The doom of the capital markets at the crossroads of the new ventures booming.
I feel like we are watching the Attack of the Clones, the second episode of the Star Wars series, when I think of our finances and money matters. March 2020 was the first episode, the Phantom Menance, where we first met with the legendary Darth Vader — as the pandemic! The capital markets were hit hard. There was little hope but lots of money. Then we managed to ride this wave with the help of Obi-Wan Kenobi (Central Banks) as he was training the young Aniken Skywalker to become a master Jedi — the access liquidity pumped into the markets. Well, unfortunately, he ended up being one of the darkest figures in the Universe.
This is my version of the capital markets story under access liquidy in the last decade. And the next episode will be the Revenge of the Sith. The capital markets will strike back. Will they? Well, maybe, but will they last? Just before answering this question, let me remind you where we are;
Inflation is soaring, interest rates are rising, S&500 is plunging, and all the major global stock indices follow through. There is a cost of living crisis and supply and chain problems worldwide. The debt markets are struggling. Businesses are setting the stage for the doom days s ahead. Meanwhile, there is a rapid change at work and a scarcity of competent workers capable of working in the new digital era. Artificial intelligence is hiding around the corner, and I guarantee we will see an early version of r2d2 soon. C-3PO is almost there! Nations are scared to death and fighting with each other.
We are at a crossroads from where I see this picture. We are observing one of the keenest transformative eras in human history. Almost 300 hundred years old capital markets establishment is tumbling under tech’s disruption forces. Something is going on, much more profound than we think.
So, let me take you to the fourth episode of the Star War series, A New Hope. That is where the story begins for all the comrades at my age — the first-ever Stars Wars movie. In the film where Luke destroys the Death Star in the end — the first battle was lost for the establishment.
Some forces are taking over the capital markets in a way we have never seen before. As I said, A New Hope is rising. A much collective one.
How will you know?
King’s Cross
In his scene, I will take you to the streets of London, where the rock-solid financial establishment settled in the City for centuries. Even occupied the Canary Wharf with New York-style estates nesting the banks’ resources. London is a remarkable centre for global trade and finance. It is in the City’s soul. Even there is a district in the City called Bank. You get the idea. If you want to discover global trends, the streets of London will help you a lot.
When you walk northwest of the City of London, you will find the historical St Pancras terminus and Old Church — known as one of Europe's oldest places of Christian worship. In the 19th century, the area was named King’s Cross and mostly stayed a rural and polluted landscape. The Regent’s Canal, the rails and the roads to the north made the area develop as an industrial crossroads. In the later part of the 1990s, the area became known for its nightlife and was something of a hub for artists and creative organisations. However, problems of crime, unemployment and a poor-quality environment undermined King’s Cross.
Meta and Facebook HQ
In the 21st century, the King’s Cross’s perception has changed. Significant environmental changes exist, and the area is emerging as a centre of attraction for Big Tech and the digital creative era. King’s Cross has seen an incredible flow of investment from Meta of Facebook, Google, DeepMind, Samsung, Universal Music, and many other scrappy startups and world-class research institutes. I visited the CogX conference the other day. It is a massive emerging tech and AI festival on the streets of old Coal Drops. The transformation of King’s Cross has been rapid and remarkable.
Tech hub
What I see is that King’s Cross has been developing as Europe’s most prominent and buzziest tech hub. This vibrancy is the physical transformation of the street.
On the other hand, King’s Cross is like a symbol of the “new normal.”
It is rising at the crossroads where capital markets meet with private equity and venture financing. Banks versus fintech. Established markets versus emerging technologies. The battlefield is set in the origins of the historical Battle Bridge war of Boudicca, the warrior queen of the Iceni and Roman invaders in the 1st Century. I could hardly name a place better than this.
Besides, there is also Eurostar now :)
Epilogue
Neither the pandemic nor the cost of living crisis is the Death Star. These shall, too, pass. The fundamental transformation is the erosion of the established capital markets under the influence of big tech.
The metrics, the benchmarks and the success criteria are changing.
The business models are changing.
The workplace is changing.
It is a different ball game.
It requires a new mindset.
It is bottom-up!
If you are in finance, you know what I meant. If not, just do not follow the crowd. They will take you down.
We will see many rebel Lukes trying to destroy the Death Star.
Some of them will emerge as venture capitalists, some as entrepreneurs, and many as the new corporate rebels in the collaborative commons.
And they all know what they stand for.
Obviously, the Empire will Stike Back.
You better find your lightsaber.
Let the force be with us.
