ITK Daily | March 11

Happy Saturday.

Here’s today’s ITK Daily.

To be ITK, know this:?

Saudi Arabia, Iran restore relations in deal brokered by China: WSJ reports the deal marks a diplomatic victory for Beijing in a region where the US has long dominated geopolitics.

Saudi Arabia and Iran agree to re-establish ties in talks hosted by China: NYT reports the agreement between the regional rivals was facilitated by China, underlining the country’s growing economic and political importance in the Middle East.

China brokers an Iran-Saudi rapprochement: But the deal will not end the countries’ proxy war nor cement China as the region’s new powerhouse.?Economist

Burkina Faso's junta tightens its grip: Political parties, human rights defenders and journalists condemn a limitation of freedoms and an increase in abuses on the motive of fighting terrorism.?Le Monde

+ The Burkinabe President called on the media to use communication techniques aimed at "galvanizing soldiers"

‘We are daring to invent the future’ — the generation that rewrote Africa’s story: The novelist Petina Gappah on a group of writers who put a fresh, modern vision of Africa out into the world.?FT

+ We want to share our stories with our audiences at home in Africa, but we recognize that power lies in the traditional centers of publishing — New York, London, Frankfurt, Stockholm, Paris.

+ It is a magical meeting of young ambitious people bursting with talent, and ideas. We are touched with fire. Our conversations are loud and liquid. In Lamu, Martin Kimani invents a word, “whiskerish”, to describe our Scotch-fuelled arguments.

+ Our politics are pan-African, but not in the sense of the dictators we disagree with. Our heroes are those who died young, whose Africa never came into being: Patrice Lumumba, Thomas Sankara, Tom Mboya. Touched with fire, we are daring to invent the future.

+ The success of African writers in the west has had a positive impact on publishing and literary production at home in Africa. In the wake of this, an ecosystem of intrepid publishing companies has evolved on the continent, with many successfully negotiating to be the African publishers of works originally published in London or New York.

What will it take to connect the Arctic? $1.2 billion, 10,000 miles of fiber-optic cable, and patience: For years, Arctic cable routes have been planned, scrapped, and delayed. A trio of companies, including Finland’s Cinia, remains determined to try.?WSJ

+ The Arctic is one of the world’s last digital frontiers. Subsea fiber-optic cables, which carry over 99% of intercontinental voice and data traffic, have traversed most of the world’s oceans, but so far not the Arctic Ocean, historically limited by the region’s ice sheet.?

+ As that ice sheet has started melting due to climate change, telecommunications companies have looked to the area—where Asia, Europe and North America are closer than they are at any other point on Earth—for a shorter, potentially more efficient route for data flows across the three continents.?

+ An Arctic route would offer the shortest connection between London and Tokyo, carrying implications for industries like financial trading, where milliseconds can make the difference between profits and losses.?

+ The planned far north fiber-optic route will contain between 12 and 16 fiber pairs, with each pair having a capacity of 15 terabits per second.

+ Cinia, which is owned 77.5% by the Finnish government, is already a veteran of one failed effort.

+ The new cable must earn more than $80 million annually during its roughly 25-year lifespan to be profitable, Cinia said.

+ Nearly all subsea cables that connect Asia and Europe go through Egypt, but that path is also a common route for shipping, which is the second most common cause of cable failures, said Paul Gabla, chief sales and marketing officer at Alcatel Submarine Networks.

+ “If you would have asked 30 years ago people how many mobile phones they need, everybody would have guessed wrong. If you don’t have something, very few people really can have the imagination to understand the need.”

The four largest legislative bodies in the world:

1. China: National People's Congress with 2,952 members.

2. United Kingdom: House of Commons with 650 members.

3. United States: House of Representatives with 435 members.

4. New Hampshire: House of Representatives with 400 members.

Bloomberg: Xi’s third term as president cements effort to consolidate power

+ Chinese leader wins another five-year term with a 2,952-0 vote.

+ Xi has been dropping his party’s collective leadership style.

From wooing Tesla to Xi’s right-hand man: Li Qiang’s road to China’s premiership: Beijing’s new number two known for cultivating business ties as Shanghai party boss before imposing sweeping lockdown.?FT

+ Li and his economic team will need to devise a new growth strategy to replace China’s flagging debt-fuelled model while overseeing a sweeping restructuring of the state, including the financial regulators, announced this week.

+ The Shanghai lockdown has been widely interpreted as a display of fealty to Xi, who had repeatedly emphasized the importance of the zero-Covid strategy before the policy was abandoned in December.

+ “The Shanghai lockdown showed that when push comes to shove, Li Qiang will do whatever Xi Jinping wants,” said Neil Thomas, a China analyst who this month will join the Asia Society Policy Institute’s Centre for China Analysis in Washington.

+ A newcomer to the national stage, Li Qiang will need to build alliances in Beijing. But Xi, ever careful about his position at the head of the party, is expected to keep Li on a tight rein, analysts said.

+ “The potential for unpredictability is going to remain a chronic risk with Xi in charge and especially with a leadership team comprised entirely of his allies. Xi’s policies will be implemented for good or bad under Li Qiang.”

China’s faith in all-powerful Xi shaken by chaos of COVID pivot: After imposing three years of sacrifice, Xi Jinping’s government let Covid tear through the population in two months. Moving on won’t be easy.?Bloomberg

Sunak and Macron seek Indo-Pacific team-up at Paris summit: Politico reports UK and French leaders will talk about challenge posed by China — but don’t expect a big migration agreement.

Sunak and Macron hail ‘new chapter’ in UK-France ties: Politico reports the British and French leaders talk up ‘moment of reunion,’ and unveil a new plan to tackle cross-Channel migration.

‘Chipper’ Rishi Sunak gives Tories a new sense of hope: After a difficult two weeks, the prime minister says his strategies are bearing fruit.?The Times

+ One Tory MP who has been critical of Sunak in the past conceded that matters had improved and that there was now an unexpected feeling within the party — hope. “The mood of the party is in a much better place,” they said. “Everyone knows it’s still going to be a rough year but there’s a sense that perhaps this can turn around.”

Sir Graham Brady: The smiling assassin who saw off 4 prime ministers: As 1922 boss bows out, here’s how Tory psychodrama turned a backroom operator into an internationally recognized figure.?Politico

Emmanuel Macron to receive Viktor Orban on Monday at the Elysée Palace: Le Monde reports Orban has been an outspoken critic of Europe's stance on the war in Ukraine, accusing it of waging an 'indirect war' on Russia.

Chile’s busted tax reform bodes ill for Latin America: Without stronger social safety nets, the region will face deeper poverty and inequality and greater turmoil and unrest.?Eduardo Porter

USA-CAN: Joe Biden is heading to Canada for his first in-person visit as US president on March 23 and 24.?

AP: Mexican president to US: Fentanyl is your problem

Biden moves to recapture the centrist identity that has long defined him: NYT reports after two years championing progressive priorities, the president is speaking more to the concerns of the political middle as he prepares to announce a campaign for a second term.

‘Don’t be fooled’: Why leading GOPers are taking aim at both Trump and DeSantis: The ex-president has his rock-solid core and little else. The real GOP fight is over who should emerge as the best alternative.?Jonathan Martin

Trump is losing his grip on the grassroots: A new survey of GOP leaders shows Ron DeSantis edging out the former president.?Seth Masket

DSM: Iowa Poll: Donald Trump’s Republican support erodes in Iowa, even as many remain committed

Ron DeSantis is definitely running: He presents himself as a serious, forward-leaning, pro-business, antiwoke conservative Republican.?Peggy Noonan

+ The first GOP presidential debate is five months away, in August. Primaries begin about six months after.

+ The Florida governor is definitely running.

+ As I watched the Reagan Library speech I thought: This candidacy is going to have power. He wasn’t inspired or eloquent but plain-spoken and brisk; his address was workmanlike, from notes, but all together it packed a punch.

+ Governors, he observes in his book, “The Courage to Be Free,” have to deliver.

+ He is a culture warrior, but between the lines he suggests he’s also pragmatic, practical and gets things done.

+ A political veteran present before and after the library speech found Mr. DeSantis impressive but saw a weakness: “He’s on ‘broadcast’ almost all of the time, not ‘receive.’"

+?“But my sense is that he’s thinking about what he’s next going to tell you, not what you’re going to ask.”

+ Still, in the end the veteran sensed something electric. “You know that feeling you get when you’re in a room and it’s obvious to every person in that room, from 10 people to 5,000, that ‘No kidding, this guy really could be a president’? He’s got it.”

+ Two DeSantis question areas:

+ First, his temperament. Does he connect with voters on the trail? How does he play it when he gets smacked around in debate?

+ Second, can he learn to explain his thinking? He tends more to announce decisions than explain how he got there.

+ You’re not stooping when you explain your thinking, you’re spreading.

A glimpse of DeSantis in Iowa: Awkward, but still winning the crowd: Gov. Ron DeSantis of Florida visited Iowa on Friday, providing a window into his still-untested skills as a retail politician.?NYT

+ His preference for policy over personality can make him seem awkward and arrogant or otherwise astonishing in person, depending on the voter and the success or failure of his one-on-one exchanges.

+ Many Republicans view his style as an antidote to the character attacks and volatility that have underscored Republican politics during the Trump era.

+ Unlike Florida, where elections are often won or lost on the strength of carefully crafted multimillion-dollar TV ad campaigns, the Republican presidential primary remains front-loaded with contests in states like Iowa where voters value personal interactions.

+ DeSantis seems determined to keep an arm’s-length distance as he introduces himself to voters, and his Iowa events showcased both his strengths and his weaknesses.

+ He’s at his best standing in front of a camera armed with studied talking points.?

‘Palpable fear’: DC’s newest rail safety push faces a tough opponent: Politico reports the Biden administration wants a host of changes intended to shore up rail safety — but they won’t come without a fight from the powerful railroad industry.

Big Railroad is a government relations and cultural powerhouse.

The US railroad industry has been lobbying the US government since the 1820s.

Plus, there is the 100-year-old tradition of placing train sets under Christmas trees - no other industry or service enjoys this cultural talisman.

AP: Silicon Valley Bank is seized by US after historic failure

WSJ: Silicon Valley Bank collapses following run on deposits

WP: Silicon Valley Bank failure raises fear of broader financial contagion

Bloomberg: SVB spectacularly fails after unthinkable heresy becomes reality

How one bank’s collapse reflects a broader anxiety in Silicon Valley?Adam Lashinsky

+ At another level, the bank’s swift fall had everything to do with its clubby clientele of Silicon Valley start-ups and the venture-capital and private-equity firms that fund them.?

+ That its collapse coincided with a moment of intense anxiety in the tech industry is no accident.

+ It became an article of faith among start-ups that once you secure funding, you put that money in SVB, as everyone here calls it.

+ As with so many other aspects of the tech ecosystem, start-ups did exactly what successive generations of their forebears did by banking with the institution that understood them best.

+ The bank’s collapse, then, had nothing and everything to do with its eggs-in-one-basket reliance on local tech firms.?

+ No bank ever has enough funds to allow every customer to pull out its money at once. All it took to do in SVB was the legitimate concern among enough customers that they would never see their money again.

+ The implosion is only the latest example of a generation of executives used to operating in a low-interest-rate environment getting caught in a crosswind with which they had no experience.

+ Once the shareholders of what was Silicon Valley Bank are partially or totally wiped out, the bank’s business likely will be a tasty target for an established player wanting to invest for the long haul in the technology industry.

Why was there a run on Silicon Valley Bank??And how will this affect startups and the financial system??Noah Smith

+ If you’re a startup founder, why would you stash your cash in a small, weird bank like SVB instead of a big safe bank like JP Morgan Chase, or in T-bills??

+ This is actually the biggest mystery of this whole situation. Some companies put their money in SVB because they also borrowed money from SVB, and keeping their money in SVB was a condition of their loan!?

+ For others, it was a matter of convenience, since SVB also provided various financial services to the founders themselves.?

+?For yet others, it might have just been vibes and hype — maybe you used SVB because you’re a startup, and that’s just the bank that startups use, duh!

+ And also groupthink — about half of all startups used SVB, according to some reports, so maybe people put their money there because their friends and acquaintances did too.

Event of note: The Future of PR Technology?hosted by USC Annenberg on March 30. Register?here.

The Messenger, a media start-up, aims to build a newsroom fast: The company, which will begin operating in May, plans to have around 550 journalists covering entertainment, politics, and sports within a year.?NYT

+ The Messenger, a news site that will cover politics, business, entertainment and sports. Financed with $50 million in investor money, the site will start with at least 175 journalists stationed in New York, Washington and Los Angeles, executives say.

+ Richard Beckman, a former president of The Hill and Condé Nast who will be The Messenger’s president, said in an interview that the company planned to generate more than $100 million in revenue next year, primarily through advertising and events, with profitability expected that year.

+ To build its digital audience, the company has hired Neetzan Zimmerman, who has been a digital traffic maven at The Hill and Gawker Media, and is expecting more than 100 million monthly readers — an ambitious goal that would make it one of the most-read digital publications in the United States.

Meta working on 'text sharing' network to potentially rival Twitter: AFP reports Meta confirmed on Friday that it was beginning to work on the new platform.

How one guy’s car blog became a $1 billion marketplace: Bring a Trailer is where obsessives buy, sell, and geek out over classic cars. The company pops open its hood after 100,000 auctions to explain why.?WSJ

+ The site’s popularity has less to do with the cars themselves and more with the way that Bring a Trailer tinkered with the underlying mechanics of a business.

+ A hybrid of Craigslist, eBay, Reddit and Sotheby’s that facilitated $1.37 billion in sales last year.

+ It’s a business formula based Nonnenberg’s own experience as a consumer. He didn’t trust anyone selling cars—and he especially didn’t trust anyone selling cars online.?

+ Legacy auction houses generally charge sellers a negotiable 10% fee and take a roughly 10% commission from buyers. But on BaT, sellers only have to pay $99 to list their cars, and the 5% cut from buyers is capped at $5,000.?

Mitsubishi Motors' entire line-up will be electrified by 2035.

How Lego beat Barbie and Monopoly: Maker of toy bricks reports rise in sales, pushing further ahead of US rivals.?WSJ

+ The 90-year-old Danish company’s performance stands in contrast to the downbeat results of other leading toy makers, which blamed the economic volatility and soaring inflation of last year for sluggish sales.

+ The company opened 155 new stores, many of them in China, over the course of the year, offsetting the decision to close its 81 stores in Russia in the wake of the country’s invasion of Ukraine. Overall, the company said it reached a total store count of 904.

US apparel companies can’t see a future without China: Brands are finding few factories outside the country that can produce the quality and quantity they require.?Bloomberg

+ Producers of lower-tech, lower-margin products such as clothing, shoes, housewares and luggage are finding that few factories outside China have the machinery or the skilled workforce to, for instance, sew what’s known as a six-needle, flat-seam stitch—needed for Actively Black gear like sports bras and shorts because it doesn’t chafe skin.

+ Along the 80-mile stretch from Shenzhen to Guangzhou, companies can weave, dye, sew, trim, label and package anything from T-shirts to tuxedos.

+ China’s investment in highways, railroads, air hubs and seaports has created a smooth path from factory gate to consumers worldwide.?

+ “Twenty years of concentration of manufacturing has created this, and busting it apart and moving it to other places on the planet is really hard,” says Kurt Cavano, chief executive officer of Nimbly Inc., a software platform that connects clothing brands with factories and suppliers.

+ The dominance of some Chinese suppliers can make it difficult to find alternatives. Textile manufacturer Texhong International Group and its dozens of subsidiaries account for almost two-thirds of global trade in certain grades of cotton-spandex materials, according to researcher Altana Technologies.

+ “China is still the workhorse with regards to fabric. Everyone is finding it difficult to move a lot of things out of China because China does so many things so well. The expertise is there, the equipment is there.”

French cognac is flowing in American rap music: The love affair between rappers and the Charente liquor began in the 1990s and turned it into a popular drink in the US. Stars like Jay-Z, 50 Cent, and Snoop Dogg have even invested in their own 'yak.'?Le Monde

+ The brown spirit was indeed embraced on a massive scale by GIs who fought in France during the first and second world wars.?

+ "We know Hennessy cognac was present much earlier on American soil, as early as 1794," explained Fabienne Moreau, the historian in charge of the brand's heritage.?

+ "But when they came to France, the soldiers discovered a country where racial equality was institutionalized. Black jazzmen could play freely in the clubs. Cognac ended up embodying these values of equality and freedom. And it became a marker of identity: It is the anti-whisky, which was seen as the alcohol of White people."

+ Cognac's historical roots in the Afro-American community have benefited from an unexpected development. Since the 1990s, rappers across the Atlantic have become the most powerful advocates for this traditional alcohol from Charente, in southwestern France.

+ Hennessy calculated that on YouTube alone, listeners had heard the word "Hennessy" more than 20 billion times in the last three years.

Hollywood strikes back against streaming: Big studios are betting that cinemas will rebound fully from the pandemic, but some fear for the future of smaller-budget films.?FT

Wild Life: From Oscar-winning filmmakers Chai Vasarhelyi and Jimmy Chin, Wild Life follows conservationist Kris Tompkins on an epic, decades-spanning love story as wild as the landscapes she dedicated her life to protecting. After falling in love in mid-life, Kris and the outdoorsman and entrepreneur Doug Tompkins left behind the world of the massively successful outdoor brands they'd helped pioneer -- Patagonia, The North Face, and Esprit -- and turned their attention to a visionary effort to create National Parks throughout Chile and Argentina. Watch the trailer?here.

+ Wild Life hits select theaters on April 14 and will be available on National Geographic Channel on May 25 and Disney+ on May 26.

The way Americans watch local sports is about to change: The once-thriving regional-sports TV industry is suffering. The financial unraveling could hasten a shift to a direct-to-consumer model for live sports.?WSJ

+ The financial unraveling of the once-thriving regional-sports TV industry could hasten the shift to a direct-to-consumer model for live sports, giving people who don’t have cable TV the ability to stream the games of their favorite local teams.?

+ The transition will test whether streaming can prove to be a viable substitute for traditional TV channels, given that these local-sports streaming platforms likely will have to charge subscribers more than Netflix Inc. and Disney+ to be sustainable.?

+ Executives at Diamond believe that the economic model that underpinned regional sports broadcasting for decades is no longer viable and that all parties should prepare for a future in which it pays lower rights fees, people familiar with the company’s plans said.

+ The stakes are high for baseball teams, which can get between 20% and 50% of revenue from local TV rights deals, people involved with the industry said. That revenue trickles down to what teams could spend on player salaries and operations.

After the NBA, JR Smith was lost. Golf became his guide.?Smith was bored and confused when his basketball career abruptly ended in 2020. His search for self took him to a golf team at an HBCU.?NYT

+ Basketball was all he’d known in his adult life. But soon he had a new thought: Maybe it was time to go back to school.

+ “Respect. That’s what I like about it the most,” Smith said of golf. “You’ve got to put the time in. You ain’t just come out here and think you’re Tiger Woods.”

Enjoy the ride + plan accordingly.

-Marc?

Marc A. Ross | Chief Communications Strategist @ Caracal

Caracal produces ITK Daily.

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