Irony

MARKETS

• U.S. markets: The S&P won the coin toss, accepted the kickoff, and hit a record high yesterday to begin a busy week full of earnings and a Fed announcement.
• Brexit: Add “flextension” to your list of words used to talk about Brexit and nothing else. The EU said the U.K. could leave the bloc on Jan. 31...or before that if both parties agree to a deal.

GEOPOLITICS

Third Time's the Charm for Davos in the Desert

Following the murder of journalist Jamal Khashoggi last October, attendance at Saudi Arabia’s Future Investment Initiative (FII) last year was a bit sparse.

A year later, many execs and financiers are back to following the money, though plenty of controversy still surrounds this year’s “Davos in the Desert,” which kicks off today in Riyadh.

The backstory

Saudi Crown Prince Mohammad bin Salman (MBS) has promised sweeping reforms to modernize and diversify the Saudi economy away from oil. To drum up foreign investment, he put on the first FII summit in Oct. 2017.

• 3,500 people controlling ~$22 trillion in assets attended, including SoftBank’s Masayoshi Son, venture capitalist Peter Thiel, and Richard Branson.
• MBS then went on a charm attack during a spring break 2k18 U.S. tour, where he met with Rupert Murdoch, The Rock, Bill Clinton, President Trump, and Oprah.

They welcomed MBS with open arms even though a quick Google search would have showed ties to purges of political rivals, a controversial war in Yemen, and human rights abuses. After the Khashoggi murder, execs and politicians abandoned the second summit in big numbers.

A year later…

...all might not be forgiven, but things have warmed enough for leaders to come back to Riyadh. Among the ~6,000 visitors scheduled to attend this year:

• Indian PM Narendra Modi and Brazilian President Jair Bolsonaro
• Bridgewater’s Ray Dalio, Blackstone’s Stephen Schwarzman, and the CEOs of Citigroup and Credit Suisse
• Masa Son, on the hunt for Vision Fund 2 funding
• In the U.S. delegation...Treasury Secretary Steven Mnuchin, Energy Secretary Rick Perry, and Jared Kushner

Who’s not coming: Major U.S. media outlets (Fox Business, CNBC, Bloomberg, NYT). Big execs from the likes of Google and Amazon. Wall Street royalty like JPMorgan’s Jamie Dimon and Goldman Sachs’s David Solomon, who are sending other leaders instead.

Looking ahead...U.S. banks are in Riyadh hunting the big cheese—Saudi Aramco’s potential IPO. The oil company could be valued at about $1.5 trillion.

TECH

There’s a Lot to Watch at Google

Yesterday, Google’s parent company kicked off Big Tech earnings for the week. Alphabet beat revenue expectations with $40.5 billion in Q3, but shares dipped after hours on a 23% profit slump to $7.1 billion.

• Ad revenue hit a record $33.9 billion, though the segment’s growing at a slower clip while competitors (Amazon) ramp up their advertising game.
• Per the NYT: “The performance demonstrated the challenges of trying to maintain growth at the company.”

It's always difficult to assess the performance of other Google segments, such as cloud and phones. Google folds these into the “other revenue” category, which did over $6.4 billion in Q3.

Adding smartwatches to the mix?

In January, Google acquired some of Fossil’s smartwatch tech for $40 million. Yesterday, Reuters confirmed the company’s still eyeing wearables by making an offer for Fitbit. The report sent Fitbit shares up 27%.

• The acquisition would give Google an inroad to compete with Apple Watch, which commands 46% of the global smartwatch market.
• In Q2, Fitbit lagged behind Apple and Samsung with 10% market share.

CRYPTO

Good Crypto News Comes in Twos

1. Coming 2020: The Starbucks Cryptoccino Experience

Crypto platform Bakkt, an affiliate of NYSE owner Intercontinental Exchange, said yesterday it’ll launch a consumer app next year with Starbucks as its first partner. It’ll be an all-in-one platform for users to “store, transact, trade or transfer” digital assets.

• There’s more: Killing two announcements with one blog post, Bakkt also said 1,179 monthly bitcoin futures traded last Friday, a record for the exchange.

2. Coming TBD: The Chinese Blockchain Experience

Chinese President Xi Jinping will never have to buy a round at crypto happy hours again.

Last Thursday, President Xi gave a speech urging the country to “take the leading position” in blockchain, the technology underpinning cryptocurrencies. As Emerging Tech Brew’s Ryan Duffy notes, the battle for blockchain supremacy opens yet another front in the U.S.-China Tech Cold War.

But chew it over and Xi’s speech tastes a bit...irony.

• China has banned cryptocurrencies since 2017.
• Blockchain is fundamentally about decentralization, while Xi “almost epitomizes the notion of centralized power,” Quartz writes.

FOOD

The Second Coming of the Popeyes Chicken Sandwich

Your spaghetti bolognese may get great reviews. But has it inspired legal action or threats of violence? Popeyes’s mega-popular chicken sandwich has. When it first arrived in August, what the restaurant chain thought was a three-month supply evaporated in two weeks.

Now, the infamous sandwich is back. Popeyes tweeted yesterday that it’ll be a permanent menu item starting next Sunday, Nov. 3.

• We assume it’s an unfortunate coincidence that competitor Chick-fil-A is closed on Sundays.
• Franchises are adding staffers to make sure they can handle the crush of customers.

We know what you’re thinking: Less sandwich, more earnings. Just before the tweet, Popeyes owner Restaurant Brands International reported earnings and revenue that met expectations—but Popeyes’s comparable sales growth nearly doubled projections at 9.7%.

Zoom out: The chicken sandwich’s success speaks to a) the superiority of all Southern food and b) the growing influence of social media. A Twitter spat between Popeyes, Wendy’s, and Chick-fil-A can take a good chunk of credit for the sandwich’s August blowout.

STARTUP

Soho House Scores Rooftop Pool-Level Funding

Welcome to the latest entry of Venture This. We’ll present you with a startup, then ask if you’d invest.

The swank hotel and members’ club Soho House has raised $100 million at a valuation of $2 billion. While unprofitable, it plans to double its number of venues to 50 in the next three to four years.

• If you’ve never heard of Soho House, you must not be in need of a hangout spot between work, barre, and drinks at Le Coucou...that’s also a hotel.
• If you have heard of Soho House, then we don’t need to tell you it’s where Blair Waldorf and Serena van der Woodsen would hang out if they turned 25 and got into watercolors.

Zoom out: An unprofitable, expanding membership/coworking startup at a sky-high valuation...we’ve got déjà-Neumann. But Soho House founder and CEO Nick Jones said it shouldn’t be compared to WeWork because it’s expanding at a much slower pace.

So....what’s the word from SoftBrew? Would you invest in Soho House? Tell us here.

WHAT ELSE IS BREWING

• AT&T has decided to appease activist investor Elliot Management by adding two new board members and exploring business units to sell.
• Boeing CEO Dennis Muilenburg will testify before a Senate committee today about the two fatal 737 Max crashes.
• Beyond Meat scored its first quarterly profit in Q3, but shares fell more than 9% after hours as expenses more than doubled.
• Apple launched the AirPods Pro if you’re looking to pay more for noise cancellation and sweat resistance.
• Taylor Swift will perform on Nov. 10 at Alibaba’s countdown to its Singles’ Day shopping extravaganza.

KNOW THY COMPETITION

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