Weekend Reading #109

This is the hundred-and-ninth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 13th March 2021.

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What we're doing.

A busy and productive week on 3BC, our private market deals platform, culminated in putting live an investment opportunity from a company who is a returning user.

Bitvore is a US-based AI platform whose products are used by a range of firms on Wall Street and beyond. They advertised for a bridging round of finance in the autumn on 3BC and now, having continued to scale, are granting investors access to their Series B via 3BC, too.

It is heartening to see issuers returning to 3BC. The business will live and die by the community of issuers and investors we can cultivate, and so it is reassuring to see that the service we’re providing gives issuers the confidence to return for follow-on rounds of funding.

A returning issuer feels like a milestone in the evolution of a company, acting as a justification of the product, approach to regulation and service levels. Social media products are measured by users who don’t just use their product once, but by returning users who continually use the product multiple times over time. Similarly, one way to judge 3BC will be to assess how often our issuing companies choose to return to use our service for follow-on rounds of funding. With 3BC a mere 9 months old, hosting our first returning issuer feels like a small but significant achievement, one we hope to build on in the months and years ahead. (EJP, contact me here).

This week also saw the Nachas trading platform go live with another local broker in Turkey adding to the two other direct fixed line “pipes” we already have in the region. It's an exciting time for the Nachas venture as we are scaling and offering more opportunities of direct market access for professional individuals and institutions. DK

Readers will also notice that from this week we are annotating each link with the initials of the team member that contributes it. That way if you wish to respond directly just click on the link and it will link you to the email address of the contributor directly.

What we're thinking.

This week finally saw the direct listing of Roblox, something for which we have been waiting for a long time. This is one of only a couple of companies that is genuinely building out some kind of precursor to the Metaverse. Everyone will know Roblox from their kids but what’s less well known is that Roblox is not some hot tech startup. It is rather a 17-year overnight success story. We started digging into the concept of the Metaverse some time ago when it was fairly “out there” as a concept. More recently it has become one of the hottest buzzwords in tech with almost every company that is even tenuously linked to some kind of virtual world claiming to be building a Metaverse. No company builds the Metaverse on its own. It will most likely be a complex, interactive, interoperable and living labyrinth spanning physical and virtual worlds which link millions of companies but the truth is no one really knows exactly what it will look like. What we do know is that whatever it looks like Roblox is one of the few companies that is a key building block at this early stage. The excellent Ben Thompson wrote this piece on Roblox this week which as always provided a great angle. DC

As tech stocks started picking up again after the recent volatility, one cannot help but wonder if the assurance (or complacency) of “stocks only go up” from the past decade has been sufficiently shaken. Rumblings in the credit markets continue despite the exuberance in equity markets, as another supply chain financing fund implodes, with assets frozen after 54% of its assets were found to be stuck in illiquid holdings. At the same time, Greensill’s last lifeline – a potential sale of some assets to Apollo Global – has also run out. Another hard lesson about how liquidity is (eventually) always king. EL

What we're playing.

Having discussed it just last week, we were shocked to see that the PC-hit survival game, Rust is being ported to console and the beta is now underway. Not to mention, it will also be coming to current generation consoles which is an exciting and unexpected surprise. The full release date is expected to be around summertime, by which time we will all be allowed outside again, but we will be sure to give it a go nevertheless. HS

We also eagerly await more updates on Battlefield 6 which is set to release in the Autumn of 2021. The latest rumours suggest it could be set in the cold war era, in which US allied forces will fight against the Russians on a Kazakh battlefront. However, knowing DICE, it is likely that the game will take place across several locations or perhaps eras, one of which is also rumoured to be Vietnam. This would be a dream come true, as there hasn’t been any notable first person shooter in recent years to make use of that particular war for their games, opening up a whole range of possibilities considering next generation technology can be used. DICE have confirmed that it will up its player limit to enable 128 player games, which although fantastic, accentuates how Call of Duty and other games have really caught up to them. One could even argue that CoD’s Modern Warfare looks more like Battlefield than any recent Battlefield game. HS

What we're reading.

I don’t read the FT as much as I used to but I did come across this piece on Twitter by Lucy Kellaway entitled, “What is the Point of Schools?”. Lucy is a veteran journalist who left the FT some years ago to become a teacher, something she had wanted to do for a while. Here she writes about her views on what school has become, what the pandemic has brought to light, and how "the system” comes up against her idealism when it comes to what she believes is the best way for kids to experience school. Many of us will identify with what she says having had first-hand experience ourselves of home schooling over the past year or so. It has exposed many glaring inefficiencies in the system but also highlighted how important it is for the kids to just be at school with other kids - what they learn is another story! Thought provoking at the very least. DC

Can trainers (or “sneakers” to our American readers) be seen as an alternative asset class? A report we come across from Cowen this week seems to think so, given that the reseller market is expected to be worth as much as $2 billion in North America alone and is growing at 20% y/y. As we increasingly move online, the opportunity for small businesses to establish themselves as ‘the plug’ for all things fashion emerges. However, this booming industry isn’t without controversy as it was recently revealed that a Nike executive was asked to resign after the news of the success of their 19-year-old son’s booming sneaker business spread having turned over more than $150,000 from his bedroom. In the UK, this is a familiar sight and resembles that of the streetwear resellers that blew up around 2016. At this time, both streetwear fans and those with an eye for making quick cash would flock to Soho for regular drops from brands like Supreme, Palace and Bape. Notable moments were the sold-out Supreme Brick which now continues to resell for around $1,000, as well as the various collaborations with other designers. I personally liked the North Face collaborations, although as a broke student the price was a major limiting factor at the time. HS

At TBC, we are far from being one dimensional, or at least we’d like to think so. I was introduced to a fascinating book from an industry colleague called The 8 Dimensions of Leadership. This is a fresh outlook on what it takes to be a great leader. The authors help you understand the psychological drivers, motivations, and “blind spot” characteristics of your style. What style are you? DK

Sports biographies can be hit and miss. That's likely because, despite the headlines and column inches, most sports stars aren’t that interesting, and certainly not interesting enough to fill +500 pages. Of course, the one reason why there are hundreds of thousands of words written about them – that reason being their sporting talent – is remarkable, but a description of how they came to be so good can usually be summed up in an interview in a Sunday newspaper. They don’t need a great tome dedicated to their life story, as it often just ends up looking like a long menu of achievements, and that's dull, to say the least. Having said that, great sports biographies are some of the greatest books of all because truly great sports stars can be truly interesting individuals. They are geniuses, icons, with temperaments and egos whose size is only matched by their sporting talent, with life stories that can add up to epic tales of human achievement. When a sports biography is written well, it can also elevate sport, setting the star’s career against the historical backdrop of the day, telling both their own story and that of the world around them, a world which, in one or two very special cases, was shaped by the star’s success.

Muhammad Ali is one such sports star, and the Jonathan Eig biography of his life, titled, Ali: A Life, is one a great biography. Thus, I think it’s one of the great books. Of course, Eig’s subject is a writer's dream, with Ali's story and all that was going on in America during Ali's career spanning 1960 to 1980, being as history-defining as the man himself. As we know, he was born Cassius Clay in racially segregated Kentucky and he went on to become Muhammad Ali, heavyweight champion of the world, a warrior for racial pride, a draft resister, a preacher, a hero to millions and a villain to some, too. For a large portion of the 20th Century, he was the most famous man on earth, and that burden weighed heavy even on his heavyweight shoulders. To put it simply, Ali’s story is the story of America in the second half of the 20th Century. As he once declared: "I am America. But I am the part you won't recognize.” It’s a fascinating part to try to learn about and try to understand and Jonathan Eig does one helluva job piecing one of the greatest stories of the last century together. EJP

This brilliant interview with Patrick Collison, the co-founder of Stripe, is worth digging into. The interviewer is Noah Smith, whose substack I am now signed up to! The interview has hardly anything to do with Stripe and is a chat between friends about what the future holds. Collison it turns out is not just a whizz entrepreneur but an intellectual giant. Topics cover everything under the sun including Political systems, philanthropy and even space. DC

Thinking through the idea of market positioning, crashes and short squeezes, this is an article that is a must-read: The ergodicity problem in economics. Don’t be put off by the jargon in the title though, because the takeaways from this article by Ole Peters will most certainly jolt your thinking into a different dimension. Ergodicity is the idea that outcomes from a moving process are random over time. The problem is that when it comes to things that matter like wealth distribution and economics, these processes are not ergodic (even though they are assumed to be so) Peters gives a specific example of how a “positive expected value” bet, a random process repeated over time, would have a long-term negative expected outcome over time. How does this tie back to crashes and short squeezes? It is that the idea of constant readjustment of implied expected value of keeping an open trade (long or short), rather than the actual fundamental value of the trade, matters more in its eventual outcome of crystallised P&L. EL

What we're watching.

On Thursday this week we were glued to our screens to watch a historic event live on the Christies website. Beeple’s Everydays: The First 5000 Days, sold at the 3rd highest ever price for a living artist, sitting snugly underneath Jeff Koons and David Hockney and above Gerhard Richter and Lucian Freud. Someone paid $69.3m for an NFT. Absolutely incredible. The traditional world finally got to see what the crypto OG’s (original gangsters) are about. The amount of wealth generated over the past few years in the crypto space is staggering and it all must go somewhere. While the experts lament this sale for its lack of “purity”, a new world is opening up right below their noses. While mini bubbles and price spikes may come and go, this era has most certainly begun. DC

One thing that months of lockdown has afforded us is the chance to revisit some classic films. Given the fact that we’ve spent approximately 364 of the last 365 nights on the sofa in front the television (I think I remember one night in September between lockdowns when we went out for dinner!), it’s been a good opportunity to revisit old favourites. One of the oldest and one of our most favourite is the romantic classic, Brief Encounter, the 1945 adaptation of Noel Coward’s 1936 play, Still Life. The legendary David Lean wrote the screenplay and the (arguably) even more legendary Sergei Rachmaninoff and his Piano Concerto No. 2 recur throughout the film as the simple yet incredibly powerful and evocative story unfolds in suburban England shortly before the start of WWII. It tells of a housewife, Laura Jesson, and Dr Alec Harvey, who meet by chance on a station platform and fall in love. Spoiler alert: there are no car chases, scenes involving torture or explosions, but the drama that unfolds right up until the very last scene is gripping cinema at is best. It is one of the saddest, most foreboding films I have ever seen and, by modern standards, at barely 90 minutes, is short, sweet, and so concise in its nature that it feels very near perfect. There is no excess, just action and emotion. Often appearing on the “finest films ever made” lists, it amazes me how few people have taken the time to sit down to watch it from first minute to last. Do yourself a favour this weekend and do it. EJP

For all you series buffs out there, this was the week to indulge in Sky Atlantic's two latest offerings. Firstly, Devils: While the financial crisis is raging in Europe, the Head of Trading at the New York London Investment Bank (NYL) is making hundreds of millions for NYL out of speculation. As his mentor, the American CEO of NYL and the nearest to a father that Massimo Ruggero has ever had, fully supports him, the talented trader seems to be the first choice in the run for vice-CEO. However, when Massimo is involved in a painful scandal that sees his estranged wife playing an escort. Dominic denies him the promotion, choosing the old-school banker Edward Stuart instead. Massimo is left astounded – his mentor turned his back on him. Convinced that the scandal was a set-up, Massimo is determined to seek the truth but when Edward suddenly dies, Massimo realizes that something bigger is at stake. With the help of his trading team and a group of hacktivists, Massimo will discover the hidden agenda behind apparently unrelated events, such as the Strauss-Kahn scandal, the Libyan Civil War, and the crisis of the PIIGS. Facing the devils who pull the strings of the world, Massimo will have to choose whether to fight them or to join them. DK

And secondly, Your Honour, features the teenaged son of a prominent New Orleans judge who accidentally kills another teen in a hit-and-run. The judge urges him to turn himself in to the police but changes his mind when he learns the victim was the son of a local mafia kingpin. Twists and turns like you can't imagine... DK

What we're listening to.

After a bit of a breather from podcast overdose over the past week, two podcasts caught my attention and on a long woodland walk, I covered them both. The first, marking a return to listening to Patrick O'Shaughnessy's Invest Like the Best, featured an interview with Josh Wolfe and Tony Thomas or T2 as he is called. Josh has featured before and is one of my top follows on Twitter for his deep insights into technology and how it shapes the future. His VC fund, Lux, invests in some incredible futuristic businesses and I try seek out fresh podcast appearances from time to time. Tony Thomas is a retired 4-star General and 11th Commander of the US Special Operations Command. The two talk about military technology and the future and cover everything from drones to semis to the battle for near-space. Having previously recommended the book, Ghost Fleet, in this newsletter I can say this was a continuation of that theme and one of the top listens of the year so far. DC

The second podcast again returning for the first time in a while to Tim Ferris was a brilliant interview in which Tim and Naval Ravikant chatted to Ethereum founder, Vitalik Buterin. It is a perfect insight into crypto and ethereum for anyone who is keen to deepen their base knowledge. Regular readers will know our thoughts on Ethereum and this is a must listen for a window in the future of finance (and much more). DC

SPACs have been getting a bad rap recently and many with very good reason. But nestled amongst the opportunists are some real gems. We’ve written before about Luminar, a LIDAR manufacturer (for self driving cars) founded and run by its 25 year old CEO, Austin Russel. Russel is no ordinary 25 year old nor ordinary founder. And his story is incredible. This podcast where he spoke to The Verge Decoder's Nilay Patel was particularly enjoyable. DC

Edward PlayfairMarch 15, 2021