Weekend Reading #57 — Three Body Capital

This is the fifty-seventh weekly edition of our newsletter, Weekend Reading, sent out on Saturday 29th February 2020. To receive a copy each week directly into your inbox, sign up here.

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What we're doing.

Whichever way you slice and dice it this past week has been a bloodbath of scarcely paralleled proportions in global equity markets.

The nature of the COVID-19 virus spread is certainly frightening and of course it will probably affect economic performance pretty much everywhere. However what’s more interesting to us is the nature of the sell off we have seen. The speed and linearity of it has been breathtaking. Perhaps it shouldn’t be a surprise considering the extent of ETF and machine involvement as it is today. The epicentre of the sell off has been in the US, which makes sense, considering the extreme levels of positioning and sentiment we have seen for some time now. Everyone and their dog was long US equities, and there are already many stocks that have fallen dramatically from grace.

Our job at Three Body Capital is not to predict, but to imagine a number of available different paths at each point. So we don’t know what will happen next. With abundant (and likely soon to be even more) liquidity and record low bond yields it is possible money cascades straight back into US equity markets. Or alternatively, the virus may simply be the straw that breaks the camel's back in terms of questionable valuations of a plethora of listed companies?

Back to real life and in London this week we’ve been spending some time building out our network of introducers, getting to know the well connected, trusted individuals who we are going to partner with in order to scale our deals platform, 3BC.

3BC already has a strong network of investors and access to decent deal flow, but we’re keenly aware there are many individuals working in the market who can loop us into their networks, too. We hope that we can work together to add deals and investors to our platform.

It’s that ethos of collaboration that we’re using to build all aspects of Three Body Capital. We aren’t protective over what we have and we hope that the friends that we make along the way, such as introducers, will be open to collaborating with us, too.

Together, we win.

What we're reading.

Digging deeper into the world of gaming, we came across a fascinating article on a16z about Roblox. Fear not if you haven’t heard of this company before – if not read this explainer – it’s a platform shaping the future of gaming.

Roblox brings people together through gaming, and it’s grown to be one of the world’s largest social communities and online multiplayer game platforms, where over 115 million kids and teens play, hang out and develop games. That’s the big story. Roblox is a community of over 2 million developers – of all ages and in all geographies – creating via the platform. Roblox provides a creative mind with everything they need to build a game.

Having recently made an investment in the company, a16z have mighty ambitions for Roblox, and the article truly piqued our fancy as soon as they mentioned one word: metaverse. As a16z explains:

"People have been talking about the “metaverse” for a very long time, ever since sci-fi writer Neal Stephenson first coined the concept of a global, virtual, persistent space shared by many. While pundits have been distracted by the readiness debates and questions over VR vs. AR, the foundations of a global metaverse have been quietly built in the background… in Roblox. With the company’s focus on safety, persistent identity across worlds, and the ability to easily hop from one immersive experience to the other — tens of millions of which already exist on the Roblox platform — the company is well on their way to making the metaverse a reality."

Truly exciting stuff, and we’ll be watching Roblox’s progress with interest.

Leaping away from the reality of the metaverse and into science fiction, it was nice to hear on Twitter from Wait Buy Why’s Tim Urban:

He’s right, of course. The Three Body Problem Trilogy is a groundbreaking and original piece of work. It’s ideas like these and creators like Liu Cixin that drive change, progress and innovation. That’s one reason why it’s the inspiration for the name of our company.

Whilst we agree with Mr Urban that true originality can be truly gripping, it’s easy to get obsessed with the need for content to be original. Everyone is on the hunt for the next best latest release. What’s new? What’s great? What’s everyone talking about? This can lead us to overlook what we know we love most, which is what we’ve consumed before. And there are few things that give us more pleasure than reengaging with our favourite content, be it an old film, a great song, or an epic book.

Which brings us to Butcher’s Crossing, a Western novel that we’ve been re-reading this week for, give or take, the fiftieth time. A tell of its quality is that every single time we re-read it, perhaps twice a year, it always feels fresh, we always find something new, it always moves us.

Butcher’s Crossing is set during the 1870s on the American Great Plains and it’s a straightforward tale about a group of men who set out to hunt buffalo in winter. It’s brutal, dark and tough but full of hope, optimism and spirit. It’s a quiet, simple book, without fanfare, which received little acclaim, written by John Williams, author of the celebrated Stoner. It’s many times better than Stoner, in our humble opinion.

So rather than recommend another new read, this weekend we’re proposing that you get reacquainted with an old favourite, be it an album, a novel, a film. Chances are, by the end of the weekend, you’ll love that piece of content even more than you did before.

What we're watching.

Last night we went to see Parasite, the South Korean film that became the first ever foreign-language film to win the Best Picture award at this year's Academy Awards.

It was nothing short of mesmerising – funny, dark and supremely surprising as the various plot twists just kept coming. In a strange way, we have rediscovered the cinema experience. As the industry has been decimated by Netflix et al, theatres have been condensed, seating has become comfy and luxurious, and prices have fallen to such a degree that the experience has become almost niche. It’s also quite pleasant that the theatres are rarely full. It’s become a place of solace, where phones are stuck away long enough to focus on losing oneself all over again. Parasite hit the spot!

What we're listening to.

As regular readers know, we’re fans of Patrick O'Shaughnessy's Invest Like The Best podcast. We learned a lot from his recent discussion about fintech investing with Ben Savage, a partner at Clocktower ventures. In a wide ranging conversation, they chat about all aspects of the fintech ecosystem, including trends in digital assets, the effect of technology on asset management and the future of private equity. With the launch of our deal platform, 3BC, underway, we learned a lot from this listen.

Following the release of Billie Eilish’s Bond25 theme, “No Time To Die”, we’ve had Bond themes booming in the office and debate raging about which is the best of all time. Is it the classic big band sound of Shirley Bassey’s Goldfinger? Or McCartney’s light-and-shade epic anthem Live And Let Die? Carly Simon’s dreamy piano-led Nobody Does It Better? Or one of the modern pretenders, like Adele’s soaring Skyfall vocal, that hits all of the top Bond notes?

We’ve been arguing about it all week. And we’re still no closer to a consensus.

One contestant that was fielded was this track, entitled “It doesn’t matter now” by Alabama-born Early James. Give it a listen, and you might understand why a mention of this track was wedged in last minute into this paragraph! All it would take is the iconic James Bond theme motif inserted into its lines, and it would blend perfectly into a psychedelic-painted 007 film opening.

Feel free to let us know who else might get your vote... unless your vote is for Madonna’s Die Another Day.