Weekend Reading #24
Photo by Fahrul Azmi on Unsplash
This is the twenty-fourth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 6th July 2019. To receive a copy each week directly into your inbox, sign up here.
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An update from Indonesia.
We returned to Jakarta last week and found it much as we had left it – buzzing with life and teeming with energy. The familiar combination of mosquito-buzzing motorbikes (plus actual mosquitoes) and the stifling humidity welcomed us as we set about our business.
We arrived at our base at The Best Western Senayan at around 11pm Sunday night after travelling for way too many hours via Doha (looking down at the dusty expanse it was hard to imagine the mechanics of a World Cup there) and expecting a fairly standard 3 star experience from our startup budget.
It was a change of location from our usual choice of the Thamrin area, given the latter’s proximity to the constitutional court from which the final endorsement of President Jokowi’s election win was expected. We checked in and went into our rooms where we were unamused to discover that there was a mirror behind the curtains instead of a window! As our COO, Lupo, joked via Whatsapp, we smiled and waved to the secret police.
A subtle shift in sentiment.
Since our February trip there has been a subtle shift in sentiment. The optimism of an expected Jokowi victory from most in the business community which preceded the elections has given way to the reality that post his resounding victory (despite some ongoing protest), his government continues its interventionist approach to business and is fairly limited by practical circumstances in terms of further major reform. A new friend mentioned to us that Indonesia is caught between permanently trying to juggle Islamism and socialism which are both powerful historical and cultural forces in the country. This is an interesting take and worthy of further thought.
While the government's infrastructure programme has yielded definite results, the question of how to sustainably elevate Indonesia’s growth back up towards the 6-7% needed to make headway is firmly back on the agenda. It's not inconceivable that profit may be sacrificed for political pragmatism in the final term of the current president and this may not bode well, in particular for state-owned enterprises that may face similar pressures to those we have seen in other emerging countries. Investors seeking higher returns in many of these names may be sorely disappointed, returns continually get redistributed from equity holders to the general public. Better infrastructure may well render Jakarta a more pleasant city to live in, but the cost of such investments – including the textbook “crowding out” of private investment and returns – have to be paid.
A boost in productivity.
Speaking of infrastructure spend, one notable change has been the completion and commencement of Jakarta’s MRT (mass rapid transport) system. Thanks to this flagship Jokowi initiative, we found we were early for most of our meetings due to less cars being on the road. Make no mistake, we are speaking incrementally here, as the traffic is still the worst of pretty much any city we’ve been to, but there is a definite improvement in travel time. It gives a different spin on one of our core themes, “competition for time” but let’s assume there's an extra 10-15 minutes available to the average Indonesian commuter each way and it can only bode well for productivity levels.
The highlight of the week outside of the business angle was our Meiso experience. "Meiso" in Japanese means contemplation and the name could not be more perfect. Meiso is a chain of reflexology centres situated mostly in shopping malls. It's always full, and we were lucky to get the slots we did. One hour of massage costs the princely sum of $7, roughly 10 times cheaper than the UK and a far better experience if you don’t mind sharing your space with up to 20 other customers all taking time out of their days to reflect or snooze or fiddle on their smartphones, or all of the above while being pummelled to smithereens by Meiso-trained masseurs.
Tech, tech and more tech.
Another highlight was a serendipitous attending of CIMB’s Indonesian startup conference where a dozen or so emerging tech companies were on hand to educate attendees on their plans. Companies ranged from P2P lenders, to a gamified stock trading app, to AI-driven healthcare and data companies. One less recent graduate which was not at the conference is WIR, an AR/VR and AI software company which media reports suggest is ready to progress to the Jakarta Stock Exchange in the coming months. This would be Indonesia’s first sizeable business of this nature to hit the stocks market and is surely a sign of things to come.
What was poignantly noticeable about this conference was the apparent lack of frenzy by investors. The conference was well attended for sure, but there was by no means the army of VCs and investors one would expect if one were in Silicon Valley or London. There are sizeable opportunities here for those willing to leave their comfort zone and travel to learn.
The harvesting of e-wallets continued at a pace and with even more aggression as the wallet providers compete with each other and the traditional banks to attract customers. With the interest rate policy seemingly peaking and possibly inflecting, our banking idea from our "Finance 2.0" theme may be nearing an attractive cyclical entry point.
Our investment meetings covered some fascinating topics, from the merits of investing in e-sports to the possible existence of aliens. From quantum mechanics’ double slit experiment to whether Bitcoin is an exit door from the current financial system. From daily sprint triathlons (yes, one new friend does that every single day) to the budding opportunity of marijuana tours in California, we covered much ground. Our journey ended with a final nip to the nearest Meiso for a catnap and a foot massage.
Again, we thank everyone who took the time to engage with us and we look forward to being back again in the coming months.
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What we're watching.
Summer is here and that means one thing in the TBC office... sport. This week, the widescreens have been tuned into the many summer sporting delights that the season has to offer. Screen one has been on the Cricket World Cup, which is inching towards the business end of the tournament, with England flirting with 'home World Cup knock out disaster' and Australia, inevitably, leading the pack. On screen two, Wimbledon glorious Wimbledon, and a year when you feel like a young gun might cause a surprise, especially seeing as a 15-year-old knocked out a 7-time Grand Slam champion on day one. Screen three goes live this weekend as the Tour de France rolls down the ramp, and we'll be watching the next 3 weeks in awe as 176 supermen-on-saddles put themselves through hell in pursuit of sporting immortality. But our screens for the past month have been dominated by the Women's Football World Cup. The final is tomorrow, with England's semi-final conquerors and reigning champions, the USA, looking to add a fourth world title. You wouldn't bet against them and you'd be mad to miss what will be a gripping climax to a fantastic tournament.
What we're reading.
Ever been swimming past the wave line and got that ominous feeling in the pit of your stomach about what lurks in the deep beneath your kicking feet? Whilst mysterious, oceans are fascinating and vital to the ongoing health of our planet and species. This week, we finished James Nestor's timely book, Deep, which explores the depths of the seas and oceans that cover 70% of our earth's surface. Nestor embeds himself with athletes and researchers who are transforming not only our knowledge of the planet and its creatures but also our understanding of the human body. Along the way, he takes us 28,000 feet below to the Atlantic’s greatest depths. He finds whales that communicate with others hundreds of miles away, sharks that swim in unerringly straight through pitch-black water, seals who dive to below 2,400 feet for up to 80 minutes. As strange as these phenomena are, they are reflections of our own species’ remarkable potential — including echolocation, directional sense, and the great physiological changes we undergo when in water. Most compelling, Nestor unlocks his own freediving skills as he communes with the pioneers who are expanding our definition of what is humanly possible in the natural world. At a time when our relationship with the natural world is strained and must be considered more deeply than ever, Nestor's book is a powerful and inspiring read.
What we're listening to.
Two fantastic – and quite different – podcasts this week were playing on our smartphones and exercising our minds.
First up, tech visionary, George Gilder, is a man who has fascinated us since we read his bestselling, Life After Google, which dug deep into the reasons why he believes Silicon Valley is suffering from an irreversible breakdown and what we – as investors, entrepreneurs and tech users – can expect the world to look like as the post-Google age dawns. In this brilliant episode of the Venture Stories podcast, Gilder riffs with Patrick Stanley, head of growth at Blockstack, on everything from Gilder’s Information Theory to bitcoin to the future of the Federal Reserve to AI and everything in between in an episode titled: The Past and Future of the World Economy. So if you want to know about that... give it a listen.
Second, another titan brings his expertise, intellect and wit to bear on the podcast stage, as Jared Diamond, author of Guns, Germs and Steel, guests on this episode of Sam Harris' always-excellent Making Sense podcast to discuss the current state of the world and how we got here. These two great minds go at each other for an hour and a half on the rise and fall of civilizations, political polarization, the precariousness of US democracy, the lack of a strong political centre and an assessment of the world's immigration policy. In some ways, it can be exhausting listening to people of this immense level of intellect parry and joust. But, with sport on our mind, like lifting weights or going for a run, you'd hope that the exhaustion is a sign of positive stimulation and exercise for the brain and soul! And that's why we love podcasts such as these.