Weekend Reading #100

Photo by Jason Leung on Unsplash

This is the one-hundredth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 9th January 2021.

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What we're doing.

Our newsletter is something we hold very dear. It was, after all, our first product, and serves as a comprehensive amalgamation of the best that our team has to offer on a week-by-week basis. It really is a great pleasure for us to prepare and write it each week. 100 editions is a major milestone of which are very proud.

As our business matures, so does our content. In the weeks ahead we will be experimenting with some new ideas, so please feel free to reach out and engage with us, as so many readers already have over the years.

The biggest news for us is that despite most of the world being on holiday in the last week of 2020, we spent it concluding a fundraise for our business! In a world where fundraises are celebrated all over the media as victory and validation, we have tended to keep our heads down and focus on building our business. We conducted a small raise in mid 2019 and have part-bootstrapped our way up to this point. Late last year we decided to raise growth capital to enable us to be more aggressive about our growth trajectory, while hiring some new faces and further enhancing our product offerings.

We are delighted to welcome a strategic investor and partner into our business in the form of somebody we have known for a very long time, and who we believe will help us accelerate our growth trajectory while supporting the various products we have across our business. Zrosk Investment Management is a Sub-Saharan African focused alternative investment management boutique with product verticals including early-stage equity investing (VC), private credit (direct lending) and absolute return focused multi asset investing. Zrosk's objective is to provide an alternative conduit to capital providers (pension funds, insurance companies, asset managers and HNI families) outside of the traditional asset management channels.

The synergies for us to partner across the various parts of our business are tantalising and in particular, we are excited about the opportunity to offer our products into certain emerging and frontier markets which are under-penetrated and require high quality local expertise to reach the end clients.

For many businesses in this social media-obsessed age, raising capital is perceived as a reason to declare victory – for us it simply increases our ability to deliver upon our vision and brings an incredible additional responsibility to make sure that we are diligent with capital allocation across our business.


What we're thinking.

There was lots of time for thinking over the holiday period. Yes, we strategised and philosophised about the year(s) ahead and where we want to go as a business – but we also spent a lot of time feeling thankful for what we already have. COVID has widened the gap between the haves and the have-nots, and we remain grateful for our health, our families and our sense of purpose as we enter another year, another lockdown, and another chapter in the human story.


What we're reading.

“The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behaviour, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.”

That’s a pretty aggressive start to an article, even by ZeroHedge’s standards. The title of the piece is even better – “Waiting For The Last Dance - The Hazards of Asset Allocation In A Late-stage Major Bubble”. It’s written by GMO’s Jeremy Grantham, an investing legend and avid market historian, and it’s a super fun read – regardless of what you believe, your take on growth versus value in a market increasingly driven by passive flows, and how you think markets will play out in the post COVID landscape.

You may have come across Richard Koch’s book “The 80/20 Principle”. But his best book is actually “Simplify: How the Best Businesses in the World Succeed”.

Koch is a former management consultant who has made a career as a best-selling author with a series of profound but nonetheless easily digestible lessons for entrepreneurs and leaders. Let’s face it, the world is full of these guys, but Koch’s writing is so good, and the examples he provides are so illuminating, that his books manage to deviate from the mean in the business book genre.

“Simplify” is about how one elemental principle unites extraordinarily valuable companies: simplifying. Some firms (for example, Ryanair) simplify on price, creating new, huge mass markets for their wares. Others, such as Apple, simplify their proposition, bringing a beautifully easy-to-use product or service to a large premium market. The book is full of amazing anecdotes from business history, but our favourite is a kind of daydream that Koch paints about Steve Jobs and his infamous relationship with Xerox:

“Imagine for a moment what would have happened if Steve Jobs, who was hugely impressed by what he saw at Xerox PARC in 1979, had decided to throw in his lot with the company. Imagine what would have happened if the leaders of the copier-company had enjoyed a collective fit of intelligence and decided to buy Apple. They could have funded such an acquisition out of their petty cash. Imagine what would have happened if the Xerox bosses had merged Xerox PARC and Apple, if they had put Jobs in charge of “Xerox Apple,” if they had then spun it off to Xerox shareholders as a separately quoted company, with Jobs and his pals as substantial shareholders in the new entity.

It’s a lot to imagine. Yet Xerox’s cash coupled with Apple and Xerox PARC’s expertise would surely have delivered a terrific second-generation PC – complete with desktop, mouse, smooth scrolling and plenty of power – not in the late 1980s (when the Mac finally achieved the feat), but in 1981 or 1982 at the latest. If that had happened, Jobs never would have been thrown out of Apple, and “Xerox Apple” wouldn’t have messed around with the Newton, but instead would have moved on to the brave new world of the iPod, the iPhone and the iPad in the 1990s, rather than the 2000s.”

It’s a cool book, once that will make you think more deeply about the brands and products we take for granted, and the role that simplification has played in getting them into our hands.

As you might have guessed, we are huge fans of the newsletter format. In the era of information overload, the idea of having the internet curated for you by trusted influencers makes so much sense – and saves so much time.

So, we got very excited when we stumbled upon Stoop, a newsletter app that collects all your email newsletters in one place. The app helps you discover, subscribe, and consume great content via the ease and beauty of an app – and stops your inbox from getting clogged. It’s well worth giving it a go.

Since they delayed their IPO late last year, we were waiting with interest to hear which path Roblox would take to market. This week they revealed their approach and it is fascinating. They have raised $520 million of private funding at a valuation of $29.5 billion. This valuation is remarkable considering their prior round in February 2020 was done at $3.9 billion. That’s seven times! They also announced the much anticipated direct listing which removes the risk of missing out on a post IPO pop at the expense of selling shareholders. Separately, we enjoyed this piece in Wired magazine from co-founder and CEO, David Baszucki in which he writes about the much spoken about concept of the Metaverse.

It's worth checking out this superb article by John Authers which goes deep into the COVID political divide from both a thoughtful but also philosophical angle. He uses an allegory in the form of a novel by a philosopher called Steven Lukes entitled “The acrCurious Enlightenment of Professor Caritat”. Given the extraordinary divergence of views around everything to do with the virus, this was a superb take from all the various angles.

Equally inspiring is this beautiful piece about Israel’s vaccination effort and how it took one man back to a simpler time where the country was united, a time that many Israelis miss. Israel is leading the charge to vaccinate its population and has vaccinated more of its population in percentage terms than any other country to date. For a country that was built for its people to survive, this is genuinely a war time effort to save as many precious lives as fast as possible. Israel elected to pay Pfizer double the quoted price of $30 per dose in order to secure the doses earlier. Seems like a pretty good payoff.

This mindblowing piece from Eli Dourado takes us on a predictive tour of the next decade and what is in store for us from a tech perspective. This is truly a piece everyone should read to open their minds to the wonder of possibility that technological evolution can bring from quantum computing to biotech and an excellent section on SpaceX and what space has to offer us.

We spent a little time over the Christmas break working our way through the recently released account of WeWork's crazy rise and epic fall, Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork. For anyone who works in finance and technology, especially if they keep an eye on the private markets, this is an essential read. It’s also well worth a read for any companies who are going through the fundraising process. It's brilliantly written and a fascinating depiction of the decade of growth that the private markets have enjoyed, charting the story of the unbelievable explosion of private capital that has flooded into technology unicorns. WeWork is the central character in this story but they are far from the only example of this sort of over-exuberance.

The book is littered with jaw-dropping anecdotes about the grandiosity of WeWork and the profligate way they ran their business. Yes, they spent a heck of a lot of money on a heck of a lot of stupid stuff. And there's also some really good chapters about the weirdness of Neumann himself, who doesn't come out of the book well, as you might expect from the title. He is a strange, eccentric man, but it could be argued he is a brilliant, charismatic founder who, somehow, managed to convince the world that he really was able to walk on water. Of course, he acted in many respects disingenuously if not criminally, but the scale of what he built, by hook or by crook, must be marvelled at. And he didn't do it alone.

One fascinating aspect of this story is that it reminds us that tech titans (much like presidents) don't ever act alone. Their grandiose plans can only become reality with the assistance of richer and more powerful individuals pulling the strings and pushing them further along the growth curve with capital. If it weren't for Softbank, WeWork might just have been a cool co-working space company with an eccentric chap as its CEO. Masayoshi Son and his billions, not to mention a few VCs, could’ve envisaged what was happening and should've known better, and they shouldn't have given Neumann the capacity to exercise his full-blown weirdness. Like Theranos and Elizabeth Holmes, it can be the financial backers trying to inflate their early investments who turn out to be the true villains as they manipulate talented, charismatic but entirely delusional CEOs as their puppets in an attempt to achieve stratospheric returns.

By no means is Neumann (or Holmes) innocent in this almighty fraud, but the participants who led the venture funding of his business were his enablers. It's a salutary tale for our times, one worth reading whatever your level of interest in the subject and sector.

It's about this time every year that we dive back into some of our favourite books of all time, the type that we've likely recommended in one of the previous 99 issues of this newsletter. And in the quiet moments of Christmas, we did just that, re-reading in one late-night sitting Butcher’s Crossing, a Western by John Williams, that we've now read every year at least once for a very great number of years. Yet again, it didn't disappoint, gripping and moving us as if it was the first time around reading it.

It's a simple story about a group of men seeking their fortune as buffalo hunters on the American Great Plains. That's the story. The men meet, they plan their trip, they head off to hunt in a savage winter. 300 pages later there is a conclusion that is likely the most perfect ending to any book we've ever read.

So please make it your resolution to read Butcher's Crossing this year. Or, if you're not inclined to a Western, why not pick up an old favourite of your own and re-read, whether that be for the second or hundred-and-second time. There are few better ways to spend a late night.


What we're watching.

To be honest, this week we’ve mainly been watching each other on Zoom! But as lovers of time travel movies, we are looking forward to checking out Tenet soon. The movie has been massively hyped – and denigrated as a “misfire”. Some of the team having seen the film were amazed by the cryptic concoction of plot twists that Nolan put together, keeping us on our toes until the very end.

But we are all huge Christopher Nolan fans, believing that the sheer spectacle he provides can carry some logical inconsistencies, clumsy dialogue and yes, some OTT hype. I mean, “inverted fight scenes”? What’s not to like?!

And whilst on the topic of films-within-films, another brilliant one we managed to catch our attention over the Christmas break was Guy Ritchie’s, The Gentlemen, marking his return to his roots with the British Gangster theme that seems reminiscent of his earlier works like Snatch. The film released in January 2020 that we’d somehow missed stars a whole range of top stars including Matthew McConaughey, Hugh Grant and Charlie Hunnam amongst others. It is an exciting tale that is packed with action from the get-go, with all kinds of twists and turns in an elaborate plot that tells of the rise and fall of a global narcotics empire forged in the heart of the British aristocracy by those that have gone on to thrive from the East London working class gangs of the late 20th century.


What we're listening to.

We’ve been listening to a lot of Van Morrison this week. It provides the perfect backdrop to deep morning work – upbeat, but not manic, thought provoking, but not distracting. He may be a grumpy old man, but he is supremely talented. This alternative take on Auld Lang Syne is the perfect way to ring in the New Year. Make yourself a nice cup of coffee, or a refreshing tisane, or even a strong Bloody Mary… and enjoy!