Weekend Reading #80

This is the eightieth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 8th August 2020. To receive a copy each week directly into your inbox, sign up here.

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What we're doing.

Over the last week, we’ve had a flurry of activity on our private deals platform, 3BC, as we welcomed an opportunity to invest in SpaceX onto the platform. This felt like a significant moment in our development, with a high profile name joining our existing cohort of innovative and exciting opportunities. It was cool to see and it neatly exemplified the spirit of our platform, with primary and secondary opportunities sitting side by side, each creating their own type of buzz with our investor community.

For the fund, we spent the week researching many new ideas, specifically discussing the implications of a secular return of inflation. In our minds, this is one of a number of upcoming narratives that the market could embrace rather rapidly and we want to be ready for when the price action indicates such an idea is gaining traction.

Away from work, now that we are all working at home, we took the opportunity to walk to the local high street to take advantage of the UK government’s new “Eat out to Help out” scheme. It offers a 50% discount (subsidised by the government) to customers up to a maximum of £10 each (so a £20 meal) which is extremely generous. It's quite a clever mechanism as it gives everyone a nice nudge to overcome the fear of going out again. It seems to be well thought through and the impact seems to have been immediate as local restaurants have been packed this week.

With remote work seemingly here to stay to some degree at least, it may be possible to see a rebirth of high streets in the UK, as space vacated by old-school physical retailers who’ve lost out to e-commerce gets taken up by restaurants, cafes and even exercise studios – at dramatically lower rentals?

What we're thinking.

Turkey is one of our favourite places and we have a particular kinship with our friends there. When the country experiences strife, we really do feel a sense of sadness given the enormous potential and natural tailwinds that the country enjoys.

This week saw international overnight borrowing rates spike yet again over 1000% in an attempt by the government to control the trajectory of the Lira. In the short term, these measures may dissuade investors from betting against the currency but the continued damage to long term credibility is enormous. Nevermind that, the propping up of the Lira can only last as long as the ammunition is there to protect it and there appears to be a sense of inevitability about the firepower running out.

Of course, politicians and power brokers often have a different set of goals to investors, but the question is whether Erdogan can hold on until 2023 to celebrate the centenary of the Republic in omnipotent power? The economy will most likely dictate the answer to that question. We don’t really know but we are ready to capitalise on any opportunity, long or short (should we be permitted) in our fund, and hopefully help our clients make some sensible choices.

We spoke on the blog last week about the sense of escapism we felt when playing around with a website that allowed us to take a look out of a selection of windows all over the world. Well, this week we went one better when we heard the news that the latest version of Microsoft's Flight Simulator is, by all accounts, ridiculously good and is a first-class ticket to explore the world again from the comfort of your office chair.

The experience of flying is something we’re all missing in one way or another. Sure, we don’t miss airports, the queues, being jammed into the back of an aircraft (we’re a startup, remember), plane food and jet lag, but the sense of adventure and wonder that air travel always brings is something that is quite unique. The chance to wake up on a different continent or fly over London up the Thames towards Heathrow or fly south over the Alps en route to a holiday or simply watch a movie at 35,000 feet… these are wonderful experiences, ones we’ve been deprived of for the last period of time. Flying is adventure, fun and, in some ways, it is time travel. And that makes it truly magical.

So the closest thing to travelling right now is a simulation and, for those of you old enough to remember, the early version of MS Flight Simulator looked like a kid’s crayon drawing. It was fun, nonetheless, trying to land the fighter jet on the aircraft carrier, a blob of grey in a blue ocean, or navigate the jumbo jet under the Golden Gate Bridge, bluntly painted as a red stripe across the sky.

But as with all things technology, the latest iteration of Flight Simulation, unveiled to gasps apparently at M3 last year, is well worth a look. Using two petabytes (a petabyte being 1,024 terabytes, itself being 1,024 gigabytes) of geographic data gathered from Bing Maps, together with cutting-edge, machine learning algorithms running on the company’s Azure cloud computing network, the game presents a near-photorealistic depiction of the entire planet.

If you’re feeling trapped at home, there can be no better way to explore the world and recreate the magic of flying than with a quick stint on MS Simulator.

What we're reading.

COVID-19 has forced the world to tear up how it views education. As with many revolutions, out of the chaos, there seem to be some very interesting ideas being created that could shape how we teach and learn for the generations to come. In a socially-distanced world, where classrooms and classmates already feel like a thing of the past, what school and university (and any form of learning) will look like is hard to say.

One incredible method of teaching that’s fast gaining in popularity is being delivered by a young Harvard professor named David Malan. Malan’s fast making himself famous for his atypical Harvard course: CS50, which aims to make the mysterious world of programming and the anatomy of our everyday tech companions more accessible. CS50 (Computer Science 50) is an online 12-week introductory course for programmers, software engineers and anyone interested in the inner workings of their machines.

Sounds straightforward enough so far – but this is unlike any online course you will have ever seen before. Not only is the content delivered in a world-class way, using the latest technologies to deliver it and looking more like a Netflix show than a lecture, it is also being delivered entirely free via YouTube and other streaming platforms. Check out Lecture 0 of CS50 here.

You can read more about Malan’s rise to fame and why he’s so popular with his students in this excellent profile in the New Yorker. And that sort of sums it up – computer science professors don’t usually get New Yorker profiles but this is no normal professor and this isn’t education as we know it. This is something wholly new and exciting and it makes us wish we could go back to university tomorrow.

Ah, sport. How we’ve missed you! And whilst it is back on our screens in some form or another, it just doesn’t feel like the beautiful game just yet. So we’ve turned our attention away from the screens in an attempt to get our sporting fix via other mediums, and this book, Football Leaks, is a great read if you’re into footy and finance.

The book sets out to “uncover the dirty deals behind the beautiful game” and it is based on a story from 2016 when a whistle-blower started leaking top-secret files to German newspaper Der Spiegel. These documents revealed the murky, clandestine dealings of clubs, players and agents at the very top of international football. From the eye-popping details of player transfers, including Neymar, Pogba and Coutinho, to the loopholes and opaque tax structures that ensure maximum earnings for players and agents alike, this is a real-world story about greed and avarice.

In some ways, reading this book could make you love the beautiful game a little less. But then again, if you're naive enough to think that all of this wasn't going on behind the scenes then, like a referee on a Saturday afternoon, you likely need your eyes testing. A cracking read about a very murky world. Back of the net!

What we're watching.

Sometimes you want an action-adventure, sometimes you want a rom-com and other times there’s nothing better than a slow-moving, hard-hitting legal thriller. And that is exactly what you get with Mark Ruffalo’s latest, Dark Waters, which tells the true story of a corporate defence attorney who takes on an environmental lawsuit against a chemical company to expose a lengthy history of pollution and neglect.

There’s not a lot to say other than this is a really good film. Mark Ruffalo is, as ever, excellent, as is Ann Hathaway and Bill Camp’s turn as the farmer-turned-victim is pretty astonishing. If you liked Michael Clayton, The Insider or Spotlight (also three ridiculously good films, by the way) then take 2 hours with a nice glass of something to watch this slow-moving near-masterpiece.

Remember, too, it’s based on a true story, told beautifully in this 2016 NY Times feature by Nathaniel Rich, which is well worth a read.

We’ve also taken the chance to catch up on the entire first season of The Mandalorian on Disney Plus. Set in the time after episode 6 (Return of the Jedi) and episode 7 (The Force Awakens), the Mandalorian tells the story of Din Djarin, a Mandalorian who - in the course of his usual business as a bounty hunter - has his fate entwined with a much bigger plot by the remnants of the Galactic Empire. We will refrain from any spoilers, but 8 episodes, largely bite-sized (around 30 mins each), with a healthy dose of blaster shots, explosions and strange aliens, a sneak peek into the ever-growing complexity of the Star Wars universe, but without any gore or extreme violence, make this a family-friendly crowd pleaser.

For any fans of the Star Wars extended universe, aside from the undoubted despair of having the official Star Wars canon rewritten with Episode 7 more than 30 years after Return of the Jedi and nullifying all those theories about what happened after the fall of the empire, this is surely a game changer. Being able to develop the Star Wars lore via a TV series allows for a much more immersive, non-linear unfurling of what is one of the richest storylines in modern times. The best part is, it’s on-demand, highly accessible and is a business/content development model applicable to any of the other great mystical worlds of modern science fiction and fantasy: Star Trek, Dune, Lord of the Ring, Game of Thrones… He who controls the content controls its universe.

What we're listening to.

We have sent many links before to essays by Matthew Ball on media and gaming but this is the first time we’ve heard him on a podcast. Good news is that he made an appearance on one of our favourites shows, “Invest Like the Best” with Patrick O’Shaughnessy. The episode covers an array of fascinating topics, ranging from gaming (and Epic Games in particular) to the concept of the metaverse and Tencent. And it got our minds racing.

As an aside, you will notice that the link for this podcast is to Spotify, not iTunes, as we have recently noticed ourselves migrating to Spotify for podcasts, too. Spotify and its investment case is a fascinating topic, one that has been bolstered by its approach to podcasts, but is for discussion another time and not at the foot of a 2,000-word newsletter.

Feeling a little confused and melancholic? That’s fine. The world right now is a pretty complex and uncertain place. But there are few better ways to ease a weary mind than with a little Keith Jarrett, the master jazz pianist, who continues to put out great music (or recordings, at least) at the age of 75.

To our mind, his finest live album is his 2005 recording from Carnegie Hall, The Carnegie Hall Concert, his first recording in a decade and it shows Jarrett at his wild, unpredictable best. For something a little mellower, his 1999 album, The Melody At Night, With You, is all you need on a warm summer’s evening if you’re after a little peace.

Recorded in his home studio when Jarrett wasn’t in the best of health, at times you can hear Jarrett sigh or creak in his chair. Highlights include a cover of Gershwin’s "Someone to Watch over Me” and the traditional American folk song, “Shenandoah”, which is so quiet a recording, if you listen hard enough you can hear Jarrett humming along from his piano stool. Peaceful indeed.

Edward PlayfairAugust 10, 2020