Weekend Reading #82

Photo by freddie marriage on Unsplash

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

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What we're doing.

Another busy week all round for us, in particular with our private deals platform, 3BC. As well as going out with two deals (Brex and TOD), we’ve spent much time thinking about how we can help VCs in particular, offering liquidity by discreetly placing secondary blocks into a differentiated investor base. We also have global transaction flow from our network of investors, entrepreneurs and influencers in emerging markets, with deals that many VCs might not typically get to see. If you’re a VC then please do get in touch to talk about how we can work together. Or sit back and we will contact you! 

We continue to make great progress with converting 1,000 or so subscribers into users of our platform. This is a mammoth task, but also a fun one! It means plenty of conversations with interesting people and lots of learnings. 

We also chatted as a team about influencer marketing and how this might be leveraged for 3BC and indeed other areas of our business at Three Body Capital. We’ve seen this model applied successfully to other areas of finance and we believe that it’s well suited to private markets, where trust is everything and influencers command great trust and engagement. It’s not something that we can execute overnight, but it’s certainly on our radar and we remain on the lookout for influencers who can help us reach target users in key markets.

What we're reading.

This piece from a16z on scaling SaaS is brilliant.  

It points out that although the vast majority of public SaaS companies have subscription-based revenue models, new fintech infrastructure is making it possible for SaaS businesses to add financial services alongside their core software product. By adding fintech, SaaS businesses can drive revenue and open up new SaaS markets that previously may not have been accessible. It goes on to talk about the winner-take-most dynamics of vertical markets, where the vertical SaaS business that can best serve the needs of a specific industry often becomes the dominant vertical solution and can sell both software and financial solutions to their core customer base.

It's a great piece on why fintech is driving the next evolution of SaaS, why it opens new vertical markets, and where and how different business models for fintech can be applied. 

Bloomberg on the crossover between games and education is a must read for parents everywhere. Entitled "Why Minecraft and Roblox Are on the Fall Syllabus", the piece explains how teachers are sneaking educational content into gameplay. 

"With the pandemic continuing to rage and many schools likely to remain closed or operate on reduced schedules, more teachers are turning to Roblox and Minecraft. Yes, they’re computer games, but they’re also serious learning tools, teachers and education theorists say." 

Roblox offers millions of games, some designed to teach the three R’s. In Minecraft, players construct and explore virtual worlds out of blocks that look something like Lego. They can engage in more than 600 learning sessions, with activities such as visiting a low-def version of Florence, Italy; hanging out in a “decimal/fraction garden”; or honing language skills while exploring a shipwreck.  

These gaming platforms have been used for years in educational contexts, but they are now being adapted to teach a broader range of subjects. And the growth metrics are astounding. Roblox now has 150 million monthly active users, up from 100 million a year ago. And use of the school version of Minecraft, which costs as much as $5 per student per year, more than doubled this spring and summer.  

Here are a couple of other interesting things we came across on our travels around the internet this week. 

The first is a Forbes feature on Robinhood with a preposterous title (“The Inside Story Of Robinhood’s Billionaire Founders, Option Kid Cowboys And The Wall Street Sharks That Feed On Them”) but a lot of meaty stuff to sink your teeth into. It argues that Robinhood’s publicly stated mission – “democratize finance for all” – actually obscures a more ruthless plan; “to get rich by selling customer trades to the market’s most notorious operators”. 

We also enjoyed this piece in the NY Times, talking about Big Tech’s domination of business. It argues that COVID-19 has taken Big Tech to new heights, “putting the industry in a position to dominate American business in a way unseen since the days of railroads. The tech companies’ dominance of the stock market is propelled by their unprecedented reach into our lives, shaping how we work, communicate, shop and relax.”

Strong stuff and hard to argue with. Although there is no point moaning about it – as with politicians, we get the technology we deserve. 

And this tweet from Sam Par made us smile:  

"The Thiel Fellowship gives $100k to 25 kids a year to drop out of college and start a company.

This morning a Thiel Fellowship recipient (now 25 years old) just sold a self-driving car startup he started with his $100k for $3.4 billion at age 18.

Hell yeah." 

Phenomenal story all round and proves that the very best investments are not necessary in companies, but in people. 
 
What we're watching.

This week Fortnite announced the arrival of the lore, legends, heroes and villains from Marvel in its universe. The new season of Fornite – technically Chapter 2: Season 4 – is dubbed “Nexus War” and it’s a comic book-style event where major characters team up to fight off the planet-destroying villain Galactus.  

Those who purchase Fortnite’s seasonal battle pass (I mean, who didn’t?) will be able to unlock the likes of Iron Man, Storm, Mystique, Doctor Doom, Groot, and She-Hulk, along with an amnesiac Thor. Developer Epic also says that a certain member of the X-Men will be available later in the season: “Be warned, Wolverine has been spotted on the island and he won’t come quietly.”  

We’ve known that Fortnite’s new season would be Marvel-themed for a few days, and Epic followed that up by releasing an in-game comic book detailing the upcoming story. These guys think of everything! 

Avid couch sports fans are turning their attention to “Le Tour”, which in our opinion, is the greatest race in the world – although some would argue that cycling will never be the same after all the doping revelations of Armstrong and co era.  

Due to the strange circumstances we find ourselves in, the start date is two months later than it should be, but let’s not detract from what everyone's talking about in the cycling fraternity – it should be the most hotly contested races for years, as Team Ineos Grenadier decide to bench previous winners, Thomas and Froome and "focus” on the other tours.

We’re hoping for a surprise result whereby a smaller team (with half the wallet spend) trumps Team Ineos... Even though we’re big admirers of Sir Brailsford and everything he’s achieved! Let’s see the chess game unfold, and who reigns supreme on the Champs Elysees some Sunday 20th Sep. Our hot tip – Primoz Roglic.

While on the topic of cycling, if you still think that eSports isn’t “real” sport, think again: the first ever Super League Triathlon Arena Games took place last weekend in Rotterdam, comprising 3 back-to-back triathlons: pool swimming, Zwift riding (on Tacx turbo trainers) and self-powered curved treadmill running. Check out this replay of the entire event. There’s nothing like convincing hardcore, world-class triathletes that eSports is well... real.

After many weeks of browsing through the Netflix catalogue looking for something interesting and a change of flavour from foodie series like Salt, Fat, Acid, Heat and Street Food: Latin America, we succumbed to curiosity and landed on the one title we’ve been a bit reluctant to click on: Indian Matchmaking. The contents are exactly as the title suggests, following the efforts of professional matchmaker Sima Taparia to find eternal love for her clients (or in some cases, her clients’ children). To be sure, some of what gets said and done is sufficiently cringeworthy and would likely be branded as too traditional (chauvinistic, even) for liberal society – but take it with a pinch of salt: for one, the series is made by Netflix for mass consumption; furthermore, everyone featured on the series more or less volunteered for it. Not our usual cup of tea (or chai), but certainly an eye opener in many ways. 
 
What we're listening to.
 
“I believe you can clear a path to scale by converting sceptics to fanatics. The best megaphones for your product are the ones who doubted you at the start.” 
– Reid Hoffman 

We loved listening to this podcast chat between Reid and John Foley, CEO of Peloton. It's all about how to turn sceptics into fans, a seemingly impossible task that Peloton has managed to pull off with aplomb in recent years.  

The argument is simple – casual fans come and go, but converts stick with you and spread the word. Who better to explain the mechanics of this process than Foley, who has one of the most epic “No-to-Yes” stories in startup history? 

When he founded the company in 2012, few believed in his vision. But he pushed forward, convincing co-founders, angel investors, and then riders, one at a time. As he converted those sceptical customers – in their flagship fitness studio, in their stores, and on their at-home bikes – the feedback loops kicked in. In 2019, Peloton completed its IPO and it hasn't looked back.