Weekend Reading #72

Photo by Bruce Dixon on Unsplash

This is the seventy-second weekly edition of our newsletter, Weekend Reading, sent out on Saturday 13th June 2020. To receive a copy each week directly into your inbox, sign up here.

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What we're doing.

Following on from the beta-testing phase for our private deals network, 3BC, we’ve begun to send out invitations to a wider group of friends and contacts. We’re now confident in the robustness of the product and in the processes we’ve put in place, so we’re turning the taps (a little) to open up our invite-only platform to a new group of users. We look forward to hearing what everyone thinks.

As we end 3BC’s initial launch, it’s been fun this week to reflect a little on how far we’ve come since we mused about the possibilities of connecting professional investors in emerging markets with deal flow in global private markets. We thought there was an opportunity to make that connection by using technology, and it’s satisfying to see now, even in the early stages of our platform’s roll out, that those links are being made. 

What we're thinking.

Whatever one may think one knows about the spread of Covid19, at this stage there are still far more questions than answers. Why does the virus come back in some places and collapses precipitously in others, despite full reopening of the country? We really don't know why, but it's increasingly clear that the world is becoming even more bifurcated between those that seem to be obliterating the virus and those that can't seem to shake it. This has clear investment implications and the markets are proving it.

We don’t really want to get into the habit of providing “commentary” or giving our views on what's happening in the markets each week as that defeats the objective of what we are aiming to achieve. However, what we will say is that we have observed our own behaviour going into our second monthly NAV print for our fund (our month end is the 15th of every month) and we are attempting to make sure that the pattern of fairly random (at any point in time) individual monthly NAV prints is an outcome of our consistently implemented investment process, rather than each print being a driver thereof in order to manage optics of performance. We know many managers struggle with this and that is why we have structured our fund the way we have.

What we would leave with you this weekend is this Bloomberg Opinion piece, looking at how the creditors of car rental company Hertz are requesting permission from the courts to sell more unissued shares of Hertz into the market at a much higher price than it was trading at when the company entered administration as part of the recovery process. If you still think markets are rational, think again. 
 
What we're reading.

In an age when investors are obsessing over a company’s financials, they can risk losing sight of what truly drives business value. This insightful piece from the team at Andreessen Horowitz argues precisely that. Yes, gross margins are important. But over-rotating on gross margins is myopic because business quality is driven by more than margins. Business quality is all about defensibility. We’ve been mindful of this since the inception of our business, and it’s why we are squarely focused on owning demand. We believe that a global network of relationships is a formidable moat and it’s one worth building.

If you’re into epic Westerns, you’ve likely read Lonesome Dove. If you’re not, you’ve likely never heard of it, but this is a book for everybody that is epic in every sense of the word. It’s 850 pages, and it makes use of every single one of them to tell the story of several retired Texas Rangers and their adventures driving a cattle herd from Texas to Montana in the 1870s in the closing years of the Old West, just before America’s railroad made these great barren and desolate plains not quite so barren or desolate anymore. 

The novel explores friendship, love, adventure and the passing of time and tells a tale so beautifully weaved that you’ll be engaged from the first moment to last. It’s hard to write a short description of this almighty book, but all we can say is that it’s rare for a book of such proportions to be so un-put-downable. 800 pages feel like 80. You’ll be done before you know and you’ll be very grateful for the time you spent. 

What we're watching.

Video calls have become an essential part of our working (and social) lives. We’re all spending a lot of time on Zoom right now. Sometimes we use Whatsapp video calling. And the other day, somebody asked if we could use Google Hangouts, which was unusual, but we went with it. But when was the last time you used Skype?

Skype was once the only option for making video calls. So where did it all go wrong? This short video, provocatively entitled “How Microsoft ruined Skype”, is worth a watch.

We caught Little Fires Everywhere, starring Reese Witherspoon and Kerry Washington, and despite it not being our usual fare, found ourselves drawn into the compelling storyline. It tells the story of a well off family in Ohio in the late 90s who encounter a wandering soul who travels around the country, raising her daughter, failing to settle anywhere. Given the backdrop of #BlackLivesMatter, the undertones lurking in this drama take on extra prominence.

Twenty Feet From Stardom is such a cool idea for a documentary that it’s a surprise to learn it has never been done before. This Oscar-winner tells the story of the backing singers, those who lent their talents to the biggest stars in music. Sometimes these singers have been acknowledged and appreciated and you might know one or two of their names, but most of the time they are not. One thing’s for sure, you’ll recognise their voices as they have been an integral part of every single hit record you’ve ever listened to. 

This is a beautiful documentary for music fans. It also asks interesting questions about purpose, seeking out whether extremely talented people can be satisfied without making it to realms of superstardom to join the likes of Stevie Wonder, Bruce Springsteen or Mick Jagger, who all play a part in the doc. Is not being Stevie Wonder a failure? No, of course not, and careers shouldn’t be judged against the greatest there has ever been. 

But the difference here is that a lot of singers don’t set out to become good. No one really sets ou to become a backing singer. They set out to be great, to be the one in the centre of the stage, and so whilst it’s cool to stand on stage 20 feet away from Stevie or Bruce or Mick in the shadows, your existence in the background is proof you didn’t make it. That melancholy, which imbues this moving documentary, is what gives it its punch. 

A poignant film to revisit is the 2004 Best Picture winner, Crash, which tells a multi-character story about racial tension and police brutality. The cast is stellar, with Matt Dillon, Sandra Bullock, Don Cheadle, Ryan Phillippe and Thandie Newton turning in awesome performances as characters who each cross each other’s paths in a chaotic 24 hours in Los Angeles. 

The film always splits opinion – with some lauding it whilst others claiming it one of the worst Oscar winners of all time – but despite its flaws, the themes it explores are worth revisiting, because 16 years on from its release they feel more relevant today than ever.

What we're listening to.

A great podcast we tucked into this week was from Kara Swisher and the team at Recode Decode who sat down with Brian Chesky, founder and CEO of Airbnb, to discuss how he has navigated a savage 75% drop in Airbnb’s revenue over the past few months.  
 
Chesky is a tremendously engaging character and the conversation we’ve heard with him always veer entertainingly from subject to subject. He also digs into the reasons why he believes fewer people will work from only one city when their lives get back to normal, which is a fascinating and exciting insight, and he doubles down on his rationale for raising $2 billion in debt in April when the world seemed to be on tilt. 

If like us, over the last few months, you’ve been working hard in these exhausting times, music has provided a source of some respite. Working from home, often with headphones in and music on, has allowed us to venture down some new musical avenues, discovering artists and even sounds that we hadn’t previously experienced. 

One of these came to our attention and ears via the Spotify shuffle this week as Eternity’s Sunrise by British composer, John Taverner, lit up our home office. It’s a piece of classical music that sounds as if it’s from another world, where music and sounds are all totally different from the ones we’re used to hearing.

So if you’re in need of something totally different, enjoy it for yourself.