The Secret Broker: Goodbye Millionaires Factory, hello Billionaire Boys Club

After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.

Blimey!

It was only three weeks ago when I used the giant goldfish as an example to explain how APT had jumped out of its domestic fish bowl valuation, thus escaping the clutches of the Big 4 banks.

Then on Monday… whammo!

The giant BNPL goldfish had been netted on a A$39bn valuation by the American payment gateway company Square.

On that Monday, they jumped up out of the water and performed an Olympic gold-winning triple somersault with a half-pike twist.

The market gave a standing ovation as the company founders stepped onto the winners’ podium and claimed their medal, by becoming the largest company takeover in Australian history.

As they stood there, flashing their whitened teeth and holding out their gold for all to see, investors joined in with the celebrations and marked the shares up by 20% on the open.

As I said in that previous article, I would not want to be an Afterpay shorter, though even I was shocked by who was holding the rod that was dangling this very juicy bit of financial bait.

Thinking outside of the square

Square are an American company that supplies a Point of Sale (POS) payment solution to small businesses so it can collect payments from customers, via Tap ‘n Pay.

It also supplies SMBs with a free website, so they can promote themselves. If required, Square also offers an online payment solution.

On top of all of that, they also supply easy to obtain business loans. East to obtain because supplying the payment gateways gives Square enough rich data to enable a very quick yes or no.

Square has the same valuation as the Commonwealth Bank of Australia but that’s where all the similarities stop. And I mean really stop.

Square has 30m customers, compared to CBA’s 15m. Square employs 6000 people compared to CBA’s 48,000. And Square has zero branches. CBA has around 1,000.

But then the real differences come into play.

This is the CEO of CBA:

He is a millionaire.

This is the CEO of Square:

Square CEO Jack Dorsey: Picture: Joe Raedle/News via Getty Images

He is a billionaire.

Now, hopefully this is dawning on all you investors out there.

You can’t become a billionaire running a bank in Australia.

All you can do is improve your bonus by closing branches, thus boosting your bank’s bottom line earnings, on which said payment bonuses are calculated.

Even Macquarie Bank, which has a foot in both traditional and entrepreneurial camps, is nicknamed the “Millionaires factory”. Note, not the “Billionaires factory”.

I could show you pictures of the two founders of AfterPay, and the two founders of Robinhood. But all you need to know is they all look very young and breezy, with not a tie in sight and their top shirt buttons undone.

They also share the common theme of now being billionaires after starting their goldfish 6-8 years ago.

Today, Robinhood has the same market valuation as Ford.

You know what’s cool?

In the 80s, all the medical university graduates changed course and became brokers and merchant bankers, as the financial rewards were much greater and the afterparties were paid for by your employer. That also made it even easier to impress the young nurses, no matter how fugly you were.

Now all the graduated brokers and bankers will be plotting on how to grow the next giant goldfish, so that they too can become billionaires and not just mere millionaires.

I only just got off a Zoom meeting with a young, spotty-faced Melbourne-based app builder. He was quoting me $100,000 to build me my own killer app, so that I can join the realms of the ones pictured above, and cast off my suit and tie.

So, if any of you brokers and merchant bankers see an IM which arrives on your desk and is titled ‘Project Goldfish’ and you wish to leave your job and become a co-founding billionaire, hit up your clients for about $5m. Then pony up and come and see me.

Mrs Broker is very worried that I will indeed also become a billionaire, as I am about to purchase another even larger fishbowl for my study with her AfterPay account and she doesn’t want to move house.

The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at [email protected].

Feel free to contact him with your best stock tips and ideas.