Weekend Reading #94
Photo by Alfons Morales on Unsplash
This is the ninety-fourth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 21st November 2020.
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What we're doing.
This week we spent some time thinking about client targeting for our private deals platform, 3BC. There comes a time in every business when you must go beyond your personal contacts and start generating cold leads. That time has very much arrived, and we have started reaching out to people we think we can help.
Early signs have been really positive – we’re getting responses, booking calls and signing partner agreements with a range of actors in private markets – entrepreneurs, freelance dealmakers, angels, and VCs. We are particularly interested in connecting with players in emerging markets, as we believe that our edge is in connecting emerging centres of innovation (Jakarta, Manila, Warsaw, and Istanbul amongst others) with developed markets. We welcome all enquiries – hit us up to explore working together!
What we're thinking.
We recently came across a brilliant quotation:
“Easy choices, hard life. Hard choices, easy life.”
It’s from Jerzy Gregorek, who went from being an alcoholic to winning four World Weightlifting Championships – and it sums up how we feel about work, life and everything in between, and serves as a handy heuristic when the chips are down and tough decisions must be made.
Discovering this quote led us to investigate Jerzy’s life and achievements as a weightlifter and coach. In the process we stumbled across this podcast interview with Tim Ferris (seriously, this dude is prolific). Jerzy’s book, The Happy Body, is worth a read too.
We’ve been thinking about the Metaverse again, as blockchain-based game, Axie Infinity, has shown that it's possible to earn a living from playing a game. They call it “play to earn” and it has taken the Philippines by storm. The incentive structure is interesting and it has gained enormous traction in a country where the pandemic has resulted in bleaker prospects for the young and unemployed. Some have told stories about how they are earning 3 times the minimum wage by playing and monetising inside of Axie Infinity.
What is even more exciting for us is the imminent IPO of Roblox, one of the first major sniffs we have of what the Metaverse may look like. If you don’t know about it, just ask your kids. It's the first of the big 3 (Fortnite and Minecraft) to list publicly and we read through their S1 with great excitement.
What we're reading.
The FT's Martin Wolf wrote a piece this week entitled "Why inflation could be on the way back". This is effectively a reaction to a new book from Charles Goodhart, a respected academic, and Manoj Pradhan, formerly at Morgan Stanley, somewhat grandiosely called "The Great Demographic Reversal". The authors argue that the world economy is about to shift regimes. The big shifts four decades ago were not so much the desire to bring inflation under control, but globalisation and the entry of China into the world economy. They argue that we are due a major reversal, with the era of low inflation and high, rising indebtedness due to end.
The piece is pretty dry and not one for a Saturday morning, but it certainly grabbed our attention. The real significance isn't necessarily the content – it's the signalling impact of articles such as these appearing in major publications such as the FT. We have been monitoring the inflation narrative for some time and this is another data point – one we feel is quite significant.
On the subject of the FT, a fascinating book that we’ve working through is former FT Editor, Lionel Barber’s, new title, The Powerful and the Damned. Barber was Editor of the Financial Times for the tech boom, the GFC, the booming rise of China, Brexit, Trump World and everything in between from 2005 to 2020. He had a front row seat for the events that have shaped the world today, meeting and greeting all of the key players and feeling the full effect of how the actions of those key players shaped the world. As a top news man during these years, he always had the inside track and it’s revealed in this no holds barred diary.
This book is Barber’s diary from those years, taking us behind the FT headlines to give us access to the private meetings and exchanges with political leaders on the eve of referendums, the conversations with central bankers facing economic meltdown and arguments with Silicon Valley tech billionaires. Trump, Cameron, Blair, Putin, Merkel, Mohammed Bin Salman, Zuckerberg… they’re all in there and Barber’s commentary on the way that they have each played their part in the world we live in today is a truly fascinating read.
Warren Buffett famously used the term "moat" to convey the idea of a company’s competitive advantage. And much has been written about moats and network effects across all types of businesses and industries. Now John Street Capital (not a name we’ve come across before but one we will be following closely) has added its voice to the discourse. This impressive and highly technical piece argues that there’s an opportunity for fintechs to create a better “mousetrap” to serve the financial service industry, clients, and ultimately end users; with a more modern and flexible technology stack. Considering our mission here at Three Body Capital, we are obviously biased, but it’s great to see others contributing to the discourse around disruption in financial services.
Earlier on in the week, we came across this rather interesting article about London’s iconic black cabs; amidst the economic fallout from the pandemic, an estimated 5,000 cabs are being kept in fields in the surrounding counties of London in an attempt to keep them off the road and for rental firms to save on insurance. Since March, demand has seriously plummeted and it's now expected that just 20% of cabbies are still out on the roads, but we hope that in the coming months as lockdown eases, people will consider taking one of these iconic landmarks on wheels not only to keep the industry alive, but to also stay healthy, given they’re a much safer alternative to taking the tube or an Uber.
One of our favourite minds, Michael Maboussian, penned a delightful take on what it means to be a value investor, also in the FT this week. In this short piece, he writes about not confusing value investing, which is alive and well, with the value investor, who may be struggling.
A book that landed on our doormat with a heavy thump this week was Barack Obama’s A Promised Land. It is Obama’s first-hand account of the first half of his presidency, giving us an insight into his rise and his turbulent first term in the White House. Given what has come since, this book should be essential reading for those who want to understand how Trump came to be. We’ll let you know how we get on, but at some 750 pages, it may be a few weeks if not months before we’ve broken the back of it. One to save for the Christmas break, perhaps.
What we're watching.
This demo from Spanish social media startup (or should we say, scale-up) is fantastic. It’s short, impactful and gives a strong sense of the beauty and utility of the product. We’re currently listing Peoople’s latest fundraise on 3BC and we encourage professional investors in our network to take a look at how the team is innovating in the social curation and influencer marketing space.
Right now, Peoople has more than 2,000 influencers adding content on a daily basis to the platform. This allows it’s c. 6.5 million users to access more than 5 million recommendations on anything they may need. Everyday Peoople is creating an average 50,000 purchase intentions, which are diverted to e-commerces and marketplaces where are converted into real sales.
Watching Peoople’s demo highlights to us the power of video as the preeminent storytelling medium. To be honest, video is something we’ve always wanted to do here at Three Body Capital and it’s very much in our marketing roadmap – but we want to ensure we get it right, and that means saving it for a time when we can fully focus and execute properly.
The Undoing, the new HBO psychological thriller, has kept us entertained. It stars Nicole Kidman and Hugh Grant as a psychologist and her oncologist husband. Things go wrong when he is accused of murder but it's very unclear what exactly happened and who was involved. It still quite cool to only watch one episode a week as we did long before the age of Netflix bingeing. So far so good after 4 episodes.
A particular joy this week has been the discover of the work of Swedish Director Roy Andersson in his film You, the Living. Andersson’s films (which take him a long time to finance and create) have a fantastic, unique aesthetic that seems to combine Peter Bruegel the Elder with Edward Hopper. They are sharply observed, deadpan and very funny.
Andersson says that "You, the Living" is about "about the vulnerability of human beings". The title part of a quotation from Goethe: "Be pleased then, you, the living, in your delightfully warmed bed, before Lethe's ice-cold wave will lick your escaping foot." Sounds terrible, dark and morose? It is, and an utter delight for that.
What we're listening to.
At various points we must all get our heads down to do some serious mental heavy lifting. Over the years we have experimented with different tactics for smoothing the transition from “shallow work” (emails, calls, paperwork etc) to “deep work” (long-form writing, thinking, and business model formulation). Invariably, music has played a role.
We are big fans of house music and its ability to induce trance like states that facilitate deep work. We use long mixes and playlists on repeat to trick our brains into letting go of distractions and focusing on the task in hand for prolonged periods. But listening to the same stuff over and over again can get a little boring. So this week we went in search of something different.
We found this playlist on Youtube. It’s chilled, ambient sounds helped us write this very newsletter! We encourage you to give it a try the next time you need to “go deep”. You won’t regret it.