Weekend Reading #167

This is the hundred-and-sixty-seventh weekly edition of our newsletter, Weekend Reading, sent out on Saturday 7th May 2022.

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What we're thinking.

We run an active hedge fund which delivers a very specific mandate. Through the course of all the trading and day to day management that comes with this often we can lose focus of the big picture. We try not to. The big picture is simple. We had a long period of good times which of course was not sustainable forever. And now many of the reasons for that period are unwinding. All the complexities and technical jargon and intellectualisation is exhausting. For every good opportunity to buy something today there are still 100 that can fall even more. This is a reset. But out of the ashes comes massive opportunity. We are spending time doing some deeper work these days into where the multi baggers will come from. The good news is there are lots of them! As we were once taught to do: “Imagine a future day some months ahead where the markets are in the green. What would you want to own then?” It doesn’t mean we are trying to call the lows (we are not) and neither should anyone else, but wow is there some great opportunities today. Instead of watching your PNL every day, go and get excited about what the future holds. It's not all doom and gloom. 

What we're doing.

This week I was fortunate enough to be invited to the private opening of Zhuang Hongyi’s first UK solo exhibition at the HOFA London in Mayfair. As our eagle-eyed newsletter readers may recall, I first met Zhuang back in 2020 during the pandemic where through a mutual friend I was given a virtual tour of his workshop in Rotterdam, Holland. For someone like myself who feels they know very little about contemporary art, the pieces are all incredible with a stunning visual effect of changing colours as you move the angle from which you look at the piece. It was a great chance to practice my Mandarin with Zhuang and his family as well as a setting where interestingly I had to watch what I said and couldn’t gossip freely as I normally would in the language. All in all, it was a very pleasant evening and if you’re about in Mayfair and looking for something to do, I’d wholeheartedly recommend checking out the exhibition whilst it lasts. HS

What we're reading. 

With all the panic across markets, everyone has already forgotten about yesterday’s hot new theme, the metaverse. Tim Sweeney hasn’t forgotten. The CEO of Epic Games (Fortnite and much more) gave a really cool interview in Fast Company in which he details how he thinks it will all play out. In it he covers the key topics of an open versus closed Metaverse, the “overlords” of the app stores, AR and VR and lots of other bits. I see him as one of the most authentic minds on the Metaverse and someone who is open to both centralised and decentralised alternatives. It’s not gonna blow your mind but there is an unusual dose of pragmatism alongside his obvious enthusiasm. 

I came across this brilliant piece the other day and it resonated immediately because it's something I’ve been thinking for a while and I’m sure most readers also have. From films to music to books to video games, when one looks at the best seller list its always the same names at the top. Is it coincidence or not and how did this happen? Personally, I don’t like it. I’m always on the lookout for new stuff because of the tantalising possibility that it may be something BETTER and expand my mind so naturally I loved this part of the piece: “Most importantly, I don't think we've realized what all these sequels and spinoffs are doing to us. It's not that they're bad––some are great! But movies, TV, music, books, and video games should expand our consciousness, and they can't do that by feeding us reruns forever”. One of the reasons The Three Body Problem trilogy was so impactful for me (that we named our business after it) was that it blew my mind. It blew my mind because the thinking involved, and the imagination was just so mind-bendingly original! I still refer to many parts of this book in the mental models I use day-to-day even though its pure science fiction. Must read article! 

Brazil is a country I know a little about from years of being in emerging markets. The political drama in this country is worthy of a telenovela itself. One man who everyone knows about is former President Lula da Silva. From rags to riches to jail and now seemingly on course for the Presidency once again later in life. He has lots to say, rebranded as a kind grandfatherly figure who is here to save Brazil once again. I haven't read Time Magazine in a decade but this article jumped out with its great cover picture and I must say it’s a very good article. With commodity prices mooning could it be that Lula times his arrival once again to perfection? It would make a great story wouldn’t it. DC

What we're watching.

Tehran on Apple+ is what I would describe as high-quality television. Written by the same talented chap who brought us Fauda, Tehran tells the story of Tamar Rabinyan, a young Jewish woman born in Iran but raised in Israel. Tamar is a Mossad agent and computer hacker on an undercover mission in the Iranian capital to disable a nuclear reactor. Her objective is to neutralize Iranian air defences so that the Israeli Air Force can bomb a nuclear plant and prevent Iran from obtaining an atomic bomb. But, as you’d expect, her mission doesn’t go to plan and the drama – and there is a hell of a lot of drama! – unfolds from there. A great story. Superb acting. Educational and beautiful to watch. This is exactly what I want from a television drama, and it seems to be losing no steam as my wife and I move through Series 1. Every episode is like a mini film, which I always think is a great sign for television drama, especially those in, my favourite, the espionage genre. EJP

 

What we're listening to.

I hadn’t listened to Hidden Forces for a while but this week was one I definitely was not going to miss. The Framework Ventures founders, Vance Spencer and Michael Anderson appeared again, two years after their appearance in which they spoke about DeFi and some of their very successful early investments. Since then, they have become household names in crypto and now have a fund size to match their reputations. The big new theme they are putting money behind is blockchain gaming. In this episode they talk about their journey, DeFi and lay out their thinking behind blockchain gaming’s path forward. As readers will know, we have been involved in blockchain gaming for some time and see it as a very large potential opportunity. What people don’t see is how much development work is going on behind the scenes. There are hundreds (more even) of projects being worked on that will only see the light of day in the years to come. Framework calls it the next iteration of gaming. PC/Console then Freemium and next up is Blockchain gaming in which players will be able to monetise their skills and build value for themselves along the way. It hasn’t even begun, and this is a nice introduction to this theme for anyone interested in learning more.  

On the same topic as above, we have written before about Axie Infinity and the initial success they have had. The problem with having a live token price is that when it collapses it is easy to assume that the business associated with it is no longer successful. Axie Infinity is barely 3 years old, and the actual game is even younger. In the course of a company’s lifecycle, it isn’t even the first inning, and one shouldn’t draw conclusions from the price action of its token in a massive bear market. This Naavik podcast features Sky Mavis’s game product lead, Philip La, who recently joined from Niantic (of Pokemon Go fame). He gives quite a detailed roadmap of where the ecosystem is at and some insights into where we are going. He discusses the pros and cons of developing in public and dealing with a very involved community as well as some bits on token design and incentives. With all the fuss around new gaming launches coming, the industry pioneer is well capitalised, has millions of daily users even now and has many learnings to build from. Worth a listen. DC

A new podcast I stumbled upon this week was titled Think With Pinker from the BBC and is a series hosted by psychologist and writer, Professor Stephen Pinker. Pinker has spent his life thinking about thinking. In this podcast, he wants us all to begin thinking about thinking, too. For the series, Professor Pinker creates and shares with us his listeners a "critical thinking toolkit" which he hopes will make the way we think about the world better and improve our understanding of it. Throughout the series, Pinker is joined by fellow thinkers, from the fields mathematics, neuroscience and journalism, who each help Pinker to teach us how to deal better with irrational side of our brains and lives. A worthwhile listen. One to get you thinking! EJP

Edward Playfair