant is reasonable.

So if Kogan.com shareholders vote to reject the options grant, Ridder and Debney intend to invoke an exception to their requirement to obey shareholders. And that exception relies upon the handing of $100 million in unencumbered cash to the company’s two largest shareholders against the wishes of other shareholders being “reasonable given the circumstances”.

The circumstances are that four years ago, Kogan and Shafer owned 69.5 per cent of Kogan.com. At each and every possible opportunity since, both men have been voracious sellers of its stock. In three years flat, they have dumped more than 45 million shares, or nearly half of the entire company, in exchange for proceeds in excess of $350 million.

If only they'd waited. Half the company would now fetch $1.3 billion.

Sell your stock, experience seller’s regret, so just get the board to give it back to you. Extract another $100 million in return for merely promising not to resign badly (even as good leavers, they keep the money). That’s reasonable? Only in Australia.

Ridder and Debney are shameful characters in this cash grab. They would fail the vigour filter applied to wax figures before they’re permitted to stand in Madame Tussauds. As for Barry Lewin, punctilious remuneration consultant to the very desperate, his phone is surely ringing off the hook already. If it wasn’t for the five kilometre rule, Anthony Eisen would be camped on his doorstep.

20 Oct, 2020
Online ordering start-up HungryHungry scores funding from iSelect CEO
Financial Review

Serial hospitality entrepreneurs Mark Calabro and Shannon Hautot have raised a $2 million round for their second start-up HungryHungry, which has signed up groups including Merivale during the pandemic to its online ordering system.

The founders, who have more than 15 years of experience creating hospitality tech solutions and previously ran point-of-sale tech company OrderMate, started HungryHungry as a table-based ordering system for restaurants, but quickly pivoted when COVID-19 struck to focus on online orders.

 

HungryHungry co-founders Mark Calabro and Shannon Hautot have helped 1500 restaurants set up an online ordering platform. 

Thanks to the swift action of the entrepreneurs, the company managed to not only stave off a drop in revenue, but has boomed during the pandemic, increasing staff numbers from 13 to 57.

Speaking to The Australian Financial Review, Mr Hautot said "winding down or hibernating" never crossed their minds when COVID-19 struck.

"We were heavily into order-at-the-table tech, but we did have a background in pick-up and deliveries … so we doubled down on that and we experienced some pretty severe growth," he said.

"We did everything we could to lower our process and make sure it was affordable for the hospitality businesses. We're really into win/win situations. It has to be something that works for the industry, and also the general community."

HungryHungry's latest capital raise was led by iSelect chief executive and Bailador Investments director Brodie Arnhold, who has also previously invested in the likes of The Shaver Shop and Endota Spa.

As well as Justin Hemmes Merivale restaurants, the business has also helped the likes of Melbourne's Di Stasio, Lune and Tonka operate their own online platforms for delivery, takeaway and pick up, including a new function for kerb-side drive-ups.

In total, the company has helped 1500 venues switch to online.

HungryHungry community

Mr Calabro said the pair, who no longer run OrderMate but still own it, started thinking about HungryHungry in 2016 when they noticed a big shift in consumer habits toward online ordering. Its table-based technology enables people to scan a QR code and then order and pay via their smartphones.

This also enables venues to collect real-time customer data, and the latest capital injection will go toward HungryHungry building a suite of marketing personalisation tools for restaurants to use this data to better target consumers, as well as creating an online community of users.

"We have a massive plan for how we want to make it more than an online ordering platform. We want to make it a community," Mr Hautot said.

"A big thing we feel is relevancy in food and beverage and that's something that's been lost. With Google, you search for something and within three or four results you have what you're looking for.

"We want to bring in that personalisation and really give some value back to consumers so they're more likely to find better experience when they go out … or dine in."

From the marketing perspective, HungryHungry wants restaurants to be able to offer a discount on a particular meal or drink they know a customer likes, or if their data suggests a customer orders gluten free, promote to them that they have a new gluten free dish on the menu.

The founders opted for a modest Series A raise, with Mr Hautot saying they didn't want to dilute themselves too much at this early stage.

"We feel like we have a lot to give still," he said.

"We have a decent customer base we're leveraging off and we'd like to track toward profitability. Call us old school, but I believe companies should hit profitability and not always run at losses. When we hit profitability, we'll put more cash in.

"We'll have to raise capital again, probably within the next 12 months."

13 Oct, 2020
Early investors in Afterpay back new retail tech start-up
Financial Review

Early Afterpay investors and seed fund Investible are backing a new retail tech platform, AirRobe, which wants to help big fashion brands join the "re-commerce" market.

NORA Network founder Paul Greenberg and US-based PopSugar co-founder Brian Sugar have invested in the company's $1.28 million round.

Speaking to The Australian Financial Review, AirRobe founder Hannon Comazzetto said she had been passionate about sustainability in the fashion industry since she was young and had been exposed to the huge amount of waste in the industry when she consulted with big fashion houses.

For years, she assumed someone would create a solution to tackle waste in the sector, but when this problem remained unresolved a year ago, she decided to quit her corporate career and solve it herself.

"The fashion industry has had a waste problem for a long time," she said.

"Having used eBay, I thought there needed to be a better solution and I thought the industry needed to play a big role.

"It's a complex problem and I think the only way to tackle it is to work with fashion houses and brands that are selling stuff brand new."

Ms Comazzetto, who started AirRobe in March last year, went through the Startmate accelerator program in June 2019 and built the first iteration of the marketplace herself. It was not her first time launching a business from scratch – she had previously started a fintech company called Borderless.

AirRobe’s approach helps solve fashion’s environmental predicament in a way that actually helps retailers’ bottom line.

— NORA Network founder Paul Greenberg

In its current form, AirRobe is a marketplace that lets users not only buy and sell second-hand clothing and accessories but also lease items. Brands available on the marketplace include Gucci, Chloé, Celine, Bassike and Zimmerman.

But, with the new funding, Ms Comazzetto wants to tackle her big vision, which is to get big brands involved in the so-called circular economy.

"It's a solution that gives them a business case to really enter this market and to deliver what the Millennial and Generation Z consumer is really after, which is that sustainability and ethical focus," she said.

"Traditionally shopping ethically and sustainably has been perceived as a luxury because of the price point, but the affordability of the re-commerce segment changes that."

Ms Comazzetto said her product for brands would enable them to offer a re-commerce service to their customer base, helping them boost sales and adding an extra level of engagement with their buyers.

According to the Australian Bureau of Statistics, about 500,000 tonnes of leather and textiles are discarded in Australia each year, amounting to 23 kilograms per person.

"AirRobe’s approach is exciting as it helps to solve fashion’s environmental predicament in a way that actually helps retailers’ bottom line," Mr Greenberg said.

Mr Sugar said the venture "ticks the box of a global opportunity in a fast-growing market".

"Hannon is a tenacious founder with unique insights into how retailers can monetise the Gen Z and Millennial trend to shop sustainably," he said.

5 Oct, 2020
https://www.smh.com.au/business/small-business/melbourne-tech-leaders-fear-tsunami-of-economic-devastation-20200908-p55tl9.html?utm_content=TOP_STORIES&list_name=2031_smh_busnews_am&promote_channel=edmail&utm_campaign=business-am&utm_medium=email&utm_sour
The Sydney Morning Herald

Melbourne tech industry luminaries, including venture capitalist Paul Bassat, are fearful the Victorian government's harsh lockdown restrictions will have a severe and lasting impact on the state's economy and damage its emerging startup sector.

Mr Bassat, who is also an AFL Commission board director, said there was a "certain irony" to weekly team meetings at his Square Peg Ventures investment fund. Staff based in Israel are working in the office despite the country recording 3000 new COVID-19 cases a day, while Melbourne employees are stuck at home and subject to some of the world's tightest and longest restrictions.

Mr Bassat said while he was not suggesting Israel had the right approach, Premier Daniel Andrews' road map to end lockdown was based on "incredibly conservative benchmarks" and he was worried about the long term impact.

"We just have to find a way to enable us to operate the economy at a faster speed limit without going back into a third wave," he said. "We have to get all of the best and brightest people in the state and the country working on testing and tracing because I think it's pretty clear we're not as good as we should be."

Mr Bassat said business leaders had been accused of speaking out of self-interest, but said his concern was for the city and state he loved, with the companies in Square Peg's portfolio doing "pretty well".

Dependent on the numbers being right, here are the main dos and don'ts as Melbourne continues toward the end of COVID lockdown.

"I think the consequence of a very extended lockdown, where economic activity is massively reduced, where kids are essentially missing out on an entire year of schooling, at least in-person schooling, we could feel the impact of this for the next next five or 10 years," he said.

I'm just really worried about what next year, the following year, or the year after, look like for people in our community

Paul Bassat

"I think as someone who loves Melbourne and loves living in it ... I'm just really worried about what next year, the following year, or the year after, look like for people in our community, particularly people in need, particularly people who need to get jobs or have mental health issues, or don't have the same educational opportunities."

Adir Shiffman, chair of ASX listed sports technology company Catapult Sports, described the government's road map as "a highway to hell" and said instead of a universal lockdown, restrictions should be based on areas where there were clusters of cases.

"There are pockets that are booming in tech, like e-commerce, but everyone is very worried, particularly in Victoria, about what happens when JobKeeper ends," he said. "At the moment, the federal government is providing pocket money to the Victorian tech sector and we all know an economic cliff is coming."

Mr Shiffman said he had never anticipated there would be this level of sovereign risk involved in basing a business in Melbourne.

"I'm sure every business employing staff is reconsidering where to employ them," he said. "There is a tsunami of economic devastation coming to Victoria. In a situation where it is easier to work from anywhere now, Victoria is unreliable in terms of understanding and justifying decision making," he said. "That's not a great investment pitch."

However, the co-founder of health startup Halaxy, Alison Hardacre, said founders started businesses where they lived and the lockdown would not change that. Halaxy has staff based in Cork, Ireland, and Ms Hardacre said it was challenging managing workers in the country who had returned to the office while Melbourne employees were stuck at home.

She said the government's exit strategy was "very, very conservative" but she understood it from a health perspective.

"If Daniel Andrews can announce the financial support measures for businesses as soon as possible, he is going to stem some of the mental health impacts I would hope," she said.

Didier Elzinga, founder of employee engagement startup Culture Amp, said there were no easy answers and the government was in a difficult position.

"Is it too slow? Probably. Could we open up more quickly? Probably not," he said. "The problem we have at the moment is everyone is feeling deflated and flat. We have to keep an eye out for each other, it is a long slog."

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