Covid-19

"In the boom days, I was not some sort of ideologue or business guru with strict rules governing what I was doing. My business strategy in terms of all the leverage I was taking and the deals I was doing was not a model I set out with. I went to Russia, saw the opportunity and figured out the easiest way of capturing it, which happened to be leveraged deals. Then I went back to Iceland, saw that banks there and in London were throwing cash at me and wanted to find a way to put the maximum amount of cash to work, so I looked for larger deals with opportunities for higher levels of gearing. Now my world and the financial world in general have changed and this modus operandi has evolved, mostly moving to unlisted companies and technology-focused venture capital. A lot of banks, for example, still have a lot of bombed-out assets which now present opportunities. Also, as a result of the crazy zero-interest-rate environment engendered and perpetuated by Covid-19, many businesses cannot operate in a real interest-rate environment, let alone one coupled with significant inflation. I will therefore try to partner up and use the capital that’s already in the system to try to revive some of these businesses. This is where the opportunities will be for my financial storm-riding in the future. We are in the midst of a major market correction, which is painful to many of my portfolio companies. I will have to try to dodge bullets again – but it will also throw up special situations, which I always find to be the best source of truly unique investment opportunities."

"On a deeper level, I think what I had to deal with was a classic case of ‘unknown unknowns’. The terms ‘known unknowns’ and ‘unknown unknowns’ come from risk management and decision theory but were popularised by Donald Rumsfeld in a 2002 press briefing. Known unknowns are things *we know we don’t know*. We’re aware of the gap in our knowledge. For example, if you’re planning a project and know you don’t have weather data for the construction site, that’s a known unknown. You know weather could impact your timeline, but you just don’t have the specifics yet. Since you’re aware of them, you can plan for them, mitigate them, or gather more information. The really interesting bit, however, is unknown unknowns: things we *don’t even know* that we don’t know. They’re the surprises, the blind spots and therefore the most dangerous pitfalls for strategic planning. They are harder to prepare for because they fall completely outside our awareness. As humans we also have cognitive bias: we’re often too focused on what we already know or what we expect to learn, but we’re blindsided by things outside that. The Covid-19 pandemic is a textbook example of an unknown unknown. The scale of global shutdowns, cascading economic impact and unexpected effects was and is extraordinary, and the after-effects are still trickling through everywhere."