The Weekend Edition

Ramadan is coming, and our minds turn to economic doomsday scenarios: French bank Societe Generale published its black swan chart of risks that could tank the economy, according to CNBC. The top economic risks and their likelihoods are:

1. Double-drag from European policy uncertainty: 40%
2. Hard landing in China: 30%
3. Sharp re-pricing of Fed expectations: 25%
4. Sharply weaker global growth: 20%

Uncertainty about Europe’s political direction, evidenced by the near election of a far-right president in Austria this month and the UK’s Brexit referendum “have brought politics in the region into sharper relief.” You could be forgiven for thinking Societe Generale sees that democracy brings plenty of risk: “with a very busy political agenda lined up for the coming quarters, the risk of an event delivering an unexpected outcome remains high, be it the OMT (outright monetary transactions) judgment from the German Constitutional Court on June 21, the U.K. ‘Brexit’ referendum on June 23, Spanish election on June 26, Italian referendum in October and heading into 2017, elections in France, Germany, Netherlands and possibly Italy.” The other major risk is stemming from China, where the “potential for policy errors is substantial, and all the more so since a new bubble appears to be building in the property market.”

More prognostication: Mary Meeker’s annual internet trends report is just out. Eleven months a year, Mary Meeker tends to her knitting, doing whatever it is that venture capitalists do (including, we suspect, sacrificing the dreams of millennials on the altar of the VC god known as “10x.”) But once a year, she serves up an ugly, poorly laid-out 200-page PowerPoint deck — a monstrosity that is literally a must-read for VCs, media types, tech geeks, and founders of businesses with any reliance on the internet whatsoever. Investors, analysts and media are still digesting this year’s beast, so we’ll have a proper “takeaway” for you on Sunday.

The three things that stand out from Meeker’s report on a really, really fast first skim:  

• The growth of the internet itself is slowing down somewhat (and the greenest pastures remain emerging markets);
• Advertisers aren’t spending enough on mobile (something Enterprise has been saying rather consistently through our long, storied [er, less-than-two-year] history);
• More than 50% of search will be voice or photos within five years rather than tapping away into that nice new search box we rolled out earlier this week.

Can’t wait for us to get back to you by Sunday? The “web-friendly” version of Meeker’s report is here and, better still, you can find the PDF here. Meeker unveiled the presentation at this year’s Code conference by Recode. And keep your fingers crossed that Recode releases Meeker’s appearance as a video or a podcast on its Recode Replay podcast series.

Closer to home on the tech scene: Flat6labs and Barclays-Egypt launched a new fintech incubator called Accelerator 1864, named after the year in which Barclays first began its operations in Egypt. The incubator will provide different types of support for entrepreneurs, including seed investments of EGP 150k, Wamda reports. “Flat6Labs will provide the training programs, workspaces, trainers and mentors for entrepreneurs, and help with technological development and legal procedures. Barclays will sponsor the acceleration programs and cover the costs of operation and training boot camps… The acceleration program is for 14 weeks, and the graduating companies will be announced on December 10. The program will accept applications in several areas of the financial sector including crowdfunding, peer to peer lending, financial services for SMEs, digital payment, digital invoicing and alternative banks.” Watch Accelerator 1864’s promotional video here (run time 01:19).

No one writes about finance issues better than Levine: Michael Dell bought his company too cheaply and there’s nothing wrong with that, Matt Levine writes in Bloomberg View. Levine chastises a court decision reached by Delaware Vice Chancellor Travis Laster to award Dell’s former shareholders and extra USD 3.87 per share plus interest. He says it’s driven by difference in valuation of discounted cash flow models that would be used by public investors and leveraged buyout models used by private equity firms. “So you see the problem. Private-equity firms will only buy companies for cheap and lever them up, so they can get the 20-plus percent returns that their investors demand. So any price that a private-equity firm will pay for a public company is inherently suspect, since private-equity firms expect such high returns. So Vice Chancellor Laster ignored the price that Silver Lake actually paid, after a quasi-auction among private-equity firms. He chose his own DCF model, with lower expected returns, and calculated a higher price for Dell. And then he declared that that was the fair value.”

Levine notes that the “fair price” calculated by Laster was one that no one was willing to buy because: “1. Public shareholders won’t pay fair value for Dell, because they are obsessed with the short term and can’t understand the long-term strategic vision. 2. No strategic buyer would pay fair value to buy Dell, because that would be risky. 3. No private-equity buyer would pay fair value to buy Dell, because private-equity firms only buy companies at a discount.” Everyone agreed that Dell was undervalued, Levine says, but Michael Dell and his private equity consortium were the only ones to put their money where their valuation was, and a court penalised them for that.

How U.S. investigators pulled off the largest insider trading investigation in history: Bloomberg has a great play-by-play. Traders “got leaks from company insiders to win a trading edge in the market. In some cases, traders paid cash to their tipsters. In other cases, facilitators who were paid a fee acted as middlemen putting the two groups in touch.” The most desired information? Data on tech companies and med trials. And the profits were substantial to say the least. “Roomy Khan, a former Intel executive, collected [USD 50 mn] while working as a trader.” They were also apparently working in “rings”, occasionally overlapping groups of insiders, traders, and facilitators, which ultimately became their downfall. “Adopting tactics used against mobsters and narcoterrorists, the FBI infiltrated these rings using wiretaps and informants to work their way further up the chain.”

Yet another thing to blame millennials for: bad business. “We have a serious productivity problem with office workers and estimated that less than 50 percent of their time is spent on value-creating business activities,” wrote one respondent in the Dallas Federal Reserve’s monthly manufacturing outlook survey, released Tuesday. “The younger workers are often off task, engaged on social media, on the internet, texting on phones and other unproductive activities.”

One millennial who isn’t slacking off: Mark Gurman, who has been one of the world’s most-watched reporters on the Apple beat since he was 15 years old. Gurman, now 22, left 9to5 Mac this week to join Bloomberg. One of the best profiles of him out there is this piece in the Columbia Journalism Review, while Business Insider has the genesis story of 9to5 Mac in “How An IT Guy Stranded In Paris Turned Himself Into The Most Powerful Source Of Apple News.”

A new report from PwC suggests that drones can replace USD 127 bn worth of human labor and services across several industries, in particular infrastructure and agriculture, where the figure is estimated to be USD 77.6 bn. The report comes alongside PwC’s launch of a new service to help clients in construction and real estate development survey land and buildings using high-resolution cameras, sensors and geo-locational devices to spot any defects. It’ll start out in Poland, one of two countries with a comprehensive set of regulations regarding drone-use, with the other being South Africa. The bigger picture, however, reveals that activities such as completing the last mile of delivery, spraying crops, helping security companies monitor cites, checking on mobile towers and planning digs for mining companies are all likely to boost the prevalence of drones in our lives in the near future. Drones have already posed as replacements for soldiers, pilots and lifeguards, among other jobs that rely on combinations of human vision and judgment.

“No one ever says it, but in many ways global warming will be a good thing”: The Telegraph thinks “our climate conversation is lopsided” and hopes you will go look for the silver lining in climate change. While some estimates suggest global warming will likely cause damage equivalent to 0.2% to 2% of global GDP, the paper argues that this is just half the social cost of alcohol today, for example. A recent Nature study revealed just how much carbon dioxide, acting as a fertilizer, would lead to a greener Earth, with global biomass expected to increase by 40%. Read on if if dare.

Nope, we are definitely not paranoid: Google has probably been recording what you say around it, and could have been doing so for years. Don’t believe us? Head to Google history’s Voice & Audio Activity page and listen to all those recordings for yourself. The company has a specific audio page and another to show you everywhere Google has a record of you being on the internet. If you’re feeling like those blackmail victims from the movies who all of a sudden hear their embarrassing recordings echoing in the room, then rejoice. Because the snooping search engine has graciously granted you the ability to delete them by selecting specific recordings or deleting everything in one go. The recordings were taken ostensibly to improve people’s ability to search with their voice and help Google improve its language recognition tools as well as the results that it gives to people, The Independent reports. If you value your privacy more than having a voice assistant on your Android, you can opt out by turning off the assistant.

And while we’re on privacy, let’s draw your attention to El Face, which has recently enabled users to opt out of the targeted ads system that it generates by monitoring your activities on the internet. Yes, Facebook monitors your activities on the whole internet, even if you do not have an account, in part through integrations in websites and apps. In the past, the social media platform has allowed users to opt out of letting Facebook track your behavior across the web to decide what kind of ads you see, but not whether your actions on Facebook inform the ads you see. This new feature would let you do both. If you are a Facebook user, you can take advantage of this here. If not, you can follow the steps outlined by Wired.

…Tech giants monitoring your data and selling it to advertisers is not new. Both Google and Facebook have faced massive backlash throughout their history over privacy concerns. But thanks to a new privacy-centric culture that is taking shape after the Snowden leaks, tech companies have read the writing on the wall (no pun intended) and have pushed to accommodate those concerns. Whatsapp and Viber have enabled end-to-end encryption of chats and voice messaging. Apple took its famous stand for privacy against the FBI. And contrary to their policies early on, it would appear that Google and Facebook are now letting people know when they take their data and have provided them with the choice to opt out.  

The North Korean forced-labourers in the EU: A Vice report exposes that a number of North Koreans are working in forced-labour conditions in Poland, where they have worked in a shipyard on repairs to British and NATO ships as well as vessels belonging to Danish and Norwegian shipping companies, amongst others. Vice says there are over 50k North Koreans in forced labour overseas, generating Pyongyang around USD 2 bn annually. Poland is particularly important to them: As an EU country, it pays the highest wages compared to the other destinations that include Russia, China, Libya, and Algeria. “It seems that most of, if not all, the money that’s being earned goes to the state [of North Korea],” one Korean studies professor says. One North Korean worker interviewed does not know how much he earns, but says “when I return to Korea I’ll get the money.” (Run time 32:41)

Omar Samra teaches us to let go: Omar Samra is the first Egyptian and one of less than 40 people to climb the 7-Summits and ski to both poles. He gave a TEDx talk in Bend, Oregon about how “the answers to life’s most important question exist in the depths of loss, vulnerability, and ultimately, learning to let go.” Samra explains that “the answers to life’s most important question — why are we here — exists not in what we do or achieve, but in the depths of loss, resilience, vulnerability and ultimately learning to let go. We discover that we’re all here for one purpose alone: to heal and to help heal each other. Samra reveals humility, hope, and courage and offers a radical re-frame of what it means to be a man, and in fact, a human.” (Run time 18:16)

Breathe Easy: The first promotional video for Bassem Youssef’s new show, Democracy Handbook, is out. Youssef appears in the satirical sketch with a “solution … more accurate than a drone strike” for Westerners on how to cope if their neighbourhoods are becoming “too Muslim.” (Run time 03:08)

The “I told you so” episode: Gimlet’s Surprisingly Awesome podcast told us they could make anything awesome and their most recent episode is about the “I told you so” part. The problem with someone who overuses her “I told you so’s” is, according to producer Adam Davidson, “you go from soothsayer, someone who can see the future, to just a know-it-all jerk.” The list of things ranges from political predictions made by Ralph Nader, to NBA star Kevin Durant’s career prospects, and, of course, Justin Bieber. (Run time 52:44)

Hiding funds in plain sight: NPR’s Planet Money tackles the issue of money laundering and hiding funds generally in real estate. An fancy apartment can be turned into a giant piggy bank or secret vault, Ilya Marritz says. “So let’s say you’re a drug lord or an arms dealer or something like that, all you got to do is set up an offshore company, put your money in that offshore company and then use the company to buy some big-ticket item. And what’s better than luxury real estate?” (Run time 18:27)

Could financial instruments be better used to mitigate global cyber warfare? Wired’s security correspondent Nathan Bruschi believes so by developing what he calls Cyber Bonds. Taking inspiration from the catastrophe bonds which came in the wake of Hurricane Andrew, these bonds would securitize the risk involved with cyber attacks and spread it globally to act as a deterrent for countries like Russia and China, which have actively used and encouraged the use of cyber attacks for political and economic goals. Companies and facilities that are deemed critical to the economy would pay premiums into a national insurance pool from which damage claims for cyber attacks would be drawn.

Each country would then securitize its insurance pool on the private market, creating country-specific Cyber Bonds and then agree to buy an untradeable basket of each other’s Cyber Bonds which would be held in their sovereign wealth funds. With every cyber attack and insurance payout, the value of a target country’s bonds will depreciate and make a dent in the country sponsoring the attack’s budget since it holds some of these, incentivising them to actively end these attacks. Why would these countries agree to this? Bruschi suggests that by protecting large institutions such as Deutsche Bank and Citigroup, major banks in other countries would want in. Excess Cyber Bonds could also be made available for investors to buy and trade on the secondary markets.

Canadian scientist wants to make brain checkups routine: British Columbia-based neuroscientist Ryan D’Arcy is spearheading a push to make scanning brainwaves a crucial part of your normal checkup at the doctor’s office. D’Arcy his team at his NeuroTech Lab, based at Surrey Memorial Hospital, say they’ve designed a way to quantify and measure brain waves based on a scale of 30 (30 showing the best brain activity), eliminating some of the inaccuracies of the electroencephalogram, or EEG, which monitors electrical activity of the brain. This would allow doctors and scientists to track and measure your brainwaves over time and extract useful information from them. D’Arcy’s new system isn’t necessarily intended to help those with brain injuries, or at least, not only them. It’s about tracking and monitoring healthy people, in a manner similar to checking one’s blood pressure. While he insists to Vice: Motherboard that this tech should be in every GP’s office, but seemed to shrug off the crucial question of what to do with that data once it has been extracted. In other words, how would a healthy brain benefit from being scanned at every doctor’s office? Food for thought.  

Ideavelopers principal Ziad Mokhtar raises USD 40 mn of USD 50 mn Egypt venture capital fund Algebra Capital: Ziad Mokhtar, a principal at Ideavelopers, the venture capital arm of EFG Hermes, has so far raised USD 40 mn of a USD 50 mn venture capital venture fund named Algebra Capital, according to his comments at the Road to Global Entrepreneurship Summit on Wednesday, Wamda reports. The fund will target Series A and B investments in technology startups in Egypt, with an aim of closing the first investments in August of this year. About a quarter of the funds raised raised have reportedly come from the Egyptian American Enterprise fund, and should not be confused with Ideavelopers’ own USD 50 mn in capital, all of which has been invested.

Profile of Leslie Jump, Founder and CEO of Startup Angels: Huffington Post’s Anne Ravanona profiles Leslie Jump on her 25-year career in building and investing in startups. Jump was formerly a Partner at Egypt’s Sawari Ventures, where she still serves in an advisory capacity, and is also an advisor at Flat6Labs, in addition to running her own DC-based Startup Angels. “What is your greatest achievement to date? [Jump]: I was fortunate to be part of the leadership team when the commercial internet was launched. It was 1994 and within 10 weeks we were shipping software (the equivalent of Microsoft Outlook). We launched the first e-commerce site and helped ignite the spark of more broad based interest in the Internet, raising collective consciousness to where it is today. We did the first OEM deal for the Netscape browser (with Marc Andreessen) and helped put them on the map.” (Read Trailblazing women: Leslie Jump, Founder & CEO of Startup Angels)

With Facebook co-opting news media, Amazon controlling book sales, Netflix and Youtube taking over video, and the smartphone industry directed by Apple and Google, there is a global backdrop of social anxiety, and it’s caused by US tech giants. European governments have led an effort to limit the reach of tech companies through privacy regulation and antitrust investigations. “The European efforts are just a taste of a coming global freak-out over the power of the American tech industry…What is happening in Europe is playing out in China, India and Brazil and across much of the rest of the globe, as well,” writes Farhad Manjoo for the New York Times. Coining the term “The Frightful Five” in reference to Facebook, Alphabet, Microsoft, Amazon, and Apple, Manjoo says these companies have created a set of inescapable tech platforms that govern much of the business world. The five have grown expansive in their business aims and invincible to just about any competition.

For all the disruptions, good and bad, the Frightful Five are founded and headquartered in America, and espouse American values like free trade, free expression and a skepticism of regulation. In the rest of the world, however, the Americanness of the Five is seen as a reason of fear, not comfort. The bigger they get, the less room they leave for domestic competition, and more room they leave for spying by the US government, says Manjoo. Globally, they could get so entrenched in world economies that they impose their own laws.

The most-clicked stories in the Egypt edition of Enterprise in the past week were:

• New executive regulations for the Electricity Act (full text) (Official Gazette, pdf download)
• The Fragile Five’s money-losing oil production (Financial Post, infographic) (tie)
• Luxury watches (with a special focus on a Magician’s Box once in the collection of King Farouk, midway down the page) (Financial Times) (tie)
• Football commentator Ahmed Shobeir loses it on Wael El-Ibrachy’s show (Youtube)
• Egyptian migrant worker beaten, humiliated in Kuwait (man alleged to have been the assailant has since been arrested) (contains graphic content; Youtube)
• The Untold Story Behind Saudi Arabia’s 41-Year U.S. Debt Secret (Bloomberg)

The most-clicked stories in the GCC edition of Enterprise in the past week were:

• Egypt blocking Iran’s access to the SUMED oil pipeline on suspicions of GCC pressure (Reuters)
• Abu Dhabi govt may act to address property glut -official (Reuters)
• The untold story behind Saudi Arabia’s 41-year US debt secret (Bloomberg)
• Fragile five money losing oil producers whose cost of production far exceeds current oil prices (View image via Financial Post)
• Announcement of Saudi’s sovereign wealth fund investing USD 3.5 in Uber (Saudi Press Agency)

The New York Times’ Cooking section is really upping its game, with the latest installment to catch our eye being a collection of recipes that lets you cook takeout favourites at home. Think: California-style pizza, takeout-style sesame noodles, Buffalo chicken wings and General Tso’s chicken. We feel a stop at Gourmet in our immediate future…