"Wealth doesn't come from wages”
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What is the main topic discussed in this episode?
Our expectations around wealth and work are changing. For decades, you would earn a salary, take it home as your reward, and use that to build your long-term wealth. But is salary alone still enough to get you where you want to go? And could it be just as rewarding to have a real stake in the work that you're doing? I'm Laura Marwick, and I'm here with Susannah Batley of Shezzy's Business and Andrew Morrow of PartsTrader, recently acquired for $650 million. We're going to ask them about ownership, opportunities and how people really want to get paid.
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Suze and Andrew, welcome to Shared Lunch. Thank you. Suze, so Sharesies has recently conducted some research that showed that 80% of respondents see that they would take at least part of their remuneration in shares if they were given the opportunity. What does that kind of say to us about these changing expectations about the way that we're compensated?
Yeah, well, I think you said expectations are changing. And I think when you look at a range of factors that are converging, it's no surprise. Employees are looking at their pay and saying, actually, while this is important for paying the day-to-day bills, it's just not enough to build long-term wealth. And in fact, when we look at data over a long period of time, wealth development does not come from wages. It comes from ownership. And I think employees are really spotting that and looking at what levers they can pull in order to make sure that they can build wealth over long periods of time.
Salary has sort of been like the definitive way to build your wealth for a really long time. Why do you think that people are kind of coming to this realization now?
Yeah, well, a few things. One is that cost of living has increased substantially. And when we look over decades, capital markets have produced enormous wealth, but that hasn't necessarily flown through to wages. So, for example, let's take New Zealand. Since 1980, the stock market has produced returns of or has increased by almost 40 times, whereas wages have increased around eight times. So you're seeing a massive divergence between ownership and the returns flown through to owners versus wage earners. So I think people are looking at that. And I think a really big factor is property, where you've seen older generations been able to do very well through owning property. And I think younger generations are rightly seeing that probably those opportunities are not there for them.
So what are other ways that they can participate in the capital markets, in the growth of the economy? And I think that, you know, this is clearly one of those levers.
And Andrew, you've spent years helping to build PartsTrader and that sort of culminated in this recent acquisition. Because... Parts Trader had this employee share scheme. Your team has gotten to have a share in that success. Why did Parts Trader choose to offer employees shares instead of maybe just like a higher salary, more bonuses?
It originated from one of the founders who'd actually been quite successful with Trade Me and he'd seen there the benefit of employees participating in the upside of growing value and also the philosophy that the employee is going to do a big part of growing the value. So when you're in an early stage company, you really have some good ideas, a thesis really, but there's nothing there other than belief for people to show up every day. And so you really want to reward them and you want them to feel part of it. and to act somewhat like owners because the original founders, the investors, the managers, they can't be everywhere. We want people to grow with the business and to think like owners, to look after the customers, to make wise decisions.
Ultimately, in an early-stage business, you work more than 40 hours a week at times.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:01–4:31
2
What evidence shows employees want part of their pay in shares?
4:31–6:01
3
Why do experts say wealth comes from ownership rather than wages?
6:01–15:14
4
Why did PartsTrader choose an employee share scheme over higher salaries?
15:14–27:33
Speakers
3 identifiedMore from Shared Lunch
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