Matt's Thoughts In Between - Issue #41

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Brexit heads to the exit?

Brexit entered its endgame (or at least the start of the next few centuries of political division) this week, with the publication of the draft withdrawal agreement. The proposed deal is deeply divisive - the only thing the Leave and Remain camps can agree on is that they hate it.

The narrative around the agreement is a microcosm of the last three years of British politics: total ignorance of the EU perspective; belief that the outcome is a function of negotiating skill rather than geopolitical structure; and the total impossibility of compromise. All that said, I can't help but thinking that the deal is getting slightly a unfair rap. I was a convinced Remainer at the time of the referendum and if there were a second referendum today, I'd vote Remain again... but as I wrote the day after the vote in 2016, there is no possibility (or even desirability) of return to the status quo ante. That world is gone.

The best piece I read all week is this moderate defence of the deal from the extremely smart and measured Leaver, Roland Smith. Smith points out - and adds more here - that the deal on the table is the (regrettable) consequence of the total primacy given to immigration by both the Remain and Leave camps in interpreting the vote. Once that narrative was established, few paths were left open. The culture war rages on - and a second referendum isn't going to make it go away.

Facebook and its headaches

The New York Times published an extraordinary exposé of Facebook's response to its Russia/2016 election crisis. Do read the whole thing if you've not already. New allegations - such as the stunning claim that Facebook paid an opposition research firm to discredit its critics, which ended up spreading George Soros conspiracy theories - have grabbed the headlines, but overall story is of a company clumsily struggling to come to terms with its extraordinary power.

There are a number of fascinating nuggets that touch on favourite TiB topics, from the growing importance of Facebook as a national security battleground to the enormous influence that the sentiment of Facebook's high skilled workforce has on its leaders (Key quote: “Republicans... grumbled that Facebook was more sensitive to the political opinions of its work force than to those of powerful [Congressional] committee leaders”).

The best commentary, though, has come from venture capitalist Michael Dearing, whose thread on what Facebook could learn from Extra Strength Tylenol is superb. His conclusion is advice probably not heard frequently by Silicon Valley billionaires: be more like Edmund Burke (Not terrible advice for the UK government either)

The end of the ICO party

It's been a bad week for the world of cryptocurrencies. The SEC announced that two initial coin offerings (ICOs), the funding mechanism less than a year ago Silicon Valley luminaries thought might change venture capital forever - or even replace it, were illegal. On the basis of the ruling, hundreds of other ICOs could be affected, which is likely to wipe out their issuing companies.

It's a moment of vindication for Preston Byrne, a lawyer who has been one of the most consistently bearish - and, it turns out, correct - commentators on the ICO market. This piece is a rather gleeful but well deserved "I told you so", which lays out clearly why most ICOs were on very dodgy ground from the start.

This ruling is likely to ripple through the crypto market and prolong the current bear market (the next shoe to drop could be stablecoins - another much-backed crypto innovation that Byrne has been criticising for a long time). As Anthony Pompliano argues, the market is now so depressed that crypto funds would be entirely rational to shut down, which perpetuates a vicious cycle. Or, as true believers would argue, perhaps this is just the start of the next bull run...

Quick links

Taking up space. What is the most requested book at the British Library? (I will be *amazed* if anyone guesses before clicking)
Illiquid lunch. Excellent thread on how institutional investors think about private equity and VC.
Soft power cut. Striking chart of international student enrolment at US universities (does anyone have one for the UK?)
There is no AI arms race. Contrarian reports on Chinese AI
Race to the bottom. Upbeat chart on the fall and fall of cancer and heart disease (Largely because of smoking cessation - do read the whole thread).

Your feedback

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Until next week,

Matt