Weekend Reading #63
Photo by Markus Clemens on Unsplash
This is the sixty-third weekly edition of our newsletter, Weekend Reading, sent out on Saturday 11th April 2020. To receive a copy each week directly into your inbox, sign up here.
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What we're doing.
As another week of lockdown draws to a close and the burden on the NHS ramps up, we are spending more and more time thinking about families that have lost loved ones to COVID-19. Some heart-breaking stories are emerging, stories that make us hold our people close and value the precious time we have together in lockdown.
Whether you’re celebrating Easter, Passover or another equally significant religious happening this weekend, we wish you and your loved ones the very best.
Our business continues to gather momentum. Without meaning to sound glib, it’s a hugely exciting time for Three Body Capital, as we roll out multiple offerings and start collecting early feedback on the products we’ve brought to market (“wrestled to market” might be a better way of putting it) over the past year. With so much fear and grief happening around us, we almost feel guilty to be excited, energised and hopeful for the future.
We believe that in times like these, it’s important to resist the urge to hunker down and hide away, and so we’ve been overcompensating by doing as many calls, Whatsapps and emails as we possibly can, in order to connect with people and explain how we can help them. If Zoom had a reward points system, we’d be gold card holders with upgrade vouchers aplenty! Instead, we are left with bulging diaries and increasingly hoarse voices, along with some brilliant connections and conversation that literally leave us tingling with excitement about the future of our business.
Three Body Capital was designed by us to be antifragile – able to thrive in any environment and at times, profit from disorder. A fondness for chaos and volatility is baked into our business model, hence the name, which evokes chaos, complexity and the opacity of the future. Of course, launching a fund, trading platform and private markets deal platform into a global economic meltdown isn’t ideal, and it will make it harder for us to generate revenue (and profits) as soon as we would have liked – but it is creating new, unforeseen opportunities. We are being flooded with enquiries by issuers looking to list on 3BC and raise investment capital on our deal platform. Brokers and introducers are hitting us up with a weird and wonderful variety of deals. And investors from far afield are coming to us asking about discounts and entry points, seeking to understand the relative value between public and private markets.
In recent days we have received several inquiries about our hedge fund from allocators, too. People are engaging with our multi-asset mandate and aligned fee structure (we are charging only a performance fee), perhaps because they understand the need for flexibility, humility and freedom at this time. If you’re a professional investor and this applies to you, we’d love to talk.
What we're reading.
Not a huge amount of time for reading this week. We’ve spent far too much time devouring news (often breaking news), which adds little value to our understanding of the world and simply reminds us of the opportunity costs associated with staying in the flow. Still, every time we delete Twitter on our phones it miraculously reappears on the home screen! And everytime we block news sites from our web browser, we find a way to circumnavigate the very filters designed to help us. Having jokingly advised everyone to lock their phones in their vehicles last week, we are wondering where to hide our car keys!
We continue to plough through Brad Feld’s Venture Deals, a classic of the genre that manages to balance textbook-style referencability (new word) with some nice writing. We are only introducing deals with 3BC, not arranging or advising investors, but it’s still handy to understand the deal origination process from a variety of angles. The more we understand people, the more we can help them. With this in mind, we’re always on the lookout for books that cover private markets, venture capital and private equity – preferably those that take us behind the scenes of the deal making process and enable us to learn from other people’s mistakes. So please let us know if you have something to recommend. Perhaps we should start a shortlist on Goodreads, or a dedicated Twitter thread for everyone to pile into?
We couldn’t miss this worrying Bloomberg article that popped up on our Twitter feed earlier this week. It reports that, “Record low interest rates are tempting some retail investors in Singapore to load up on debt to buy shares [...] There are also some suggestions retail investors may be using their homes as collateral to borrow money.”
This is clearly a TERRIBLE idea and one that could exposure individuals to catastrophic risks. The passive industry continues to push it’s simplistic messaging about “time in the market” to a new generation of retail investors who are desperate to participate in the kind of asset price inflation that made their parents rich. Except, as we all know, past performance is not necessarily an indicator of future outcomes. It’s painful to read these stories, as behind the hook lies human lives that could be ruined by reckless behaviour driven by simplistic messaging. Then again, it’s easy to understand how such thinking comes to exist, when the Fed is – once again – at work buying out ever-lower quality debt instruments in the trillions. Talk about moral hazard!
This piece by John Gray in the New Statesman is hyperbolic and completely over the top – but it's still a rip-roaring read! It’s full of grandiose statement like this:
“This is not a temporary rupture in an otherwise stable equilibrium: the crisis through which we are living is a turning point in history.”
Gray contends that the era of peak globalisation is over, which is an argument that proliferated well before the global airline industry shut down, countries closed their borders and started squabbling over face masks and anti-bac. In fact, events such as Brexit, the rise of Trumpism and other populist regimes in countries across the world have been signalling a retrenchment from globalisation for some time. So far, Coronavirus seems to be catalysing pre-existent trends, not creating new ones.
The article notes that, “In the view of the future to which progressive thinkers cling, the future is an embellished version of the recent past.” This is very interesting, and worth considering whilst during our temporary confinement. What if the future does not resemble that which came before it? What if the future is different? We spend every day trying to answer these questions, or at least, imagine what the answers might look like.
We completed also very quickly an exceptional piece of creativity entitled Ghost Fleet, a riveting fictional account of a war between the United States and China set in the near future. The authors, PW Singer and August Cole, are two leading American experts on national security and the latest military technology and research and the book is superbly woven together. It made such an impression on former Indonesian presidential candidate, Prabowo Subianto, that he mentioned it in a speech in the run up to the last election. In the book, Indonesia has split apart and disintegrated as a result of a second Timor war. It was immensely enjoyable and possibly instructive – definitely worth a read.
What we're watching.
It’s Passover, which means we are relaxing and immersing ourselves in quality family time… and delicious food! Our belts have already been loosened by one notch, with more to go by the time the week is out.
Since this year the global Jewish community is celebrating Passover under lockdown, the Israeli Philharmonic Orchestra has put together a special musical greeting, à la Zoom! The talent and ingenuity on display here is just crazy.
We’ve also been watching the barely believable ascent of Riot Games’ new game, Valorant, their first title that isn’t set in the League of Legends universe. 1.7 million viewers have viewed early footage of the game’s closed beta, which means it’s surpassed Fortnite’s peak viewership during the World Cup and came within a whisker of toppling the record set by Riot’s global heavyweight, League of Legends.
Valorant arrives at a pivotal time for the competitive gaming landscape. Right now, the space revolves around multiplayer online battle arenas (MOBAs) like League of Legends and Valve’s Dota 2. Valorant is doing something different, combining character-based gaming (ref: Overwatch) with the intensity of a tactical shooter (ref: Counter-Strike: Global Offensive) and marketing this mashup to millions of MOBA fans.
If Riot can pull this off, they will have reverse-engineered a new eSports category.
What we're listening to.
This week we’ve been listening to a lot of children’s music.. I’m sure a lot of you reading this newsletter know our pain! One neat trick (particularly for those of you with young kids, who can get away with monopolising the Spotify account) is to stick to the instrumental stuff. The Shady Ukulele Band play upbeat covers of classic tunes in the Hawaiian ukulele style. This is fun, exotic music for bath-time, chilling in the garden, even nappy changes!
On that musical note, we bid you adios for another week and leave you in the capable hands of American poet Tony Hoagland, who’s beautifully crafted words remind us of the need to focus on what we have, not what we don’t have. Lockdown and the childcare challenges that come with it have the potential to make us more open-minded, more patient and more grateful. The final line of this poem has followed us around for years, but we never knew the meaning. Until now.
Jet
– By Tony Hoagland
Sometimes I wish I were still out
on the back porch, drinking jet fuel
with the boys, getting louder and louder
as the empty cans drop out of our paws
like booster rockets falling back to Earth
and we soar up into the summer stars.
Summer. The big sky river rushes overhead,
bearing asteroids and mist, blind fish
and old space suits with skeletons inside.
On Earth, men celebrate their hairiness,
and it is good, a way of letting life
out of the box, uncapping the bottle
to let the effervescence gush
through the narrow, usually constricted neck.
And now the crickets plug in their appliances
in unison, and then the fireflies flash
dots and dashes in the grass, like punctuation
for the labyrinthine, untrue tales of sex
someone is telling in the dark, though
no one really hears. We gaze into the night
as if remembering the bright unbroken planet
we once came from,
to which we will never
be permitted to return.
We are amazed how hurt we are.
We would give anything for what we have.