Weekend Reading #95

Photo by Nick Fewings on Unsplash

This is the ninety-fifth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 28th November 2020.

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What we're doing.

This week we couldn't keep our eyes off crypto as the fireworks began and then fizzled out to some degree. Ethereum surged through its highs for the year and breached $600, only to promptly fall back closer to $500. Bitcoin also had a pullback after nearly reaching its previous “bubble” high from 2017.

Stocks-wise, the cyclical rally continued but many growth stocks also resumed their upward move – turns out the rotation wasn’t from growth to value... it was from cash to stocks! The Dow is on course for its best November in 40 years. Remember a few months back when nobody believed the market would go up, given the state of the world? The dollar also continued its recent fall against everything giving traditional emerging markets another leg up. The copper price reached its highest level in nearly 7 years too – for us a significant indicator of what may be unfolding.


What we're thinking.

We spent some time this week feeling grateful for what we have. Gratitude has been en vogue for some time now, with various bloggers and podcast hosts espousing the psychological benefits. But occasionally things happen that remind you how lucky you are. We are living through a difficult period here in the UK, with COVID-19 related disruption at full tilt, but we are very conscious that we still have it easy compared to many other people around the world.


What we're reading.

This tweet from Sriram Krishnan caught our attention. It shows the effect of the hit Netflix release, The Queens Gambit, on Lichess player numbers and how they went up pretty much immediately after the show captured everyone’s attention. Of course, some will argue seasonal factors, lockdown etc affected the numbers too but the size of the move is fascinating! We haven't watched the Queens Gambit yet, but we can't wait to do so.

We greatly enjoyed this article on Medium that took a moment to reflect on the 15 years since Chris Anderson’s seminal book, The Long Tail, was first published. It’s fair to say, a lot has changed in the intervening years! The article assesses Anderson’s predictions to see which he got right. Many have but some have come to pass in very different ways to those Anderson predicted.

The Long Tail was Anderson’s catchy name for a set of observations about the economics of rapidly evolving internet markets, the type where anyone can try their hand at turning their specialized interests into sources of income. The internet gave everyone, be they a creative or an entrepreneur, a chance to scale. It also meant that non-scalable businesses, built out of bricks and mortar, were set to be relics from a bygone era. With hindsight, Anderson’s point seems obvious, but his thinking in 2005 was prescient, and the rapid rise of Amazon, Netflix, Airbnb and Spotify and countless others proved it.

But central to Anderson’s premise was the way that The Long Tail would allow individual creators, for the first time in history, the chance to compete with the technology giants as the internet had levelled the playing field in terms of distribution. The shortcomings of this prediction are plain to see in 2020. Aggregators are now so entrenched and dominant that individuals are being squeezed more than ever before by search algorithms, pricing wars and the like, each making the discovery of content harder, more competitive and less economically attractive than ever. Most creators have either lost out or at the behest of the aggregators as the aggregators have, in many respects, eaten the entire internet, hoovering up the opportunities that once existed in the long tail where Anderson predicted opportunities for creatives and entrepreneurs. Whilst they’re still there, these opportunities are now owned by the gatekeepers, the aggregators, the Spotify’s and the Netflix’s. You may be a song writer, but you’ll still need to distribute via Spotify. You may be a film maker, but pretty much the only way to shoot for stardom is via Netflix. As sad as that is, and as much as social media has helped creatives and entrepreneurs to rise from nowhere, the long tail is now owned by those who used to be firmly in the middle.

That’s the theory in this excellent article, anyway. Anderson’s predictions were never going to be 100% accurate but his ideas were ahead of their time. Understanding and interpreting them from a position of knowledge gained over time is a fun pastime. It’s fun to think that, despite its continued evolution and growth, the early stages of The Internet Age are now a part of history and should be critically considered thus. And, if you haven’t ever read one of the most important books in internet history, reading The Long Tail with a reflective hat on is also highly recommended.

A controversial read in the New Yorker was published this week under the lively title, How Venture Capitalists Are Deforming Capitalism. It’s an essay that begins by telling the story of one of WeWork’s earliest rivals, Nextspace, who in the late 2000s was trying to grow a co-working business in an old-fashioned way by keeping costs low and making revenues.

Unfortunately for Nextspace and their then-CEO, Jeremy Neuner, they got burned bad and eventually put out of business by the VC-fuelled rise of WeWork that torched the rest of the competition in the co-working sector. We all know how that story ends (i.e. not very well for WeWork) and reading about the aggressive expansion plans and zero-sum tactics of WeWork and their venture partners was an insight into the way modern VC’s choose to position their portfolio companies.

As former Nextspace CEO, Jeremy Neuner says:

“V.C.s seem like these quiet, boring guys who are good at math, encourage you to dream big, and have private planes. You know who else is quiet, good at math, and has private planes? Drug cartels.”

Sure, that might be a little over the top, and you can sense the frustration of a man who was put out of business by a more aggressive rival, but this is a fascinating read that examines the rights and wrongs behind the VC model and how it has shaped the funding landscape over the past few decades. Essential reading for anyone trying to make sense of the current private market landscape.

We LOVE Thai food. So we lapped up this simple recipe for Tom kha chicken and mushroom from Clapham's Cher Thai Eatery, via the Spectator's restaurant critic, Tanya Gold. She ends the piece by saying:

"It is one of the best things I have ever cooked — deep, tart, sweet — and it is also beautiful. It has something too that I find rare these days, and lack myself, and so wonder if it is why I love Thai food best: it is balance."

Now you know what we’ll be eating this weekend!


What we're watching.

Following news of Sean Connery’s passing at the end of last month, we couldn’t help but revisit perhaps the most iconic of his films: the first 6 films in the James Bond saga. Granted, these films could hardly be made now – contrast Connery’s 007 with Daniel Craig’s rendition of the great spy, and the evolution of not just filming technology, but also culture and tradition, could not be starker.

Equally iconic as the great 007 is perhaps the music that accompanies each film. The opening title plays an equally critical role as the plot and cast, and while we have mixed opinions about the producers’ latest choice of theme song for No Time to Die (of the same title), the choice of music for all the previous Bond films has been flawless.

But what would have happened if different music had been chosen? This intriguing history of what went on behind the scenes while making the title track to “You Only Live Twice”, best known for Nancy Sinatra’s haunting vocals, tells of the ill-fated recording of a version by Julie Rogers which was ultimately discarded, only to re-emerge decades later, wrongly credited as a “demo” track. Give it a listen – it’s an interesting counterfactual for what might have been a very different opening (and ending) to a silver screen classic.

Great opportunities don’t show up often – when they do, it is those who seize them that truly have a chance to make their mark in history.


What we're listening to.

This Hidden Forces podcast with legendary shortseller, Jim Chanos, is a must listen. He speaks about his process, the markets, Tesla and a host of other fascinating things with host Demetri Kofinas. Being avid short sellers ourselves it is fascinating to hear a master of our craft reveal some of his secrets.

It’s rare nowadays for people to listen to albums from front to back. Most listen to music by streaming a single track they like on Spotify or YouTube and many constantly use the shuffle button as a way of keeping their diet of music fresh and interesting. The idea of listening to an entire hour-long-plus album is pretty alien to most of us, and that’s likely a reflection of the fast-paced nature of the way we live, the shortening of attention spans and the fact that spending an hour doing one thing nowadays is quite an ask.

Well, we would implore you to take an hour out of your day (67 minutes and 38 seconds to be precise) and listen to Lana del Rey’s most recent release, Norman F***ing Rockwell!. This is music that is a little beyond our usual tastes, but, upon listening to a few of the tracks a couple of times, we gradually began to want to listen to more and before we knew it, we’d listened to the entire album several times through during a working day. It is a beautiful bit of work, a piece of art, perhaps, and pop music at its very best. It’s an album that emboldens and lifts up the sum of its parts, telling a story throughout that rises and falls, keeping you entertained for the entirety.

Yes, it’s a little different to the usual music recommendations we make in the newsletter (Springsteen, The Beach Boys, Beethoven...) and we even surprised ourselves by enjoying this album as much as we did. The Greatest and California are wonderful tracks but, remember, have a go at the entire album. It’ll be an hour, seven minutes and thirty-eight seconds very well spent.