* A list of recently unlocked essays from the archive
📓 What a journey! My first encounter with Azeem Azhar, writer of theExponential View newsletter and author of the recently published eponymous book Exponential, happened on Twitter a few years back, right after I had settled in London with my family. At the time, I think Exponential View was in its infancy and Azeem was still writing a regular column for the Financial Times.
* We exchanged messages on Twitter about the future of trade unions—which ended up inspiring me with the idea of “exit unions”, discussed here and here, as well as in my book Hedge.
And that is how the connection was made. I believe Azeem and I have only met once IRL, but we’ve kept reading each other, and then Azeem invited my wife Laetitia Vitaud and me to contribute one of the summer editions of Exponential View, which we dedicated to... the future of workers’ rights and trade unions in the platform economy. You can read it here: EV #179 Platforms & workers.
* More recently, Laetitia was a guest on Azeem’s own podcast, an episode dedicated to discussing craftsmanship as the best paradigm to imagine the future of work. Here’s the link: Technology and the New World of Work 🎧
It was only logical that with Azeem publishing a book (his first!), he had to be a guest on our own Building Bridges podcast. Here’s what Laetitia wrote about their conversation:
The pandemic provided us with ample evidence about our being ill-equipped to grasp exponential change. At the beginning of each new wave of contamination, policy makers fell into the same cognitive trap. They ignored exponential growth at the beginning. The early points on any exponential curve look so unimpressive at first that everybody (except for epidemiologists or financial experts) will fail to pay attention to it. So people aren’t ready to adapt to exponential change.
At school, classes are often taught as if Google and Youtube didn’t exist. Our tax systems largely ignore the specifics of our digital economy and fail to properly grasp the value created by digital giants. Labour unions fail to target the growing precariat of our day and age. More people fall through the cracks of the safety net we designed for the industrial age. Even the way we measure and analyse economic value is more and more beside the point. The list could go on and on…
That’s why I was particularly satisfied to find out that this gap had been given a name: the Exponential Gap. In [his] must-read book titled Exponential, Azeem explains that in our Exponential Age, technological change is exponential whereas institutional change is only linear, which results in a fast-growing gap between the two.
👉 You can listen to Azeem and Laetitia discussing the advent of the Exponential Age using the player above 👆 or on Apple Podcasts or Spotify.
Bonus: For those who prefer to listen to French, Laetitia and I will discuss Azeem’s book in the next “À deux voix” episode of our Nouveau Départ podcast, to be published tomorrow. Time to subscribe to our French-speaking platform 🇫🇷
🇫🇷 Last week was quite big for French startups, with a handful of them announcing unprecedented megarounds over the course of just 48 hours. This is the topic of my latest column in Sifted, published this morning, in which I make two points:
* Yes, the French entrepreneurial ecosystem is starting to compound, with the first generation of successful entrepreneurs finally paving the way for the next generations, following a process well documented by analysts of successful entrepreneurial ecosystems.
* However, we should be wary of a typical French trait known as “toxic positivity”: the idea that everything is going well, everyone is doing things right, and France will inevitably grow its own tech giants—like it once grew landmark companies like LVMH, L’Oréal or Air Liquide.
Put simply: there’s no guarantee that because a country was among the most advanced in a given paradigm (that of the Fordist Age), it will remain so in the next one (the Entrepreneurial Age). French founders have to keep pushing, looking outward, and connecting with the rest of the world.
😀 Echoing my early discussions with Azeem about the future of trade unions, here’s a fantastic contribution by Li Jin (alongside Scott Duke Kominers and Lila Shroff), recently published in Harvard Business Review. This niche topic has become a global conversation, effectively in sync with profound transformations on the labor market. Read more in A Labor Movement for the Platform Economy.
🙂 A gem I discovered: Tyler Cowen on reading fast, reading well, and reading widely. You might remember Tyler being a guest on the Building Bridges podcast a few months ago (here 🎧). He’s known as one of the most effective and efficient readers there is. In this article, discovered via Trevor McKendrick, he explains his approach to books and to absorbing what’s in them.
😏 This tweet was my most popular in recent memory: worth reading the thread, and the article that’s linked in it—a discussion between George Kankou Denkey and Howard French about urbanism in Africa:
While it lasted, the West — not in an ethnocentric but in a normative sense — made the world, on balance, a better place. Its ongoing fragmentation therefore bodes ill for stability and peace. The U.S. should keep trying to salvage this West, even as others, like the U.K. and Australia, are wise to draw up a Plan B. But ultimately it’s the Europeans who have to decide what they want — and then do what it takes to become credible.
This speaks to a broader economic shift that has dented the need for expats. Once upon a time they used to be the ones able to facilitate access to foreign capital and know-how, often from Western sources. Now money is abundant and the most exciting business opportunities are emerging markets doing business with other emerging markets, particularly in Asia. You don’t need a Westerner to show you how to do that. The world they understand is no longer as relevant.
😖 For a few weeks, everyone was wondering if the fall of Chinese real estate behemoth Evergrande would precipitate a global financial crisis. It appears China tackled the matter and prevented the situation from degrading further. The whole episode was an opportunity to learn more about real estate in China as well as the (mostly negative) role it plays in economic development. I loved this essay by Noah Smith (paywalled, but worth subscribing!): China's real estate trilemma 🇨🇳
China’s government now has to decide what to do, and quickly. It doesn’t lack for policy options. The problem is that there are a number of competing concerns here, and figuring out which to prioritize is not an easy problem. Basically the three concerns are: 1. Short-term economic growth; 2. Middle-class wealth; 3. Long-term productivity growth and structural economic transformation. Let’s talk about all three of these goals, and why China probably can’t accomplish all of them at once.
📚 I unlocked twomore essays from the European Straits archive recently:
* since these two radically different playbooks co-exist, maybe there are many others;
* in particular, there must be such a thing as a European playbook, which we still have to discover.
When I voice this thesis, people immediately jump to the next round of questions: What’s this uniquely European playbook? What makes Europe different from the US and China? What are our strengths and how can we Europeans play on them?
This, I must say, is the holy grail of investing in Europe. Any investor with a deep understanding of what makes Europe unique has an edge over US competitors and any locals that don’t know how to do anything other than to emulate Americans.
* Plus, learning to differentiate your approach to the market in Europe is good training for doing the same in the many other regions in the world where successful tech companies are now growing at a fast pace. Again, the key to success in venture capital at the global level is not to replicate the same approach everywhere, it’s to understand the local context and adjust investment decisions accordingly. It’s true in Europe, but it’s also true in Southeast Asia, the Middle East, Latin America, Africa, and elsewhere.
But still, what about Europe? One of my findings is that the best way we Europeans can learn about ourselves is by asking outsiders what they think, whether they’re from the US, Asia or other parts of the world.
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit
Today’s episode of Building Bridges is my conversation with Byrne Hobart, a hedge fund alumnus and investor who now writes the popular newsletter The Diff.
I have Eugene Wei to thank for recommending Byrne Hobart’s newsletter The Diff early during the lockdown in 2020. Byrne was already on my radar somewhat, so I jumped on the occasion and immediately subscribed to the extraordinary, dense, 5-email a week product that is The Diff.
I’m still enjoying it almost one year later because it spans the many different topics I’m interested in, from finance to economic development to industry deep dives to country focuses—with a few powerful recurring ideas and all the depth & breadth we should be looking for in our everyday reading. Should I mention that Byrne’s has become one of the most popular paying newsletters on Substack?
Before you go and explore The Diff, however, listen to the podcast 🎧 My contribution is just a few short questions, with Byrne sharing his thoughts at length on the following topics:
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit
Today’s episode of Building Bridges is my wife Laetitia Vitaud’s conversation with Deborah Copaken, a best-selling author and screenwriter who shared her experience with the healthcare system in America.
I’ve been writing about economic security almost forever, insisting on the importance of providing a well-functioning safety net to foster a more entrepreneurial society. For more on that, see my book Hedge as well as this compilation of related essays: All About the Gig Economy.
Indeed, the idea of widespread instability is an integral part of what the Entrepreneurial Age is about. The lifespan of companies is getting shorter and shorter due to the acceleration of technological change; corporations have less ability to provide their employees with stability; in turn, these employees decide to break free and go on the hunt, enjoying the upside of flexibility from a worker’s perspective.
What Deborah Copaken reminds me in her conversation with Laetitia is that this kind of instability determined many of her career choices as a woman working in the media industry in the US. Because the US provides affordable healthcare only to those who are employed in a steady job, at many times in her life she had to give up on what she really wanted to secure access to proper healthcare coverage. And because she’s a woman, she’s also experienced the sexism of the healthcare system at every turn.
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit
Chinese Tech w/ Lillian Li. Founder Control w/ Bill Janeway. Daniel Ek, Arsenal & the Super League.
Wednesday, April 28, 2021 • Duration 46:16
The Agenda 👇
* I spoke with Lillian Li, writer at Chinese Characteristics, about everything Chinese tech 🎧
* What if Daniel Ek buys Arsenal? My latest column in Sifted
* We all have something to say about the football Super League. A thread.
Today’s episode ofBuilding Bridges is my conversation with Lillian Li, a former venture capitalist in Europe who now writes the highly successful newsletter Chinese Characteristics.
I’m not really sure how our paths initially crossed, but I discovered Lillian’s work about technology in China in the course of last year—first on Twitter, and then through the insightful and enlightening essays on Chinese tech companies published on her acclaimed newsletter Chinese Characteristics.
* I had all the reasons to dive in. I think China is a critical area on the global map, one that none of us can afford to ignore. And I think that tech entrepreneurship is one of the things that make China matter even more. On the other hand, we Westerners have to be humble when it comes to China: it’s a very large and diverse country, with a culture that’s very different from ours, and where people speak a language that’s extremely difficult for most of us to master.
Needless to say I had to have Lillian on the podcast: as someone who grew up and worked in Europe, she can relate to the kinds of questions we’re facing on this side of the world; but as a native of China who went back there last year, she has the unique ability to share the details and nuances that elude most of us who are seeking to understand how China is positioning in the Entrepreneurial Age.
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit
Productive Disagreements w/ Ian Leslie. Restructuring. Taxation. Velocity in VC.
Wednesday, April 21, 2021 • Duration 01:02:15
The Agenda 👇
* My wife Laetitia Vitaud spoke with author Ian Leslie about conflicts and disagreements 🎧
* Apply to On Deck Angels, an eight-week fellowship for top angel investors
Ian first emerged on my radar three years ago when I read an inspiring article he wrote about the future of advertising and brands in a more digital economy. I started to follow him on Twitter and then signed up to his excellent newsletter The Ruffian. When he tweeted that he was spending a few days in Paris, I had my colleague Kyle Hall interview him on stage at our then-flagship office in Paris.
And when he more recently announced that he was about to publish a new book, I told Laetitia she had to have him as a guest on the podcast and ask him about why he thinks conflicts can be a good thing.
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit
Around Europe w/ Tyler Cowen. Lobbying. Startups Across Borders. Biden’s Global Tax Reform.
Wednesday, April 14, 2021 • Duration 44:49
The Agenda 👇
* Economist and blogger Tyler Cowen on everything Europe 🎧
* Founders, investors, and governments: all can contribute to upgrading regulations—in Sifted
Today’s episode of the Building Bridges podcast is my conversation with Tyler Cowen, an economist, director of the Mercatus Center at George Mason University, blogger at Marginal Revolution, and host of the podcast Conversations with Tyler.
I first met Tyler back in 2019 when my colleague Zineb Mekouar and I spent a few days in Washington, DC to promote my book Hedge and to connect with John Dearie’s Center for American Entrepreneurship. We had lunch with Tyler and his colleague and co-author Alex Tabarrok in a Chinese restaurant near George Mason University. Most of our conversation that day was about exchanging ideas and impressions about the relative situation of America, Europe, and the rest of the world.
Since then I’ve kept reading everything I could find about the political situation in the US, the state of the transatlantic relationship, and recently how COVID-19 was impacting the distribution of power and wealth across the world. Then last year, I realized something: Americans are, by far, the most inspiring contributors to this conversation—yet alas they’re mostly speaking about America, leaving the rest of the world untouched, uncommented on, almost undocumented!
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit
We all sense how housing is a cornerstone of our social contract. In most countries, a house is many things at the same time: a shelter for one’s family, but also an investment for old age as well as collateral against which we can borrow and consume.
* As a result, we shouldn’t be surprised by the following: on one hand, the shift to the Entrepreneurial Age is a direct challenge for housing as we know it; on the other hand, it’s very difficult to change anything in housing because it’s so ingrained in our culture, our collective psyche, and our social contract.
The pandemic has been revealing in this regard. With many schools closed and many people stuck at home, there has been a widespread realization that the housing market doesn’t really match our needs and expectations anymore.
* . Two-income households, longer life expectancy, less predictable careers, more and more jobs (whether high-skill or low-skill) concentrated in urban areas: all of these call for a dramatic upgrade of the housing market and our very conception of ‘home’.
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit
Discussing Europe (& Rabbits 🐰) w/ Noah Smith. Deliveroo. Delaware. Defensibility. Software Digesting the World.
Wednesday, March 31, 2021 • Duration 50:25
The Agenda 👇
* Bloomberg columnist (and writer, and Twitter extraordinaire, and owner of rabbits) Noah Smith on Europe in the Entrepreneurial Age
* Why investors shouldn’t shun Deliveroo, in Sifted
First of all, it’s now official: my wife Laetitia Vitaud and I have decided to merge our respective podcasts under one single brand, Building Bridges. From now on, we’ll take turns interviewing inspiring guests about the state of our fragmenting world. The resulting podcast will be syndicated across this newsletter, Laetitia’s own Laetitia@Work, and the Building Bridges hub on Substack.
🐰 Today, I’m pleased to share a new episode of Building Bridges in which I interview Noah Smith, an opinion columnist at , which I highly recommend subscribing to since it covers so many topics that resonate with this newsletter—from economic development to immigration to the current paradigm shift to industrial policy to economics in general.
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit
Growing Your Network w/ Kelly Hoey. Europe. Stripe. Accelerators vs. Seed Funds.
Wednesday, March 24, 2021 • Duration 58:44
The Agenda 👇
* Author Kelly Hoey on what becomes of personal networks in the digital age
* Can seed funds and accelerators work together? Views differ
I’ve long called the current period ‘the age of computing and networks’:
* The ‘age of computing’ because we are all equipped with a growing number of digital devices whose computing power is increasing exponentially.
* And ‘the age of networks’ because we use these devices (our computers, our smartphones) mostly to connect with one another.
Many online connections with other individuals are implicit and invisible. For example, we’re connected to one another when we read reviews posted by other customers before buying a product on Amazon. Or take our daily habit of asking Google questions, which are then analyzed to suggest, in real time, better ways to pose those questions. This is possible because we are connected in a network whereby each individual’s contribution helps to improve the Google search engine for all.
What happens to personal networks—which, contrary to the examples above, are formed consciously and explicitly—in a world where interconnectivity is the norm? Things change on various fronts.
* First, the ability to connect everyone together tends to devalue individual connections. In the past, having someone’s business card had a lot of value. It indicated that you had met that person and that they had judged you to be trustworthy enough to share their contact information. Today, however, that same information is available to everyone via LinkedIn. The business card has thus lost its economic value, as well as its symbolic value. It takes much more than a business card to indicate that someone has entered the inner circle.
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit
* Another finding is that what Americans, in particular, admire the most about Europe is our cities: their density, their vibrancy, the quality of their infrastructure, the beauty of their architecture, and generally how rewarding and convenient life can be when you live in a large European city.
If you follow that path, a key to understanding Europe’s entrepreneurial potential is to get a better understanding of what makes its cities different—whether that’s housing, retail, healthcare, proximity services, transportation, or any other aspect of urban life. And since I came to this realization, a big part of my thinking as a European investor has been focused on cities: what makes them different from cities on other continents, and what unique opportunities can be seized by European entrepreneurs as a result?
All of this is why I was especially interested to listen to my wife Laetitia Vitaud’s conversation with Chris Bruntlett, a cycling enthusiast, the Marketing Manager at the Dutch Cycling Embassy, and, together with his wife Melissa Bruntlett, author of several books about urban mobility. Chris is a Canadian who moved to the Netherlands specifically because he was attracted by the Dutch urban way of life and what makes it so unique: the key role that bicycles play in day-to-day transportation. As Laetitia wrote on the Building Bridges website,
When you look at the infrastructure decisions made in the Netherlands in the 1970s, you see that they were designed as very democratic and inclusive infrastructures: the old use them, people with disabilities use them, so do families with children. Cycling is cheap. And it has the potential to transform our (work) lives for the better.
👉 You can listen to the whole conversation between Chris and Laetitia by using the player above 👆 or on Apple Podcasts or Spotify.
As a complement to the Building Bridges podcast with Chris Bruntlett, please enjoy this reading list on the future of transportation in cities:
😀 After 10 years in Paris (from 2006 to 2015) and then 5 years in London (from 2015 to 2020), my family and I have been experimenting with escaping from the big cities, moving from London to rural Normandy at the start of the global pandemic, and then from Normandy to suburban Bavaria in November of last year. Read a few related ideas in my Household Finance in the Entrepreneurial Age.
🙂 They did it again! Our friends at Index Ventures have been at the forefront of pushing for simpler, better approaches to granting stock options to employees of European tech startups, most notably with the #NotOptional campaign about which I wrote in my 2019 essay Why Employee Equity Matters. Now the very same team has launched a powerful tool to help early-stage founders plan and execute on bringing their early employees in as shareholders. Check it out here: Index Ventures OptionPlan.
😏 A recurring theme of this newsletter is the transition from the Fordist Age, which was dominated by manufacturing, and the Entrepreneurial Age, which is dominated by tech companies. A recurring objection from my readers concerns today’s equivalent of the working class: what will replace those steady, high-quality jobs that manufacturing used to provide? Well, it seems we now have the answer—it’s Amazon: Amazon’s New ‘Factory Towns’ Will Lift the Working Class.
😐 If you want further proof of that trend, just consider how hard Amazon and Walmart are competing on the labor market, as suggested by this article: Amazon and Walmart are Winning the Labor Market Wars. It’s good news for workers, as they can play on the competition so as to obtain higher wages and better benefits. It’s bad news for many other employers in proximity services, who now have to renounce treating workers like crap. Not sure what kind of news it is for us consumers, though!
😒 Luckily for workers at Amazon and Walmart, their jobs tend to be located far away from the dense and expensive metropolitan areas. On the other hand, many workers in proximity services continue to suffer from unaffordable housing and/or long commutes because not enough has been done to build housing over the past decades. It’s a problem that’s at the core of the current malaise within the Western middle class (and beyond!), and hopefully one that can be solved in time. Read more in Sam Bowman, John Myers & Ben Southwood’s The housing theory of everything.
😖 I admit defense industry contracts between France and Australia has never been at the top of my interests. But last week’s cancelling of such a contract in favor of Australia’s partnering with the US and the UK caused such a stir that I had to pay closer attention to the whole thing and its implications from a geopolitical perspective. For a glimpse into how the French reacted to the setback, read Rory Medcalf’s What does the new Aukus alliance mean for global relations? And for more in-depth analysis and commentary, follow Bruno Macaes’s Twitter account:
Sign up to European Straits if you don’t want to miss the next issues 🤗
* Why he moved from New York to Austin, Texas during the pandemic, and what it’s like to homeschool your kids like he and his wife have been doing for months.
* His professional journey, what led him to write a newsletter, and whether writing on a regular basis makes him a better investor.
* Why he thinks The Social Network by David Fincher is the most important movie of all time—regardless of accuracy.
* The difference between hedge fund managers and venture capitalists, and what the latter could learn from the former.
* Why America’s financial system makes the country so strong and resilient, including from a global perspective.
* Why there are many things in common between a country that’s developing and a company that’s growing—and what happens at the end of that process.
👉 Listen to my conversation with Byrne Hobart in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify.
The spark for my Sifted column this week was an op-ed in the Financial Times by Airstreet Capital’s Nathan Benaich centered on the poor performance of European universities when it comes to spinning out successful startups. Nathan’s opinion dovetails with my own, which is that European universities create too many administrative frictions, slow entrepreneurs down rather than speeding them up, and generally have the wrong idea of how startups can benefit the university and its researchers. This is a mentality problem, but perhaps one that can be rectified with a bit of history and a desire to do better.
News came last week that what’s left of Yahoo is being sold to a private equity firm. Although it’s certainly not much of a household name anymore, Yahoo was one of the Internet’s early tech powerhouses, and there are many interesting aspects of its history that can illuminate both where we’ve been and where we’re headed. So many, indeed, that I dedicated this ‘11 Notes’ edition to the company.
For example, the different approaches taken by Yahoo and Google show the stakes in increasing quality in the face of increasing scale, as Yahoo’s emphasis on curation led to their being left behind at an exponential rate as the number of web pages exploded. Then there is Yahoo’s relationship with Asia, from an early expansion to a complicated situation in which its investment in Alibaba ended up being worth more than Yahoo itself (creating some awkwardness in terms of the company’s tax burden).
In the end, Yahoo may also become notable as being one of the last of those born in the dotcom era to disappear–with the others either long gone (Myspace, Netscape) or in no danger of leaving the stage anytime soon (Google, Facebook). Whether due to failures in leadership, missteps in international expansion, a missing connection with end users, or simply a large combination of factors, Yahoo’s presence over the past 30 years certainly merits reflection on its legacy in the Entrepreneurial Age.
As software eats the world, it’s needing to digest industries that are more and more heavily marked by tangible goods. I was reminded of this recently as one of tech’s latest success stories, Peloton, was hit hard by the need to recall a large number of their connected treadmills. Peloton’s stumble shows how producing hardware impacts a company’s strategic positioning and its returns on invested capital.
My longtime readers know that one of the key elements guiding my thinking on this topic has been Amazon, as it bucked the trend of the early Internet era by going directly into the highly tangible, low-margin world of retail. Now, with online commerce having become firmly entrenched, much attention has been turned to manufacturing, where there is an entirely different equation to solve regarding building a business and making profits.
All in all, the need to confront the world of tangible things led me to my conviction that, as software eats the world, it’ll be needing help–digestive pills, if you will, to help it along. I believe that there are many opportunities for startups to grow in that field, and am excited to see how it will change the field of what many refer to as ‘deep tech’.
For the past few years, there has been a growing sense (especially in the US) that tech has become the bad guy. But as a European, I’d sheepishly note that this seems to be one field in which our tech scene has the lead over the Americans: in Europe startups have long been characterized by many, including journalists, as threatening incumbents, destroying jobs, and not complying with regulations.
We at The Family have always had to work within this kind of antagonistic framework, whether directed at the startups in our portfolio or our firm itself. I myself ended up being sued for libel after saying the owner of the most powerful taxi company in Paris (G7) was a “gravedigger of innovation” (I did, however, win the case 😉).
Thus having a different perspective than many in the US, I believe a bit of startup wisdom can be applied here. Namely, we know that finding product/market fit is a key inflection point, because literally everything in the startup changes: what was true before is no longer true, and what was useless or even damaging before can become a very smart move. Many in the tech world need to grapple with the fact that startups, and the tech world in general, have passed that inflection point, and as such their relationship with the media must be reinvented.
Sounds interesting? Subscribe to European Straits and let me know what you think!
🔥 Next Tuesday, The Family is hosting the First-Time Entrepreneur Summit, as founders tell the real story of what happens when you take the leap and start building. The full program and free tickets are available right here.
👀 In my latest contribution to The Family’s daily newsletter, I suggest founders be cautious as they seek advice from sources across the Atlantic: Read the context.
As pointed out by Steve Blank, Frederick Terman inspired the entire Stanford startup community with an obsession for building what customers want (echoing Paul Graham’s famous words). This is why, as stated by this great article in Scientific American, to this day “Silicon Valley is [still] dominated by what we call the “need seekers,” companies that focus on discerning their users’ actual needs, both spoken and unspoken; figuring out how to meet those needs; and then getting the necessary product or service to market as fast as possible.”
And Terman designed and operated a self-sustaining system, with a flywheel turning so fast and churning out successful tech companies at such a high rate that it became a perpetual entrepreneurial machine, supporting the rise of many generations of highly successful tech companies—from Fairchild Semiconductor in the late 1950s to Robert Noyce and Gordon Moore’s Intel in the 1970s, Apple and Atari in the 1980s, Netscape in the 1990s, Google in the early 2000s, and then the likes of Facebook, Airbnb and Uber.
Deborah’s story is the perfect illustration of the point I make in Hedge: creators, like innovators, need a better safety net to work their magic! In a world of instability, this net is what makes risk-taking possible.
Deborah and Laetitia’s conversation is a must-listen. In addition to just how critical economic security is so that people can move forward and take more risks, you will also hear about:
* Being part of the writing team of the popular Netflix series Emily in Paris, and drawing on Deborah’s own experience of cross-cultural issues to enrich the script.
* What it was like for Deborah to live in Paris for a time when she began her career as a photojournalist—and the sexism she has had to fight ever since in the media industry.
* What it’s like to have to deal with the US healthcare system when your life's in danger and you need thorough examinations and emergency procedures.
* The reality of a life on the edge and having to deal with multiple risks and constraints at every turn—as is too often the case for people who embrace creativity as a career.
👉 Listen to Laetitia’s conversation with Deborah Copaken in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify.
🇪🇺 Productive Fragmentation
Here’s an idea that matters in Europe: creating spaces where people can come together, regardless of their ‘native’ culture and language, in no way negates the individual experiences of any given country. Nor does the idea of pooling resources mean ending in-group competition; indeed, finding the right balance among these various needs is key to what we can think of as ‘productive fragmentation’.
I’ve been reminded of this quite often lately, in contexts ranging from Netflix’s excellent Drive to Survive series about Formula One to my recent podcast discussion with economist Noah Smith. While Europe certainly has the fragmentation part of the equation down, it hasn’t found the proper way to use that fragmentation to encourage value creation in the Entrepreneurial Age.
That doesn’t have to remain the case, however. When I spoke with Chinese Characteristics writer Lillian Li about the situation in China, she noted the high degree of internal competition and decentralized autonomy there, with Beijing competing against Shanghai and Shenzhen and more for talent and results. That competition, however, tends to end with one proven winner, suggesting that fragmentation is an advantage when starting businesses, before eventually being reined in during the scaling up phase. Could Europe find a new configuration in which that is possible?
While retail investors grab the headlines (as we saw with the Gamestop saga, for example), institutional investors are a better indicator of where things are headed over the long term. Indeed, their job is allocating vast amounts of money across various asset classes, including stocks, bonds, commodities, foreign currencies, real estate, hedge funds, private equity—and, yes, venture capital. Therefore it’s a very good idea to keep an eye on how they’re directing those capital flows.
Today, there are several levers that can be pulled, especially in Europe, in order to facilitate the growth of venture capital by making it a more attractive part of a multi-asset strategy from an institutional perspective. Israel’s Yozma program is a good example of how to do it well, while numerous Asian countries have had their own approach. One key, no matter what a given country decides, is to remember that it is critical to provide viable ways to show that liquidity is coming.
In our times of transition, it’s only natural for people to move about in search of opportunity. Yet for all the talk about how nomadism is growing as a viable option, moving from one place to another is still very difficult, particularly for anyone who isn’t all on their own.
And so while many, including policymakers, recognize the potential benefits that can come from having talent choose their city or country as a new place to live, very little attention is paid to the real issues that block people from moving. These aren’t just related to administrative technicalities such as a visa; instead, the most difficult ones are related to very practical needs such as finding a home, opening a bank account, even getting a cellphone.
In Europe, there is also the language issue, since there are very few places where speaking English in the workplace is the norm, to say nothing of one’s daily life dealing with schools, shopping, interactions with neighbors, etc. While none of these problems are insurmountable, they are all critical and they all build upon one another. Solving the question of how to attract more talent will mean going far beyond quick administrative fixes, and towards a much broader buy-in on the part of society at large.
👉 My Tuesday thread this week sprang from a podcast discussion with Laetitia, resulting in Attracting Talent in Europe.
Sounds interesting? Subscribe to European Straits and let me know what you think!
🛠 In my latest contribution to The Family’s daily newsletter, I highlight an overlooked discipline in the startup world: product management. Check out A key part of your startup team.
What does the future hold? If the key to individual happiness is no longer a work contract, then we must reinvent what work is about, and Laetitia thinks it should revolve around the values and principles of craftsmanship—autonomy, responsibility, and creativity. Hence the title of the book: Du Labeur (“From Labor...”, which denotes routine, alienation, and pain)... à l’ouvrage (“...to Craftsmanship”, which is all about self-determination, fulfillment, connections...and uncertainty). The norm used to be about being alienated along assembly lines while enjoying “the bundle”. Tomorrow, the norm might be about working on our own, just like craftsmen, yet being connected to others through networks.
Here are the topics Lillian and I covered in our 45-min. conversation:
* Why she decided to go back to China, how life in China compares to that in the UK in the context of the pandemic, and her assessment of China’s economic prospects.
* What makes tech entrepreneurship in China different from that in the US or Europe, and what European entrepreneurs can learn from their Chinese counterparts.
* Why Westerners should focus less on powerful Chinese individuals and more on systems and institutions if they really want to understand what’s happening in China.
* What really happened in the runup to Ant Financial’s interrupted IPO and her explanation of the setbacks encountered by Jack Ma following the fateful speech he made in October 2020.
👉 Listen to my conversation with Lillian in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify 🎧
⚠️ In my latest Sifted column, I’m taking on a story that many people have commented on during the past week or so: the football Super League.
* The angle I explore is an interesting development following the disastrous announcement and ditching of the plan after only 48 hours: the fact that Spotify CEO Daniel Ek is now looking to buy the famed Arsenal club in London (which I’m familiar with because I used to live not far from there in the Borough of Islington).
It’s a development that, in my eyes, could signal European tech having reached a new level. It could also contribute to several positive developments in the European tech ecosystem over the coming years.
One of the joys of writing this newsletter is that it gives many occasions to hear feedback and enter discussions with people whom I greatly admire. And Bill Janeway certainly fits into that category, which is why I was happy to have his pushback on my position that it’s a good thing when founders can keep control over their companies. Even better: he agreed to let me share his thoughts with you.
So this edition, which I sent for free to everyone, is simply the text of Bill’s responses during the conversation that we recently had. It’s well worth your time: not only does it provide a crystal-clear understanding of how a venture capital investor can evaluate the developments and various risks occurring in their portfolio, it’s also rich in sources and examples that go deeper into the subject.
I’d also note, before sending you to read the whole piece, that Bill is a great example of the insight one can get from an investor who has developed clear theses on the world in which they’re living. The mantras that he’s developed, such as “corporate happiness is positive cash flow” and “all entrepreneurs lie”, are direct and revealing, serving as useful signposts while evaluating a given situation.
My conversation with Bill has obviously been at the top of my mind, and so for the week’s curated readings I went back into everything related to founder control. As Bill also pointed out, there’s nothing particularly new in this debate, as evidenced by one of my earliest writings on the topic (in 2016), which focused on the case of young entrepreneurs back in the 1950s.
And perhaps the continued existence of the debate is simply an indication of how complicated the question is. Indeed, it’s a topic that touches on a wide variety of issues, ranging from the search for product-market fit to crossing the chasm to building a company in the face of both risk and uncertainty.
For entrepreneurs who are still in the early stages of building their company, it’s critical to be aware of the tradeoffs that can come with accepting investors into your cap table, and the terms that will govern the involvement of those investors. This is especially true for anyone looking to build a startup across borders, as choices made early on can have outsized impacts on your options further down the road.
It’s rare to see such a rapid, high-profile explosion as that which occurred with the ill-fated announcement of a new football “Super League”. There have been numerous articles looking in detail at what happened, but I wanted to put things into a particular perspective that I believe is fundamental to the Entrepreneurial Age: namely, how the people behind the Super League forgot that football was one of the first industries to truly shine a light on the power of the multitude, thanks to the implicit contract clubs form with their fans.
Football clubs have long been able to translate the power of their local fan base into benefits for the club and its owners. What was lost in the planning of the Super League was that those fans also can turn their power against the club itself, particularly in a situation where there seems to be a significant downside for them, given that the existence of the Super League would have rendered meaningless the outcomes of its elite clubs’ matches against their many historic national rivals.
Still, despite football having been early in sealing a compact with its multitude of fans, the sport itself has in many ways remained in the old paradigm of mass production, especially in its fascination for live TV audiences. That’s proving all well and good for now, but I wonder where the tipping point in the football value chain is, and how owners and investors will make money when technology has displaced many of the players upon which the sport relies?
Sounds interesting? Subscribe to European Straits and let me know what you think!
🏎 Matthias Hilpert, a seasoned tech investor based in Berlin, just launched a book titled Fast Forward to help founders master the discipline of B2B sales. It includes testimonials from two of our portfolio founders, Nicolas Dessaigne of Algolia and Firmin Zocchetto of PayFit. Discover the book here: Fast Forward: Accelerating B2B sales for startups.
🔍 In my latest contribution to The Family’s daily newsletter, I share a few pieces of advice to help founders identify good investors—ones that are decisive and supportive: Only deal with good investors.
The most interesting trend in global tech these past few years isn’t anything that’s been happening in the US. Rather, it’s the rise of tech companies in China. Like many Westerners, I had long been uninterested in what was happening in Mainland China. I thought it was too far away, too different, and all happening in the impenetrable language that is Mandarin.
But I changed my mind following Alibaba’s IPO in 2014. That moment triggered my interest, leading me to watch The Crocodile in the Yangtze, a movie that tells the story of Alibaba beating eBay on the Chinese market. I then read many books and articles, met many experts, and even had the opportunity to travel there twice: to Shanghai in 2017 and then to Beijing, Wuhan, Shenzhen, and Guangzhou earlier this year with my colleague Emilie Maret. Today, I’d say that the idea of China as a tech superpower has become widely acknowledged. But that doesn’t make the country any less interesting.
Like a lot of other animals we humans respond to threat with two tactics: fight or flight. Either we become very hostile or we do everything we can to avoid any kind of argument. But both these reactions are completely dysfunctional. The internet isn’t helping: social media are designed to turn what could be productive exchanges into useless cockfights in a public arena.
The counterintuitive truth is that we need conflicts to move forward and live and work together more happily. Conflicts can bring us closer. “Couples and teams are happier when they are in the habit of passionate disagreement. Conflict can draw people together.” That’s why the author devotes the second half of the book to his 10 “rules of productive argument” to help us get better at disagreeing with others.
Establish a relationship of trust with the other person, accept them for who they are, try and make them feel good about themselves, consider that you might be perceived as “weird” by the other person, be curious about their point of view and actually listen to what they have to say...and above all else be real and honest when you interact with them.
The stories told in the book and the insights shared show this guide to productive disagreement is indispensable reading.
👉 Listen to Laetitia’s conversation with Ian in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify 🎧
⚠️ On Deck Angels (ODA) is an eight-week fellowship for top angel investors looking to hone their investing craft through community, tactical workshops and deal flow.
* ODA addresses topics such as: mental models and investing frameworks, establishing a track record, adding value post-investment, and learning how to build an angel brand.
Some of the founding fellows include Dan Romero, VP of Coinbase; Michael Vaughan, COO of Venmo; and Ann Ferracane, founder of Patch Ventures.
As I’m sure you know, writing this newsletter isn’t my only job at The Family (or at least, I hope you assumed that! 😉) Over the past year, a large part of my time has been taken up by a major restructuring of our firm—one that, although not prompted by COVID-19, was immediately and drastically affected by the broader economic context of the pandemic.
It has been a rather complicated operation. Restructuring a business is something that’s relatively simple in theory and even in the steps to be taken, but quite difficult to actually execute. In no small part that’s because each step requires you to remain absolutely faithful to the plan, even when faced with difficult and/or deteriorating relationships with creditors, suppliers, employees that are let go, etc.
When done well, though, restructuring is a real opportunity to not only get the business onto more solid ground, but also to double down on everything that works well in your organization. You get a better view of which outsider providers are doing a great job (and which ones aren’t), your team can make faster decisions, and your management can refocus on the big picture. In doing so, remember that none of it is simply an end in itself: your goal isn’t survival, it’s to make sure the business can thrive, positioning itself to execute on a sound strategy over the coming years.
As noted last week, the Biden administration’s push for international coordination on corporate taxation could finally produce results in a field that has been slow to adapt to the digital age. The lack of results certainly hasn’t been due to a lack of interest, however, and there is a rich bibliography for anyone wanting to dive further into the topic of how corporate taxation is and could be structured.
My own writings on this specific topic date back to a report that the French government commissioned from me and Pierre Collin, a respected tax judge, back in 2013 (my participation in that report came following the publication of L’Âge de la multitude with my friend Henri Verdier in 2012). The report was then followed with many (more accessible) articles on the topic, in outlets ranging from Forbes to Politico EU to The Family’s own publication on Medium.
More recently, I’ve directed my attention specifically at how corporate taxation impacts startups and startup ecosystems. Indeed, these aren’t simply questions about how to tax profits; corporate taxation is also critical in subjects such as rewarding employees for value creation through equity sharing, enabling a remote workforce, and generally building startups across borders.
Much talk in the VC world lately has been about hedge fund Tiger Global’s move into venture, with Founders Fund’s Everett Randle’s in-depth article on the topic serving as an excellent base for discussion. For me, this discussion is related to several recurring themes in this newsletter: the diffraction of venture capital, the fact that returns go down as predictability goes up, and new quantitative/indexing methods for deploying capital in venture.
In yesterday’s edition, I concentrated on one characteristic that has its role to play in each of those trends: the velocity with which money flows in the venture space. To keep it short, the idea is that by increasing the speed at which money moves from one hand to another, you can create more value in the economy, even without increasing the quantity of money in the system.
Now, in today’s low-interest-rate world, we know that there is in fact an increasing amount of money in the system. Nonetheless, the lesson remains: by not having money locked up for long periods of time (for example, in the decade that can easily mark the time between a startup’s founding and an IPO) and utilizing methods such as secondary sales from Series B and beyond, startup ecosystems can avoid stagnation and create more value through faster positive feedback loops.
Sounds interesting? Subscribe to European Straits and let me know what you think!
🌤 A while ago I mentioned my involvement in the project to create a new moral political economyby the Center for Advanced Study in the Behavioral Sciences (CASBS) at Stanford University.
I haven’t been there for a while for obvious reasons, but the pandemic hasn’t slowed down Margaret Levi and her colleagues in advancing the cause. They’ve just published a new website, Fairer Tomorrow, which I highly recommend visiting so as to have a glimpse of all that it takes to make the most out of the current shift:
The COVID pandemic continues to disrupt almost everything that enables us to learn, work, play, and thrive. It also magnifies numerous vulnerabilities and deficiencies that affected governments, economies, and societies well before its onset.
As we envision and, eventually, forge together our lives after the pandemic, we do ourselves a lasting disservice by returning to the pre-pandemic status quo. Instead, we can move toward a new political economic framework that serves a more prosperous, equitable, and human-centered society. A good way to start is through exploring lessons we already have learned and ideas we have generated during the pandemic.
That is the core concept motivating Fairer Tomorrow: Solutions to the Issues Highlighted by COVID, a website presented by the Center for Advanced Study in the Behavioral Sciences (CASBS) at Stanford University. Specifically, it is a product of the Center’s flagship program, “Creating a New Moral Political Economy,” led by CASBS director Margaret Levi.
⎈ In my latest contribution to The Family’s daily newsletter, I share a few pieces of advice for founders about the unique position they’re in: You're the one in control.
It’s a matter of scale. If it’s me that’s caught in a public controversy regarding tech in Europe or French politics, I can write conciliatory DMs to the three people who are my most fervent contradictors and find some room for agreement.
On the other hand, a “famous and powerful” person such as Andrew Sullivan simply can’t deal with the thousands of Twitter users who are shouting insults at him—not only because he’s not used to being on an equal footing with the rest of us, but also because it’s practically impossible to exchange 1-on-1 messages with literally thousands of angry people on the Internet.
In this case, what choice do such personalities have (apart from reflection and contrition, which doesn’t really fit their character) except to wage an all-out war and risk cancellation?
In this context, how about launching a podcast series in which I’d interview American thinkers, but having them focus the conversation on Europe?
Fast forward to today: my 2020 idea has morphed into the Building Bridges podcast which I’m co-hosting with my wife Laetitia Vitaud. The value proposition of our podcast is to provide a platform for anyone who has interesting ideas to share with our vast community of “unapologetic globalists” (to quote my recent guest Chris Schroeder).
* Not everyone that’s part of this roster has much to say about Europe. But whenever I catch one who does, I make sure to focus our conversation on that very subject—and I must say Tyler is one of our recent guests who has the most to say and to share about the Old Continent!
And so if you’re interested in Europe, economics, libertarianism, or the prospects of various other regions in the world, I urge you to give my conversation with Tyler a listen. Here’s what you’ll hear:
* What Tyler likes and dislikes about Europe, and the various countries he’s lived in or traveled to here (which is most of them!).
* Why he thinks Europe is one of the least fragmented regions in the world—which is the exact opposite of how I view Europe!
* Why Americans should be present and invest in India if they want to retain some influence in the future.
* What advice he would give to young Europeans and young Americans who want to prepare themselves for our coming world.
* Why he expects Europe to remain a wealthy and prosperous region, despite, well, everything. And many, many more interesting topics and ideas.
👉 Listen to my conversation with Tyler in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify 🎧
⚠️ In Sifted this week, I take up a problem that most startup founders find extremely difficult to navigate: regulatory barriers and how to lobby regulators for updated standards that take our now-digital economy into account.
* As more startups move into industries such as finance and healthcare that are (for good reason!) quite highly regulated, founders and investors both need to step up their game in terms of effectively interacting with regulators. And on the other side, regulators—especially in Europe—need to realize that upgrading the regulatory framework can be a competitive economic advantage that boosts value creation.
Last Thursday, I took on a topic that I consider critical for everyone interested in European tech: how startups can build their business across borders. It’s a subject that my firm The Family is interested in both for our startups (since our reason for existing is to help ambitious entrepreneurs grow the best companies possible) and for ourselves (since we knew from very early on that in order to achieve that goal, we ourselves needed to expand beyond our beginnings in Paris).
So from experience, both that of our firm and that of our startups, I can tell you that it’s not easy. And it’s made even harder by the general lack of good information available on the topic. It made me realize something: despite our perception of the economy being global, not many companies have actually succeeded in being truly multi-geography. In turn, that means that the number of people who have been on the ground doing it successfully is quite low.
Yet such hands-on experience is critical when it comes to the “hard” problems which companies face when trying to do business across borders: corporate structuring, employee equity, work contracts, proper accounting, etc. There is a real dearth of open source knowledge on these topics, and this essay serves to open a new stream of content that we at The Family want to produce for founders facing these problems. By the way, the essay is free for everyone!
My own writings on startups’ attempts to grow across borders and the issues they run up against have mainly discussed the “soft” problems relating to culture, language and the like. These were the subjects of some of the earliest long-form essays that I wrote when The Family switched to producing all of its content in English back in 2015.
More recently, these topics have focused on fragmentation, both in Europe and around the world in general. As I’ve become more familiar with different ecosystems around the world, it’s striking just how many founders, whether they’re in India, Spain, or wherever else (that isn’t the US or China), are facing very similar problems.
My real question now is which countries are going to step forward and make things easier for their local champions to expand across borders? This obviously becomes a question of industrial policy, and so perhaps it is no surprise that the most enterprising countries so far seem to be smaller ones that recognize the opportunity presented in the shift to the Entrepreneurial Age: Estonia, South Korea, and Israel, for example.
For several decades, the global tax structure (or lack thereof) has been the cause of many grumblings in many places, with the associated noise only getting louder as software has continued to eat the world. But for all the talk about “double Irish with a Dutch sandwich” and headlines about corporations paying no taxes on their profits, there has been very little actual change in corporate tax codes.
That may be ending, however, with a new proposal for a global minimum tax coming from the Biden administration. Following on the heels of a Trump administration attempt to have companies repatriate profits via a lower corporate tax rate, the Biden administration’s proposal benefits from a multilateral approach (as opposed to a change affecting the US only) and a context in which corporations, including many tech companies, are facing mounting PR problems over their lack of tax contributions despite soaring profits.
Of course, as always, the road is long and nothing is finalized yet. And in terms of the outlook for Europe, such changes likely won’t put more tax dollars into the coffers–unless European companies, and specifically startups, can start to create and realize more value right here on the continent.
👉 I put together a quick 30-point outline of the situation in A New Corporate Tax.
Sounds interesting? Subscribe to European Straits and let me know what you think!
😓 In my latest contribution to The Family’s daily newsletter, I share a few pieces of advice for founders about how to raise funds for their startup: Fundraising is hard.
🇫🇷 We’re resuming our bi-weekly podcasts with Laetitia on Nouveau Départ (in French) for paying subscribers: check out yesterday’s edition on Suppression de l'ENA : une mesure populiste ?
Many founders have a naive view of government, thinking that a 10-minute meeting with some cabinet minister will help them see the light, letting the problem be solved once and for all. After all, how can any government official be against progress?
In reality dealing with regulators is hard, and there’s no magic bullet. But I now have a lot of experience dealing with startups in The Family’s portfolio, and after hundreds of hours spent advising them on the best approach, I realized there are recurring themes and approaches that have all been validated in action. I’ve tried to organize them all into a coherent 10-point list.
The model of a single-family home, which became dominant during the post-war period, is ill-designed for today’s economy
It so happens that history is the most fertile ground there is to help us broaden our perspective when it comes to housing. By going into the past, we can see that communal housing, short-term rentals for highly mobile workers, and multi-generational households were the norm in the vibrant cities of the 19th century. What if those are a frontier we should try and (re-)explore?
Indeed, in her landmark book Brave New Home, Diana Lind acts as a guide to the history of housing and reveals that what we take for granted is in fact very recent and very dependent on a specific cultural and political context. Thus our vision of housing is also much more precarious than many people assume. It could very well be that the pandemic, as an accelerant of the shift to a new techno-economic paradigm, marks the end of housing as we know it—and the beginning of a new approach to providing shelter, investing in assets, and living together in our more urban world.
👉 Listen to Laetitia’s conversation with Diana in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify.
📦 Amazon’s Strange Politics
The past few weeks have seen some heated commentary regarding Amazon and a union drive at its Alabama fulfillment center. As someone who supports both a strong social safety net and admires Amazon’s performance as a company, I understand how people can be surprised at the contrast: Amazon has generally progressive cultural and political legacy, but now it’s taking a turn toward defending its interests as a now highly labor-intensive business.
Amazon’s position is unusual indeed. When we step back, most businesses in the past have moved being labor-intensive to being capital-intensive industries, becoming able to produce just as much, if not more, with a smaller and smaller workforce. On the other hand, very few corporations have gone the other way like Amazon, and this might explain the company’s strange politics.
In any case, it’s clear that balances must be struck. There are industries in which capital is unable to replace labor, for instance in proximity services where many workers are on the front lines interacting with many customers. And then there are industries in which capital can exist on its own, creating a highly stratified world of a few haves and many have-nots. And so the question is there: can we as a society (and Amazon as a company) have the best of both worlds?
Reflecting on labor-intensive industries and the spectacle of the Deliveroo IPO led me to think that collecting together resources on the “gig economy” could be quite timely. I started by noting, however, that I don’t particularly use that term (except with the associated quotation marks) since I think it’s about much more than that, namely the entire world of flexible work powered by tech platforms.
My first writings in English on the topic date back to 2015, when I wrote an article in Foreign Affairs with my friend Bruno Palier. A year later I talked about it as part of one of my most read pieces ever, “Enough With This Basic Income B******t” and then it became a critical part of the research and material for my 2018 book on building a social safety net for the Entrepreneurial Age, Hedge.
Throughout, I’ve been convinced that the move to a more entrepreneurial economy will carry with it the rise of the gig economy, simply because of the ability for information to move more and more quickly among interested parties. This is also what underlies the growing need for an upgraded social safety net, which was a key part of discussions around the Deliveroo IPO.
In my home country of France, which has just headed back into another lockdown period, the headlines over the last few days have centered on the opening of new mass vaccination sites. Yet in the US, which has been one of the fastest at vaccinating its citizens, such mass vaccination sites have been largely abandoned in favor of distribution through the vast network of local pharmacies.
It got me thinking about how organizations manage the balance between their centralized and decentralized levels. I don’t believe that it’s so simple as positing centralization vs. decentralization as a general theory; every organization has elements of both, and so the real question is how to optimally distribute assets, functions and risks between the two.
A big challenge is that the functions that are optimally centralized (or decentralized) in the age of computing and networks are not the same ones that were optimally centralized (or decentralized) in the age of the automobile and mass production. As such, many organizations are struggling to reshuffle things, especially when they are trapped in a centralizing mindset such as that which dominates France’s government and institutions.
One way to mitigate problems on the housing market would be drafting zoning rules that favor the constant mingling of hunters and settlers, rather than doing the opposite (as they currently do). There wouldn’t be a crisis of suburban housing if suburban areas were attractive for hunters—which they aren’t. Likewise, there wouldn’t be a crisis of urban housing if it was easier to settle in such areas.
The stakes are high. New legal frameworks should make it possible to harness technology and achieve a radical upheaval of the way of life for both adventurous hunters and settling families—in each case at every level of the income ladder. If they fail to accommodate both populations, the danger is for every large city to be inhabited only by very rich hunters and very old settlers.
My idea was to focus the conversation on Europe, and indeed Noah has many insights to share. One of them, which I find particularly compelling, is the idea of “optimal fragmentation”. There was a time, in the 19th century, when Europe actually benefited from being a fragmented continent. Britain, Germany and France were of roughly equal sizes; the world was the stage on which their rivalry played out; and the technology of the day made it so that each could grow their national industrial champions and claim to be part of the club of the more advanced countries.
* Today, the situation in Europe is very different, however. The advanced technologies of the day (computing and networks) call for growing corporations whose scale far exceeds the size of any European market. And because they have realized fragmentation isn’t much of an advantage anymore, European countries have been trying to join forces under the umbrella of the European Union—alas encountering many frictions and obstacles along the way.
Here are the other topics I discussed with Noah:
* The various places he’s lived, including Texas, Japan, New York, and the Bay Area—and what specifically attracted him to Japan, where he spent 5 years in total.
* Industrial policy: what it is, why it is so difficult to design and implement during a paradigm shift, and how Europe has been performing on that front.
* Texas and its (so far) failed attempts at catching up on Silicon Valley: it’s all about non-compete clauses, urban sprawling, and universities.
* Where to look for inspiration: Noah shared his assessment of how various European countries are doing and what other regions in the world we should all study.
* Finally, I made sure to ask Noah about his pet rabbits, and he shared the reasons why everyone should consider adopting their own—tl;dr, “they’re like clumsy, vegetarian cats”.
👉 Listen to my conversation with Noah using the player above 👆 or on Apple Podcasts or Spotify.
⚠️ While the European IPO market hasn’t necessarily been as hot as its US counterpart, one tech company has plans to go public as early as TODAY: Deliveroo. Unfortunately, it seems that investors are a bit skeptical, as the floatation is meeting strong headwinds.
* I believe the bear cases against Deliveroo are a bit shortsighted, however. Just like Uber before it, investors will be well-served to remember that Deliveroo’s total addressable market isn’t restricted to food delivery, but instead the entire realm of things that people want delivered to them–both now and in the future.
💊 An Investment Thesis: Help Software Digest the World
For years, Marc Andreessen’s thesis about “software eating the world” was a solid one indeed–and in general, it still is. But for investors looking at the industries that are still early in the process of being eaten, it’s clear there are quite a few in which software alone can’t finish the job. In ‘hard’ industries that are heavily tangible, whether due to personnel needs, physical infrastructure, complex regulations, or whatever else, software sometimes runs up against problems in digesting its meal.
This has been the case (so far, and to varying degrees) in industries such as energy, agriculture, construction, and space. But just because these industries are more difficult for software to consume, that simply means that there’s more opportunity for startups to arrive with solutions that are designed to facilitate the arrival of more and more software.
To give you one of the most evident examples of how this can occur, the iPhone was so revolutionary not because of what it brought to communications, but because of how it quickly enabled software to extend much, much further into our lives. This wasn’t just because the iPhone brought its own software and hardware into the equation, but because it also directed all that power into being a vehicle for all the software that developers around the world could dream up. In effect, the iPhone served as a digestive pill, making it much easier for software to keep right on eating.
The idea of a company creating a ‘moat’ is nothing new. In the 20th century, businesses were able to do so through various means, whether by investing in physical infrastructure, building privileged relationships with key players, or encouraging politicians to enact regulations that just so happened to make it extremely difficult for anyone new to come along and push their way into the game.
In the Entrepreneurial Age, some of the methods for digging moats, or erecting ‘barriers to entry’, have disappeared completely (physical infrastructure in, say, the music industry), changed (access to key players is still needed, but it’s much easier to contact someone via email than by phone or an in-person meeting), or stayed much the same (tech giants certainly aren’t above lobbying politicians to make things difficult for newcomers, such as we’ve seen with the GDPR regulations in Europe).
Given my interest in business strategy, it should come as no surprise that my attention has quite often turned to ideas of moats and how companies can incorporate defense strategies while still concentrating on growth and increasing returns. So this past week, following further reflection inspired by Gil Dibner of Angular Ventures, I pulled together a set of resources on the topic.
A while back, I and my colleagues at The Family were excited to support the #NotOptional campaign, led by our friends at Index Ventures. Given the importance of employee equity in growing a thriving startup ecosystem, we’ve been similarly disappointed to see more recently that the enthusiasm the campaign generated hasn’t turned into beneficial changes in Europe’s corporate laws—yet, at least.
So I started thinking about how tech startups in the US have the good fortune to be able to incorporate in Delaware, why that is, and whether or not a jurisdiction in Europe could take on that same role. And let’s just say that while I don’t think it to be an impossible feat, it is true that it takes more than simply changing some laws and regulations.
Indeed, one of the key aspects as to why Delaware is so attractive for incorporation is the case law that has been developed in the Delaware Court of Chancery during the course of more than 250 years. And no country in Europe would be able to provide that immediately, but… does that mean that no one is willing to even try?
Here’s an enigma: historians teach us that fragmentation is what made Europe strong and prosperous in the past. So why is that long-time asset now a liability? To understand the reasons, we need to go back in time. In Guns, Germs & Steel, Jared Diamond explains why fragmentation once helped Europe rise as the main Eurasian power at the expense of China, which was much more monolithic than fragmented Europe and thus depended on the (occasionally stupid) decisions of a single sovereign.
At the same time, developing a relationship with another person no longer implies that you’ve met that person ‘in real life’. Twitter has gotten us used to the idea of having interesting conversations with people we’ve never actually met. And for the past year, the pandemic and the difficulties in moving around have further anchored the idea of getting to know one another from a distance.
What will happen to all these long-distance relationships once the pandemic is over? Will we go back to how things were, returning to our old network of acquaintances who all live nearby? Or will we continue developing these relationships regardless of physical distance, using more and more apps that let us connect more and more easily with others? It’s not just Facebook, LinkedIn and Twitter anymore, but also TikTok, Discord, Clubhouse—and others that we haven’t discovered or even invented yet.
This latter hypothesis is what Balaji S. Srinivasan foresaw in his 2013 article Software is Reorganizing the World (in Wired). For him, the Internet is less about nourishing relationships that initially developed in the real world, and more about developing new relationships with people that we may eventually meet IRL later, only then perhaps deciding to live near one another. Balaji gives the example of Silicon Valley: a location where people (entrepreneurs, investors, operators) go to live because they first connected with one another via the Internet and then later decided to use the San Francisco Bay Area as the place to meet up and work together at building tech companies.
* In that regard, it’s clear that the pandemic has changed things. With it, we’ve learned how to build companies remotely, a shift that devalues the idea of collecting everyone together in Silicon Valley in order to succeed. But that, of course, won’t impede individuals who connect with one another from deciding to move to a given area based upon other shared affinities.
All in all, the economy of personal networks was upended by both the digital transition and the pandemic. Kelly Hoey, author of the book Build Your Dream Network: Forging Powerful Relationships in a Hyper-Connected World, discusses the new state of networks with my wife Laetitia Vitaud in the latest episode of the Building Bridges podcast.
👉 Listen to Laetitia’s conversation with Kelly using the player above 👆 or on Apple Podcasts or Spotify.
⚠️ On Deck Catalyst is a ten-week remote program for young leaders who want to solve the world’s most pressing problems and take an unconventional path to building their career. The curriculum includes:
* Deep dives on how startups work: what core positions look like day-to-day and why that role is important to the business.
* Learning the ins and outs of founding and investing in companies alongside the best in the industry.
* Speaker sessions from Keith Rabois, Aileen Lee, Jack Altman, and others as part of the Leaders and Protégés track, an in-depth look into mentor and mentee relationships, and a launchpad for eventual success.
* How to create your own opportunities—make roles that previously didn’t exist at any startup you join, launch a startup from scratch, or break into the world of venture capital.
⏰ Their next cohort kicks off on June 5. You can apply here before May 4th. Applications will be reviewed on a rolling basis.
📉 10 Hypotheses As To Why Europe Is Lagging Behind
For all the debates about Europe and how it’s doing, one indicator certainly shows that things aren’t going swimmingly: GDP per capita, which is going in the wrong direction in multiple key European countries. But why is this happening? How is it that in the last 20 years, the average French, English, Italian citizen is getting noticeably worse off than many of their global counterparts?
Observers posit various hypotheses, some of which I find more convincing than others. For example, I don’t think that Europe is necessarily slow in adopting technology, and I also don’t think that the problem comes down to an excess of regulations.
Still, it’s undeniable that something’s going on, and identifying the proper hypotheses as to why it’s happening is critical to turning things around. Europe would certainly benefit from taking a more outward-looking view on business, using the entire world as its stage rather than remaining within the borders of the EU. And given the current repositioning that the US is undertaking, not least because of the chaos that grew out of the Trump White House, there could be an opening for Europe to rediscover industrial policy levers–so long as those levers match the requirements of the Entrepreneurial Age.
The big news in the startup world last week was Stripe’s new fundraising round which brought the tech giant’s valuation to $95B. The company’s rapid rise since its founding back in 2010 by Irish brothers Patrick and John Collison is part of the process of constructing the foundations of the digital economy, in Stripe’s case by focusing on payments.
But beyond the eye-popping valuation and inevitable musings about when the IPO could occur, Stripe is definitely worth knowing more about, quite simply because of what it reveals about that ongoing digital construction process. Namely, the Entrepreneurial Age is showing just how much larger markets can be when they’re truly digital, with returns on invested capital getting much, much higher than ever was the case in the 20th century.
So while companies such as Visa or Mastercard did quite well for themselves in processing payments, their reach was necessarily restricted by physical constraints (credit cards, payment terminals, phone lines, etc.). In shrugging off those constraints thanks to digital tools, Stripe, on the other hand, is playing a different game indeed.
As entrepreneurship spreads throughout the globe, more pressure builds throughout the system. One of the places where that is most felt lately is early-stage investing. More and more money is flowing as investors attempt to back startups that might turn into tomorrow’s tech giants.
That led London- and Tel Aviv-based investor Gil Dibner to recently question whether the accelerator model was doomed, given the multiplication and increased sophistication of seed funds like his Angular Ventures. Indeed, this new generation of seed funds now competes for some of those same early percentage points in a startup’s cap table, with a proven ability to add as much (if not more) value than accelerators.
I think that Gil’s idea of conflicting interests between seed funds and accelerators is accurate, although I don’t think the conclusion is necessarily that accelerators don’t have a part to play. For one, accelerators still have some advantages that seed funds don’t, including one that we at The Family treasure: the ability to work with many more founders since their entry into The Family doesn’t involve us signing a hefty check. Another important nuance is whether it’s about a mature entrepreneurial ecosystem or one that is still in its infancy—and where the toxicity requires as much help as possible at the pre-seed stage.
🚀 My latest contribution to my firm The Family’s newsletter is a tribute to Jeff Bezos (and Kevin Kwok): Learn to draw flywheels.
🎧 I was invited by Odin for a one-hour conversation with their founder Patrick Ryan. You can listen to it, and read the transcript, here: Building an Entrepreneurial Ecosystem.
Today’s power is vested in the mighty “multitude”—the billions of individuals who are now equipped with powerful computing devices and connected with one another through networks. And it inspires a lesson in strategy and management that every corporate executive needs to keep in mind: the businesses that succeed in the digital economy are the ones that realize how power has been redistributed outside of their organizations. The winners are not the companies who use the most technology. Rather, they are the companies that best use technology to harness human power, which in turn fuels growth and generates profits.
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