Weekend Reading #185
Photo from Unsplash
This is the hundred-and-eighty-third weekly edition of our newsletter, Weekend Reading, sent out on Saturday 10th September 2022.
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What we're thinking.
In today’s world, the monarchy is a figurehead of course, but the truth is that most British people feel very strongly about the monarchy and in a weird way take comfort and direction from it rather than the government which has been a bit of a mess in recent years. And the Queen after being in place for so long WAS the monarchy to almost everyone alive today who has only ever known one monarch. With somebody new up there one has to wonder whether the population will take as much comfort and direction from King Charles III as they did from his mother.
Markets wise they continue to whipsaw. Following the late August/early September selloff we’ve seen a rebound the past few days across all asset classes. Tricky to trade so better to stay low risk for the moment and wait. One sector that’s traded really well is genomics and biotech more broadly. Even in the big selldown over the past week the leading stocks were resilient. Remember there is always a bull market somewhere!
As we wrote last week, the ongoing situation in the Helium community has brought up lots of food for thought. Regular readers know that we have always looked at Helium’s deployment of token economics to incentivise hotspot rollout as one of the most practical and interesting use cases for tokens. But perhaps more so than just dishing out tokens as incentives to users, there was also an implicit “optionality” in being able to own a share of a network which could in turn form the base for other services and applications to be built. With Helium moving off its native chain to Solana, notwithstanding the benefits that would bring on the operations side of things, one cannot help but wonder how much of this implicit optionality has been taken away. The jury’s still out on that and it’s something we continue to ponder. Ultimately, this is the risk (and the opportunity) in early-stage tech venture, which crypto undoubtedly is: business models change fast. But between token holders and equity holders, it is becoming clear who ultimately has the final say.
What we're doing.
We spent the week on a family vacation in France, with this paragraph being written in the town of Saint-Jean-Pied-de-Port, in the heart of Basque country, right on the border between France and Spain at the foot of the Pyrenees mountains. Our trip started in Bordeaux, continuing to Lourdes, and will end in San Sebastian across the Spanish border over the weekend. The region of Aquitaine in Southwest France where we’ve spent the past few days is perhaps best known for its food and wine: from the vineyards of Bordeaux to the delicacies of the South West. But coming into the Basque region, it’s a reminder that beyond the borders and definitions of nation states as we know it, there are also very distinct regional and ethnic identities that persist, regardless of whether they are recognised as a state: the Basque region, with their own language, culture, cuisine and history, is one prime example.
So far, the list of food recommendations continues to grow: Le marché de capucins in Bordeaux, Les 100 Culottes Tapas Bar in Lourdes and Le Chat Perché in Saint-Jean-Pied-de-Port were top eats/food sources in each city so far. EL
What we're reading.
I’ve got this meme/image from a few Turkish friends showing in one picture the effects of currency debasement and inflation over 7 years. A warning sign of what can happen when things really go wrong. We are nowhere near that in the West but the speed of Turkey’s fall has been blistering. I remember going to Turkey as an analyst ten years ago when the Lira was 1.6 to the dollar. Today it's over 18. What a spectacular pure policy failure.
Elsewhere the world of chess has been rocked by a massive scandal at the Sinquefield Cup in St Louis. Just last week I shared a podcast with Magnus Carlsen and it was he who created a storm when after losing to young US grandmaster and lowest-rated player in the field, Hans Moke Niemann he quit the event with a cryptic tweet quoting Jose Mourinho of all people, “If I speak, I am in big trouble.” Everyone jumped onboard and took sides from Hikaru Nakamura to Gary Kasparov. What probably didn’t help is that Niemann admitted cheating in online events but said he had never cheated in an in person event before. Apart from all the drama I learned that there exists something called a chess detective whose job it is to check whether any cheating took place. The how of this I really don’t know but this piece in the WSJ summed it all up quite nicely. DC
What we're listening to.
Mitch Lasky is a partner at Benchmark and one of the few specialist gaming VC investors. In this chat on Invest Like the Best with Patrick O’ Shaughnessy he covers gaming history, various business models and a bit of the “secret sauce” he looks for in a new gaming investment. The chat also briefly covered his views on blockchain gaming and how he is yet to see a project that solves what Blake Robbins says is a Three Body Problem. You have a stable relationship between the developer and the user and now with the introduction of the speculator, you create a dynamic whereby you cannot have a stable relationship between all 3 participants. We have seen this with Axie and many other early innovations in the space. A new breed of projects is launching over the next couple years and we will see which model wins. Ultimately both Lasky (and us) believe there will be a great model but at this stage it's still very experimental! DC
In addition to the above episode of ‘Invest Like The Best’ mentioned, another episode of the same series I listened to this week was the one from 23rd August with Robert Smith on the topic of Enterprise SaaS businesses and the investment environment around those sorts of companies. Having founded Vista Equity Partners back in 2000 after leaving the technology division of Goldman, Roberts was one of the early pioneers in the space and his firm is now widely revered as one of the world’s leading software-focused private equity firms. He talks through a variety of interesting points including the profile of companies he’s favoured over the years, market cycles as well as some of the lessons he’s learnt along the way. Leading up Nachas Networks, our software business, there was a lot of helpful tidbits for me to take on board from perhaps one of the best experts out there as we prepare for our first external fundraising round in the coming months. HS
What we're watching.
Tennis for a start. The US Open had been quietly simmering away without Novak Djokovic who was ridiculously banned from entering the US due to his unvaccinated status, thus denying him a chance to level up with Nadal’s 22 grand slams. I’ve always been a Rafa Nadal fan over Federer and Djokovic. He never makes a fuss and its pure grind and determination. Legend. But as Nadal enters the endgame, I’m on the lookout for a new favourite and this week I found one. His name is Francis Tiafoe. I’ve seen him once or twice before and he had a few big wins recently but this week he had the biggest win of his young career in beating Nadal in the fourth round. Tiafoe’s rise is one of the best stories. Wikipedia says it best.
“Frances Tiafoe was born on January 20, 1998, along with his twin brother Franklin, in Maryland, to Constant (better known as Frances Sr.) Tiafoe and Alphina Kamara, immigrants from Sierra Leone.[3] His father immigrated to the United States in 1993, while his mother joined him in 1996 to escape the civil war in their country. In 1999, his father began working as a day laborer on a construction crew that built the Junior Tennis Champions Center in College Park, Maryland. When the facility was completed, he was hired as the on-site custodian and given a spare office to live in at the center. Frances and Franklin lived with their father at the center for five days a week for the next 11 years. They took advantage of their living situation to start playing tennis regularly at age 4. They stayed with their mother when she was not working night shifts as a nurse.[4][5]”
He’s up against the probable future number 1 in Carlos Alcaraz in the semi-finals late Friday. I’ll be waiting up to watch that cracker. DC
This week also saw Apple drop its new line up of products, the replay of which can be watched here, along with a summary of their new product drops. A new iPhone, with a superpowered camera, new watches and new airpods basically sums up the bulk of the new product releases. Of course, none of this goes to say that Apple is doing a bad job – their products are easily the top of the food chain in terms of global consumer tech in more ways than one, but the question one has to ask is when was the last time we saw an Apple product release event that REALLY left everyone in awe? Apple makes good products, that’s beyond doubt. Did it lose the magic touch? Only time will tell. But the other question is whether Apple’s products continue to command their premium pricing: $799 for the lowest spec iPhone 14 is a rather huge ask in these trying times. We already saw the likes of NVidia take some pain with their consumer GPUs as demand dried up, and we’ll soon find out if Apple bucks that trend. EL