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Ten interesting things we read this week
Some of the most fascinating topics covered this week are: e-Sports (World-class gamers who play with their mouths), Business (Apple's control over the iPhone, the Internet, and more; Covid-19 and the struggling nightclubs), Lifestyle (How Covid-19 transformed exercise) and Travel (Will business travel change forever?).
Image: ShutterstockHere are the ten most interesting pieces that we read this week, ended February 13, 2021.
1) Quad Gods: The world-class gamers who play with their mouths [Source: BBC]
Chris Scott, an experienced skydiving instructor with around 6,000 jumps behind him, was paralysed from the shoulders down in an accident. It was in Mount Sinai Hospital that he met Dr. David Putrino in March 2019. In his role as the director of rehabilitation innovation at Mount Sinai, Dr. Putrino explored different ways of improving patient health. He used training methods associated with high-performance athletes, as well as technological solutions like virtual reality. In his first conversation with Dr. Putrino, Mr. Scott said that he loved playing video games against others. Dr. Putrino was surprised. "That was me being naive at that point," he says, "because I'd never seen competitive gaming from someone as severely paralysed as Chris."
That’s how the idea of forming an e-sports team, Quad Gods, popped up. The aim was to compete at the highest level. Soon a group of eight people with paraplegia and quadriplegia were meeting up regularly to practice. One of the first video games they played together online was League of Legends, a gladiatorial game where two teams battle each other in a fantasy setting. It is a game that relies on teamwork and, as they played, the different playing styles and characteristics of each team member came to the fore. They found that playing together they were a formidable outfit.
By the summer of 2019, the team was ready to begin playing in competitions where prize money and greater prestige would be up for grabs. In the first competitive tournament they played in there were 99 teams, and the Quad Gods were hoping to finish in the top half. They came fourth. They began playing in - and winning - more tournaments online, finding particular success with the popular fighting game Fortnite. As stories about their team spread among the gaming community, funding opportunities came their way. They received money to buy equipment and to launch as a legitimate e-sports team. Their next goal is to place highly at a range of different e-sports World Championships next year. The Olympic Committee are strongly considering e-sports for the 2024 Olympics and, by securing a world ranking, the Quad Gods hope to qualify.
2) Jason Zweig – Psychology, History & Writing [Source: Infinite Loops Podcast]
In this podcast, Jason Zweig of The Wall Street Journal, where he writes his famous The Intelligent Investor column, talks about the power of writing to learn, why humans never learn from their mistakes, his path into markets out of college, the lessons we can learn from the past, and much more. He starts by saying how he doesn’t like the idea that investing shouldn’t be entertaining. A few years ago an investment consultant said to him that if it’s interesting, you’re doing something wrong. Investing should be like a manufacturing process. He compared it to the cookie production line factory. While you’ll be tempted to eat the cookies while they are being made, if there is any variation then the factory is malfunctioning. You should just let the assembly line run.
Talking about his love for history, he says that he was driven towards history because of his parents. His house was full of history when he grew up with 200-year-old chair and desk. When he first tried to make a living as a writer, he did not have much success. He was like an every fledgling writer, interested in writing poems and novels. So, eventually he took up any odd job he could get in journalism, and he just bounced from one starter job to another, until he landed at Forbes magazine. He was a business reporter.
Mr. Zweig also talks about the criticism that writers get in their article’s comments section. He says that he prefers not to read them, as most of them are directed personally and talking nothing about the article. He also says, if you want to deepen your thinking and improve your mind, you should listen to people who don’t think like you, and disagree with you. And when they disagree with you, you should not hate them. They are good teachers. Investing is not only about finance or Math, it’s about psychology and history.
3) Apple, its control over the iPhone, the Internet, and the Metaverse [Source: matthewball.vc]
Today, everyone can create content on the internet, everyone is technically capable of accessing everything on the internet, and every web page on the internet can connect to another without the user needing to change browser, device or client. Right now, we are on the cusp of the next internet. But what matters is that a growing share of our time will be spent within virtual spaces and with virtual goods — for education, work, health, politics and leisure. Sometimes these spaces and goods will be purely virtual, other times virtual twins of physical ones, and sometimes augmented reality. The most important impediment today is Apple. Apple is inhibiting this future Internet. And it does so via tolls, controls, and technologies that not only deny what made and still makes the open web so powerful, but also prevents competition, and prioritize Apple’s own profits.
Apple’s control and integration allowed it to offer a best-in-class mobile experience that also helped repel the most pernicious aspects of the online world; onboard and engage less technically savvy users; and develop a richly monetized app ecosystem. This, in turn, led to unprecedented success. Today, the iPhone has 66% market share in the United States, 75% of U.S. App Store revenues, and over 80% of time spent on the mobile internet. Apple’s regulatory role often leads to widespread good. The company’s aforementioned efforts to suppress excessive tracking and data collection is particularly commendable and worth highlighting. Apple’s byzantine rules are based on its bargaining power from a decade ago, which differentiated between extant businesses (in which Apple had limited leverage), nascent ones (in which Apple was a key growth partner) and those yet-to-be-created (in which Apple was a gatekeeper).
Collectively, Apple’s anti-platform policies and philosophy do more than prevent competition on today’s Internet - they also impede the development of a new one. Apple does not want a digital world built and innovated upon interoperable standards, device/endpoint agnosticity, and without Cupertino. The worst part of the ‘Apple Problem’ is that everyone knows Apple’s policies are a bottleneck to business creation, new business models and new products — and the dominant response is just to wait for them to change. It may feel unfair to force Apple to loosen the controls that led it to such unprecedented success and adoption. Yet problems arising from Apple’s controls are becoming larger every day, as is the company’s unprecedented strength.
4) Even before covid-19, nightclubs were struggling [Source: The Economist]
Almost all factories were shut in the initial period of lockdown. But, slowly they started opening and manufacturing as well. Some factories were used to manufacture PPE kits, masks and other such products. But, nightclubs had no option but to remain closed. Like restaurants, cinemas and hotels, nightclubs are bound to suffer in a pandemic. Even before governments had started to shut down the hospitality industry, nightclubs were recognised as an unusually serious vector of infection. In May South Korea’s government advised them to close for a month after tracing a number of cases back to gay clubs in Seoul. The questions posed by covid-19 for all hospitality and social industries are: first, whether you can hang on long enough for the world to return to something like normal; and second, whether that normality will include you.
In rich countries, fewer people are going clubbing because of greater competition, online-dating sites, growing abstemiousness—and, above all, ageing. In the decade before the pandemic, the number of nightclubs shrank by 21% in Britain, and by 10% in both America and Germany, according to ibisWorld, a market-research firm. Some of the ways clubs have responded have made things worse. In an effort to offset the impact of falling attendance, many increased prices of tickets and drinks, which has made them even less popular. Clubs will not be able to operate normally until most people are vaccinated.
If nightclubs in developing countries make it through their long covid, they will face some of the same pressures that currently bear down on their counterparts in rich countries. To survive, they will have to make the same sorts of accommodations: finding new, more formal venues; building better relations with local residents, often by making less noise; and persuading authorities that they are both a useful source of jobs and a way to keep cities centres safer at night. As countries emerge from the pandemic, their governments will be desperate for growth from any source. And as Mirik Milan, founder of the Global Nighttime Recovery Plan, an industry group trying to come up with ideas for reopening, points out: “When a lot of people are dancing, there are a lot of people working, too.”
5) Why India should buy Bitcoin [Source: swarajyamag.com]
Cryptocurrency has become a rage lately. So, should India be buying this instead of banning it? The author of this article writes why India should buy Bitcoin. Some of the points that he discusses are: 1) Crypto is now a trillion dollar industry: Bitcoin alone is worth more than $600 billion. That's more valuable than any of the tech unicorns founded in the last decade, more valuable than Uber, Airbnb, Stripe and Slack combined. 2) National Security – Crypto Means India Can’t Be Deplatformed: A recent bill introduced in the Indian Parliament proposes a ban of cryptocurrencies like Bitcoin in favour of a digital rupee. One of the likely justifications is to protect India's national security. And decentralisation defeats deplatforming.
3) Crypto brings capital to India: The value of Bitcoin is something leaders in the global tech community agree on, like the Internet or open source. Estimates vary, but if and when Bitcoin hits $200,000 per BTC, Olaf Carson-Wee at Polychain Capital calculates that roughly half of the world's billionaires will come from cryptocurrency. As such, if India bans cryptocurrency, it doesn't just criminalise the holdings of countless innocent Indians. It repels a trillion dollars in crypto capital from coming to India in the first place. The proposed crypto ban would itself cause capital flight. 4) Crypto enables the remote economy: Almost most of Indians have gone online. India is poised for an absolutely massive boom in remote work and remittances, with crypto serving as the conduit for large flows of money into the country to pay Indians for performing remote work.
5) Crypto means mathematically provable accounting: The key concept is that on-chain accounting doesn't just make it easy to perform audits, it makes it easy to automate them. There are technologies like proof-of-reserve, for example, that allow firms to continuously certify that they have the needed cash on hand. This would prevent scenarios like the allegations in the Vijay Mallya episode, where false evidence of reserves was allegedly presented to gain access to loans. India has the talent to pull this off. Such a move would make international headlines, attract global support from the world's technologists and financiers, differentiate India from the increasingly zero-sum economic policies pushed by America and China, and put the country at the forefront of a trillion dollar industry.
6) How to get managers’ incentives right [Source: The Economist]
In the corporate world, some say, fear plays as big a part as greed in distorting manager incentives. Critics claim that managers are unwilling to invest in long-term projects because they fret this will damage the company’s profit growth in the short term. If that happens, the managers may worry that they will be fired by the board, or that the company will be subject to a takeover bid. Lucian Bebchuk of Harvard Law School argues that there has been too much focus on the role of institutional, and particularly activist, investors in driving short-termism.
The problem lies with the incentives used to motivate executives. Andrew Smithers, an economist, has calculated that the proportion of operating cash flow paid out to shareholders by non-financial American companies was just 19.6% between 1947 and 1999. By the end of that era, share options became a popular means of motivating managers. Subsequently, the proportion of cash flow paid to shareholders averaged 40.7% between 2000 to 2017, while cash used for investment fell. To examine the effect of incentives, Xavier Baeten, a professor at the Vlerick Business School in Belgium, studied the Stoxx Europe 600 index of big European companies between 2014 and 2019.
When he compared individual firms’ returns on assets with the chief executives’ remuneration, he found a positive impact of high pay on performance over the short term, defined as the next 12 months. Yet no such relationship showed up over a three-year period, implying that the initial gains soon dissipated. Mr Baeten then examined the composition of the executives’ packages. He found that short-term performance was better when incentives were more than 200% of base pay than when incentives were less than 100%. He also found that after the first 12 months, the impact switched. This suggests the need for carefully designed incentive schemes. The principal-agent problem requires eternal vigilance by shareholders.
7) What India needs to become a solar-manufacturing hub [Source: ET Prime]
Capacity utilisation of domestic production facilities for PV cells and modules is currently only at 40%-45%, while the estimated operational capacity is at a meagre 7GW. At the current production capacity, only 35% of the total annual domestic demand can be met. Meanwhile, Chinese suppliers account for 80% of the imported-modules market in India, with the remaining coming in from Thailand, Malaysia, and Vietnam. Since 2015, India has on average imported solar cells and modules worth Rs176 billion annually. At the same time, around 80% of India’s exports of modules are to the US.
“Until 2011, India was one of the largest exporters of best-in-class modules. Domestic manufacturers including Tata Solar, Moser Baer, BHEL, Indosolar, and Lanco Solar were industry pioneers. However, factors such as lack of financial support, inconsistent government policies, and competition from low-priced Chinese imports led to undercutting of India’s domestic module-manufacturing growth,” says Vibhuti Garg, energy economist at the Institute for Energy Economics and Financial Analysis. According to industry estimates, as much as Rs1.75 lakh crore of investment is required to bid out 35GW of renewable energy capacity in the country. According to industry estimates, around 10 million solar lamps and lanterns were sold annually in India in 2017 and 2018, up from 6.38 million in 2016. This is nearly 40% of the estimated global market volumes for solar-lighting solutions. A large number of these products were imported.
Exports from India are a negligible portion of the overall off-grid lighting market. With right incentives, local manufacturing can be increased, and once Indian companies start making quality products at competitive prices, they can compete globally. Amid rapid innovation in solar-power technology, Indian companies are struggling to keep up with the constant manufacturing and capacity upgrades undertaken by their Chinese counterparts. To provide India’s solar-equipment manufacturers a conducive environment to grow and compete with global players, it’s imperative for the government to come up with out-of-the-box solutions.
8) The extra mile: how Covid-19 transformed exercise [Source: Financial Times]
Have people become more fit in this pandemic sit home, or put on weight? The author writes how people have started working out more than before now. Between March and September, Peloton, best known for its spinning bikes, almost trebled the number of people who pay for its digital fitness classes but don’t buy equipment. Turbo trainers allowing you to cycle indoors on an outdoor bike were so in demand that by April they were sold out across much of Europe. Sales of actual bikes jumped too, along with sales of running shoes. In New York, some faced a three-week wait for gym equipment like dumbbells and kettlebells.
Strava, a social network where around 70m people record and share exercise sessions, will not give a full breakdown of activity levels across the platform, but says that, as an example, it has seen a 61% jump in the number of Londoners running between this April and June versus a year earlier. Globally, the number of people setting records for cycling or running a particular stretch is up 50% over the same period, suggesting fitness improvements. Scott Powell, chief operating officer of Wells Fargo, and an avid runner and cycler, is among those who have been working out more in the pandemic era. “It’s definitely [due to] having more time,” he says, describing his midweek exercise as “hit and miss” in the pre-Covid-19 world of commuting, frequent business trips and meeting-packed schedules.
Americans’ spending on home fitness equipment doubled to $2.1bn in March to September this year versus the same period in 2019, research firm NPD said. Stats on new powerlifting aficionados are hard to come by, but consultancy Publicis Sapient’s Digital Life Index shows that 27 per cent of people started a new form of fitness between mid-March and mid-June. Fitbit’s data showed that rollerblading and yoga nearly tripled in popularity for 18- to 29-year-olds in 2020 versus 2019. Kick-boxing is also on the rise, across all age groups, as is orienteering among 30- to 49-year-olds. If anything, the pandemic has made people realise the importance of getting out and working out to stay fit mentally as well as physically.
9) Business travel: ‘We don’t know how many people will choose to fly’ [Source: Financial Times]
Industry experts say that for the travel and tourism industry to get on its feet, it will take some time. The pandemic has resulted in a $710bn year-on-year loss of revenue to the industry. The question now is whether those travellers will return once the pandemic ends. And, if they don’t, what that means for a sector which directly and indirectly supports one in seven jobs worldwide according to the Global Business Travel Association, subsidises mass tourism and had annual revenues of $1.4tn in 2019. So although many in the travel industry are predicting a robust recovery in leisure travel once borders can properly reopen as cooped-up workers make a break for overseas trips, business travel, which can generate as much as 75 per cent of airlines’ revenue on some international flights according to PwC, faces a severe crisis.
Jeffrey Goh, chief executive of Star Alliance, the world’s largest airline group, predicts there will be a “structural change in terms of the business travel segment” that could leave the sector up to 30% smaller. Yet Carsten Spohr, chief executive of Germany’s Lufthansa — a Star Alliance member, insists that business travel is set to return quickly. “Whenever I talk to corporate customers, there’s such a backlog of travel needs,” he told a recent analyst call. A seat in business or first class is on average five times more expensive than in economy, according to the global airline trade group IATA, and airlines rely on these premium seats for 30% of their revenues. Marriott, the world’s largest hotel group, estimates that in 2019 around 70% of its hotel nights were business-related bookings.
Beata Sperling-Tyler, a senior credit analyst at S&P Global, says companies want certainty before they send employees out on the road: “It’s worth referring to what happened after 9/11 — airports had to become terrorist-proof and now they have to become virus-proof.” Despite rising optimism around vaccinations, a Deloitte survey of 90 finance directors across the UK’s largest companies in January showed that 44% expected to reduce discretionary spending such as travel even further over the next 12 months. The CFOs are also anticipating a fivefold increase in homeworking relative to pre-pandemic levels by 2025.
10) Mastering your body’s response to stress in business [Source: Forbes]
The new way of living in this pandemic has resulted in a higher level of anxiety amongst the majority. The bad news is that most of us don’t know how to manage our stress response. The good news is that Sherry Lukey, a trauma specialist, uses signature program, Fear to Freedom, and Emotional Freedom Technique (EFT), to empower men and women to eliminate negative behavior patterns and establish positive ones.
1) Recognize what’s happening: “For many people tuning into the emotions in their body can feel uncomfortable or even unsafe. We can even learn to ignore the sensations in our bodies. Yet, to reprogram your brain to respond differently, you must be able to recognize your body’s stress response (fight, flight, or freeze). Classic physiological signs of stress response activation include shallow breathing, racing thoughts, tightness in your chest and a pounding heartbeat. As soon as you notice that you are experiencing one or more of these feelings, it’s time to deescalate the situation.”
2) Reprogram your brain to let go of stress: “With two fingers, gently tap on the side of your right or left eye. Tap as if you were tapping your fingers on your desk. At the same time, ideally, you'll talk aloud to yourself, but you can also just say it in your head. You might say: Even though this is an important call, and I’m worried I’ll mess it up, I’m acknowledging it now. Even though it feels like if I mess up this call it’ll be the end of the world, it actually won’t be. Even though the success of this call feels so important to me and I feel so much pressure, I want my body to know that the outcome of this call is not a threat to my survival.
3) Reinforce positive, supportive beliefs: “Many people don’t realize that much of the stress they experience is due to limiting beliefs born out of negative or traumatic experiences, usually from our childhood. For example, if you’ve ever experienced bullying, perhaps you worry about being visible, so the idea of doing a live webinar floods you with anxiety and you never host one. Subconscious beliefs can limit your behavior and cause you to instinctively react to stress, instead of responding thoughtfully,” says Lukey. “But tapping can help you retrain your brain. We learn through repetition, so repeatedly responding with tapping can help you rewrite those stories from your childhood and reinforce positive, supportive beliefs. Using the R3 formula (Recognize, Reprogram and Reinforce) consistently, you can master your body’s response to stress and experience game-changing results.”
