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Venture capital has always been an American game played with American rules. Silicon Valley sets the terms, defines success, and draws the world’s best entrepreneurs into its orbit like a gravitational force. For European founders, this creates an existential question: do you stay local and risk irrelevance, or go global and risk losing everything that made you unique?

Martin Mignot understands this tension better than most. A partner at Index Ventures, he’s spent the last three years building their New York office after a career in London, helping European companies navigate the treacherous waters of US expansion. Index itself embodies this challenge—a firm born in Geneva that had to become truly transatlantic to compete at the highest level. Today, they’re arguably the best venture capital firm in the world, with recent exits including Figma, Scale AI, and Wiz.

This summer, Index published Winning in the US, a data-driven playbook for European and Israeli companies expanding to America. The book’s breakthrough is its recognition that there’s no single path to US success. Instead, it identifies four distinct archetypes—‘Telescope’, ‘Magnet’, ‘Pendulum’, and ‘Anchor’—each requiring radically different strategies. A gaming company can conquer America from Helsinki; an enterprise software startup must transplant its founders to San Francisco. Get the archetype wrong, and you’ll burn millions trying to force the wrong playbook.

But what struck me most in our conversation wasn’t the tactical advice about hiring or go-to-market strategies. It was Martin’s observation about the fundamental asymmetry between Europe and America: Europeans obsess about American politics, culture, and market dynamics, whilst Americans barely think about Europe at all. This indifference is both liberating and terrifying. It means European founders won’t face the political backlash they fear, but it also means they’re starting from absolute zero—unknown, unproven, and irrelevant until they prove otherwise.

This conversation with Martin, recorded in September, explores what it really takes for European companies to succeed in America, why so many fail by hiring the wrong “head of US,” and whether the current geopolitical tensions matter less than we think. The transcript has been edited for flow and clarity.

“It’s an overnight success a decade in the making”

Hi, Martin. Nice to see you.

Good to see you.

Martin, we go way back. We’ve known each other for twelve years now. You were already working at Index when they invested in my firm, The Family, back in 2013. You’re still at Index and have become a partner since then. You used to be in London but are now in New York, or between New York and San Francisco—perhaps you can tell us more about that.

Before we discuss the book, Winning in the US, which Index published in July, we should start with a few words about the firm. I won’t name names, but this summer I had breakfast with someone in the US who told me, between us, that Index Ventures has probably become the best venture capital firm in the world. That’s because you’ve had tremendous results recently: lots of portfolio companies going public, lots of visibility in the media, clearly very strong tailwinds, and a very strong presence both in Europe and in the US. You don’t have to comment on the praise, but tell us more about Index Ventures.

Well, first of all, it’s obviously very nice to hear that. I think it’s true that we’ve had a really strong start to the year with the IPO of Figma recently, where we were the largest shareholder; the investment of Meta into Scale AI, where we were the second largest shareholder; the offer by Google to Wiz, where we were the largest shareholder; and the Dream Games operation. So we’ve had a lot of very big outcomes, all in the past six months. But obviously, as you know, in venture it’s an overnight success a decade in the making. Most of these companies—we’ve been in Figma since we led the seed round when Dylan was nineteen. That was over twelve years ago. So these successes are a very long time coming. It just happened that a lot of these transactions are all happening at the same time, but they’ve been very long processes.

Regarding Index, we’ve been doing early stage tech investing for about three decades now. We’re actually celebrating our thirtieth anniversary next year in 2026. We started originally out of Geneva, which will be relevant to the conversation we have today. In a way, starting from a place like Geneva, where there is little to no homegrown tech mega-success, forced us to be global from day one. That was very much the original idea: to bring West Coast, Silicon Valley investment style to the rest of the world, with the simple idea that great entrepreneurs could come from anywhere where you had talent, infrastructure, and resources.

That forced us to look outside. Our first big successes were actually in places like Finland with MySQL, Estonia with Skype, and Sweden with King, which were not prime locations at the time for tech investment and tech entrepreneurship. Then from that strong starting point in Europe, we very quickly expanded back to the US. Today, we are a totally transatlantic fund. Half of the team is in the US, half is in Europe. We invest a little bit more in the US, but it’s roughly half and half. It’s a very balanced, fully transatlantic fund that operates as one team across all those geographies, which is a bit different from a lot of other funds.

“It’s much easier to be born global than to become global”

Index has been publishing various books over the past few years. I know the team who’s been working on it—it’s a lot of work because for each book, you go and interview dozens of portfolio founders and beyond, collecting testimonies and data. It’s all beautifully made. The book Winning in the US is a very nice object.

Tell us more about the book, and maybe we should spend some time discussing the “archetypes”. I think it’s really a breakthrough in the book because startups form such a diverse world. So many startups fail because they apply recipes they’ve read somewhere that don’t really apply to their particular context. You’ve made the effort to distinguish between different types of startups, which you call archetypes. There are four of them, but perhaps it’s worth spending a few minutes introducing each archetype and what playbook being in one bucket or another dictates for founding teams.

Absolutely. Before I get into the nitty-gritty of the archetypes, let me provide some context on the books and on Index Press. The initiative, which we call Index Press, can be found on the Index Ventures website under a section called Press. The driver behind these was that founders always ask us the same questions. Some questions are very specific, but many are not specific to a company—they touch on org design, compensation, option plans, and international expansion. We have a book called Scaling Through Chaos. We’ve done a lot around option plans and compensation in general, and international expansion. We’ve got two books: one is Winning in Europe for US companies expanding to Europe, and this latest book is Winning in the US for European and Israeli companies that want to succeed and expand into the US market.

All these books share the same characteristic and structure, mixing a quantitative approach with qualitative insights. For this book, we studied the expansion plans of hundreds of European VC-backed companies—when they expanded, how they expanded, what team they built, and so on. We coupled that with testimonials, interviewing more than forty top founders like Nikolay Storonsky, Ilkka Paananen, and Daniel Ek, as well as some senior executives, to bring the data to life.

We came up with four archetypes—actually five, but one is a bit different. The fifth one, which I’ll start with, is what we call the “transplant.” These are companies with European founders that started in the US and have been based in the US from day one. Examples include Datadog, Duolingo, and Stripe—not shabby successes, and it’s actually been a very successful archetype. But obviously, that’s not relevant for most European companies. These companies are typically US companies for all purposes, though they also tend to develop quite a bit of European presence over the long run.

What makes a company not a transplant? What stage do you need to wait for before going to the US to fall into the other archetypes?

Any company that was started in Europe, meaning either has a European legal entity or the founders are literally based in Europe with the team based in Europe, even if they incorporate in the US, we would still call them European companies. The transplants are very much US-registered companies whose founders and early team members are all based in the US. They are US companies for all purposes, though some of these founders may be dual citizens. That’s a different category.

The book focuses more on the four other archetypes, which are European-started companies that then expand to the US. These archetypes depend mostly on two things: the size and importance of the US market for the business in the long run, and the go-to-market approach—whether it’s marketing-led or sales-led.

Can you explain in concrete terms what it means to be marketing-led? People may confuse the two categories.

On one extreme, you have what we call the “telescope” companies. These are marketing-led companies where the US is a large part of their market. Examples include gaming companies like King, Supercell, and Voodoo in France. Because of the app store and marketing channels, especially performance marketing that are global, these companies can scale globally, including in the US. The US is their largest market but not the dominant market. They can do this all from one location, which can be anywhere—Paris, Stockholm, or Helsinki. These have been some very big successes. Anything in consumer mobile, with gaming being the biggest, follows this approach. These companies tend to keep most of their team in Europe. Everything is very Europe-driven. Over time, when they get bigger, they may hire a few senior folks in the US for product angles or business development relationships with Meta, Apple, Google, and TikTok.

Those are the companies you buy from to raise awareness and convert customers.

Exactly. They’re your distribution partners, so you want to be close to them. But apart from that, most of the team stays in Europe.

On the other extreme of the spectrum, very sales-driven companies where the US is the vast majority of your market, especially early on, you have what we call the “magnet.” These are typically enterprise software companies, especially if you’re selling infrastructure-related products or truly global solutions like cybersecurity. Examples from our portfolio include incident.io and Collibra. Most Israeli cybersecurity companies follow this model, and Datadog in France would be a good example. These companies start in Europe and build their first work there, but there’s such a pull from the US market that very quickly the founding team ends up having to spend most of their time in the US, moving there either part-time or full-time, building at least a go-to-market team, and eventually moving more and more senior leadership to the US.

That’s because in those segments, sales means presence at a very senior level. The CEO or very senior people need to be there to meet potential customers, convert them, and prove they mean business.

Exactly. That’s what we mean by sales-driven versus marketing-driven.

Then you have two others in between these extremes. One is the “pendulum”—companies that started in Europe. Index, in a way, is a pendulum. These are truly balanced companies where the US becomes close to half of the business, maybe slightly more or less, but Europe remains very important, as does the rest of the world. Examples include Spotify and Celonis. These companies build significant teams on the ground in the US but also have significant teams in Europe and never truly make a choice. If you look at Daniel Ek, he’s a really good example—he literally spent half his time in the US and half in Europe when scaling Spotify in the US. These businesses live on both feet and keep strong presence on both continents.

Finally, you have the “anchor” model, where Europe remains the dominant geography. The senior executive team remains in Europe, and the largest market remains European. But the US grows over time and there’s a pull, though it remains a smaller portion of the overall market. Adyen is a good example—the founding team is still in Europe, and most of the market is European, even though the US is growing very fast. Eventually, you can think of it as being served from Europe. Revolut is another good example where Europe remains the largest share of the market. These are typically in industries that are very big domestic sectors where you can build a hundred-billion-dollar company just in Europe, even though you will have some global presence. Fintech is obviously a case study of that.

There’s another framework I’ve been using a lot, which is to distinguish between “default global” and “default local.” You have to be aware of this. When you start, depending on the market you’re trying to address and the industry you’re part of, if you apply a local playbook to a business that’s meant to be global, it usually fails. Fintech is very much default local because you need to address a market that’s local due to regulations and culture—the relationship with money and banking—and you can’t really succeed otherwise.

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Manufacturing has become the defining battleground of 21st-century economic competition. China's transformation from assembly hub to advanced manufacturing superpower didn't happen by accident; it emerged from strategic choices about industrial policy, workforce development, and the patient accumulation of process knowledge that Western economies largely abandoned in their rush toward financialisation.

Patrick McGee's masterful Apple in China provides essential insight into how this transformation unfolded. Through meticulous reporting from factory floors and boardrooms, Patrick reveals how Apple mastered what seemed impossible: outsourcing production whilst maintaining absolute control over its value chain. The book shows how Apple kept design, knowledge, and brand—the parts that appreciate—whilst leaving factories and workers to others.

More importantly, Patrick's work illuminates why that model is now unraveling. Not because Apple failed, but because the conditions that made it possible—China's unique manufacturing ecosystem, unfettered global trade, and Apple's relentless design innovation—are disappearing simultaneously. As software becomes commoditised and hardware determines competitive advantage, understanding how China built its manufacturing dominance becomes crucial for grasping what comes next.

This conversation, recorded in July 2025, explores the mechanics behind China's rise, the strategic decisions that enabled it, and whether the West's current push to ‘reshore’ manufacturing can succeed—or if it represents a fundamental misunderstanding of how modern production actually works. Patrick brings a reporter's eye for detail and a deep understanding of both American business culture and Chinese industrial policy to questions that will shape the global economy for decades.

“It was miserable failure for at least 24 months”

Hi, Patrick. It's great to have you here. Thank you for agreeing to do this.

Thanks, Nicolas. My pleasure.

This is an interview about your book, Apple in China, which is everywhere. Everyone's interested in it—those who are interested in China, those who are interested in Apple, those who are interested in tech in general or manufacturing. Obviously, there's also the perspective of reindustrialising the West, restoring our manufacturing power that apparently has been lost to China over the past 20 to 30 years.

All in all, it's a book that is of interest for many people. It means there have already been a lot of articles and interviews. We're doing one more, but I’ll try to ask questions that haven't been discussed that much yet. Thank you again for agreeing to do this.

First of all, can you remind us of the history of the book? How did you decide or how did someone decide that you should write this book?

I was the Financial Times reporter for Apple for four years, from 2019 to 2023. I had previously covered the German automotive sector. For several years, I was covering the dieselgate scandal at Volkswagen, but I was in factories in Germany all the time. People who know German corporate history will know that the Germans did phenomenally well throughout the 2010s by making China their massive market. Volkswagen, I think 40% of profits were coming from China. Germany as a country is actually undergoing something pretty similar to Apple as a company. In other words, deep success, but deep vulnerability and exposure to China. Before that, I was in Hong Kong for three years. In a sense, the idea for the book—I didn't think about this at the time, but in retrospect, I'm connecting the dots the way that Steve Jobs said he'd like to do for his own life—is the combination of those beats. China, supply chains and tech, if not Apple in particular. Then there was the fact that I found Apple to be quite a difficult company to cover.

I don't look back in my four years as an Apple reporter as one success after another. It was a miserable failure for at least 24 months before I began to understand how to cover it in a distinct way, largely because I don't care for a lot of Apple coverage, and I don't like covering it the way that people like to cover it. It typically gets covered for a tech audience. I'm much more interested in not Apple per se, but Apple's impact. It's such a large company. It has such a role in our culture. Obviously, we are tethered to our smartphones in a way that we've probably never been tethered to any technology before. There were all sorts of things that were interesting about Apple, but the geopolitical lens is the one that has really been undocumented. Everybody knows that Apple is manufactured in China, and most people could probably tell you two things about Foxconn: that it assembles Apple products and that there were some suicides 15 years ago. That was honestly the state of knowledge before I began to really delve into that. And then it became obvious that there was a book there because much had really just been uncovered.

And basically, questions that I wanted to answer for my own knowledge of Apple were not available. Up until even just waiting for the book to be published, I would randomly ask ChatGPT certain questions where I knew I had the answers in the book just to see what it would come up with. And it just routinely hallucinated and got things wrong because much of it hadn't been reported before.

Yeah, that's interesting. I used to work in policy for the French government on tech-related issues. And Apple was notoriously difficult to deal with because they didn't have an office, they didn't have a team, you didn't know who to talk to. And when you finally found someone either from Apple or representing them, they would say, “Officially, we don't exist. We're not talking to you. We'll pass some messages, but we're not here,” basically.

Is it the same for journalists like you? Or did you have someone to talk to at Apple?

No. You have an Apple PR team that—I want to be clear about this—is not incompetent. They know what they're doing, but they are unhelpful by design. They are not there to help you understand the company. They are there to figure out what you're reporting before you report it so that they can brief other individuals and do damage control. They would often try to kill a story in the 48 hours that I would give them to comment. But they're never there to be like, “Oh, that's an interesting topic. Let's help you understand the manufacturing process a little bit. We'll get some manufacturing design engineers on the phone with you and handhold you as to how we work with Foxconn.” That would never happen. Certainly, they would never get excited that you're interested and say, “We should actually have you fly to some of these factories in China. Let's go through the process with you. Let's see how the sausage gets made.” It's nothing like that whatsoever.

I have to say, among the difficulties I had in getting inside Apple as a reporter, well before I was writing the book, was that I had been misled into how to do it by all the reporting I had done in Germany. Because in Germany, by law, companies have to be split at the board level between shareholders, which is basically everyone on the American side of things, and the labour union side. What that meant was that whenever you got in touch with one of those sides, they were pretty happy to talk to the media because there's tension within the company, and the shareholders' side wants that side to win, and the labour side wants their side to win. They always have this incentive to give you the inside narrative.

Apple is very different, and American corporations at large are very different. They want to tell you a singular narrative. They don't want to reveal the tension, even though it probably exists not differently. The ease with which I had access to German corporations led me into a complacency that it was easy to get the inside view of companies. With Apple, it was like talking to the CIA and trying to figure out stories. They're actively unhelpful, and you're trying to figure out your story.

“I had to cut 20,000 words, and It was good stuff”

I imagine it's the same in China. China is notoriously difficult to cover because nobody understands a thing. You need to master the language. And if you really want to go deep, the Communist Party won't talk to you either. You picked a really difficult subject, in a way.

Yeah. A fair criticism I haven't seen a lot of ink spilled over, but would just be fair, is the idea that I didn't give enough credence to the Chinese official side of things. It's a hilarious criticism because even the top analysts working for America don't really understand how the CCP works at the highest echelons of the Politburo. But I would say the book is very much a history of Americans going into China. It's ‘Apple in China’ rather than the more local side.

I do try to tell some of those stories through the eyes of someone like Terry Gou from Foxconn, because there's something fascinating about the fact that Foxconn is a Taiwanese company operating on the mainland and indeed building up the competence of the engineers and the staff on the mainland in massive numbers. It must still be true today, but it became true in 2001 that Foxconn was the largest employer in the country. That's playing the role that Walmart plays in America, except that it's a little Taiwan, a little Taiwanese island. Or Taiwan, a little island, has this massive company operating on the mainland in huge numbers.

That's really interesting. I do try to go into that, but it's baffling to me that there is not a Western biography of Terry Gou, and there's not a Western history, or indeed, any history that I'm familiar with, of Foxconn. As authoritative as I hope the book is, I think I mentioned in the acknowledgments, this is like covering a country and being the first person to write a major history of it. The Apple and China dynamic. Obviously it's not the first book about Apple, but there should be multiple books about the Apple-China relationship. I know better than anyone how little I have scratched the surface of this story, and it's pretty detailed for a 400-page book that spans 30 years, if not more. But there's a lot more. I know that because I had to cut 20,000 words, and it was good stuff.

Yeah, always the same with books. Your editor forces you to cut out many parts.

“That's basically Apple fan fiction”

I had a first question about Jony Ive. It was recently announced that he's somehow joining OpenAI. It's more complicated than that, but basically, from now on, he will work for OpenAI and potentially help them build a hardware device, something that serves AI like the iPhone created the mobile revolution or the smartphone revolution.

What I realised recently in that context is that Jony Ive has a massive fan base of people who think his departure from Apple was a major loss, that he should have become the CEO of Apple instead of Tim Cook.

Now, there's a lot in your book about both men and their respective contribution to Apple expanding in China. What you explain basically is that Apple's success is in large part due to large-scale production, and only China could deliver such capacity at such a scale. But you also explained that it was a challenge because Jony Ive's design work made it really difficult to manufacture the iPhone.

And so you could have a first impression from a reader's perspective that he started clueless about the whole manufacturing process, then learned a lot to make it possible for the manufacturing side to actually build what he had designed. But essentially, without China and the manufacturing capacity they provided and Tim Cook orchestrating the whole thing, Jony Ive would be a designer in his office drawing nice designs on paper or on a computer, and we wouldn't be hundreds of millions using an iPhone every day.

Can you replicate that at OpenAI without a Tim Cook and without China?

🇨🇳 After publishing my in-depth piece on advanced manufacturing in China, I was struck by the volume and intensity of feedback it generated. The numerous interactions and follow-on discussions made it clear that China, once again, emerged as a subject I needed to explore much more deeply.

As is often the case when I embark on such a learning journey, one of my go-to sources is Jordan Schneider's newsletter and podcast ChinaTalk, which I've been following for many years.

* Jordan's work stands out for two compelling reasons: its unwavering focus on China—with a more recent pivot toward technology and US-China rivalry; and its refreshingly multidisciplinary approach. ChinaTalk isn't merely a publication about technology, economics, and finance, but one where culture, history, institutions, and comparative analysis of different regimes and countries occupy substantial space, offering a uniquely valuable perspective for Westerners seeking to better understand China.

Jordan and I have known each other for years, following each other's work (I believe we started writing on Substack around the same time), and occasionally exchanging thoughts via social media and email. However, this interview marks our first extensive face-to-face conversation, and I'm delighted to have created this opportunity to deepen a relationship that I expect will be instrumental in continuing to make sense of China in the years ahead.

In our conversation, Jordan and I explore a wide range of topics: his personal journey learning Mandarin and living in China; the volatile cycles of Western perception regarding China's rise; the evolution of China's technological capabilities from hardware manufacturing to software innovation; the critical role of China's governance system as the great unknown variable; the complex dynamics of US-China competition; Europe's precarious position caught between these superpowers; and the growing challenges facing Western China analysts who can no longer conduct on-the-ground research. Throughout, Jordan brings nuance and historical context to these discussions, challenging simplistic narratives about China's trajectory.

I should note that Jordan gently scolded me when I mentioned wanting to publish this interview in written form only. He challenged me to release the audio track as well, pointing out that it gives the audience more flexibility in how they consume the content, and that the audio version provides a more intimate experience of connecting with both host and guest, as well as capturing the unique alchemy of our conversation. So feel free to read the (slightly edited) transcript below, or listen to the (also edited) audio track above.

* I should mention that I haven't yet decided whether I will resume podcasting on a more regular basis as part of Drift Signal, so I didn't include formal elements such as an intro or opening song. I hope you enjoy it anyway!

Introduction and Background

Hi, Jordan.

Thanks so much. It's such a pleasure to be here. I'm a big fan of yours.

Oh, thank you. I'm a big fan of yours as well! Thank you for making the time.

I'd like to start with maybe a few words about yourself and your relationship with China. Where does it come from?

My name is Jordan. I run a podcast and newsletter called ChinaTalk, where we cover China technology and US-China relations. I lived in China from 2017 to 2020. I started there as a graduate student and spent time at a tech company. It's defined my professional life for the past decade. I think China is a fascinating, wonderful place with incredibly dynamic people, culture, and history. It's also America's strategic competitor, and reconciling that tension is complex. I feel a connection to China at a high level, but have learned enough about the place to have some strong issues with the government and the direction it's taking the country. This is a tension that myself and everyone in the West who engages with China professionally has had to grapple with for a very long time.

You mentioned being there from 2017 to 2020. Does it mean that you had to come back because of COVID?

Yes. I was in Malaysia for Chinese New Year of 2020, which is when COVID started in China. I was scuba diving at a resort where 150 of the 200 people were from Wuhan with strong Wuhan accents. By day four, we started coughing and got very sick. I flew back to the US to see my parents because China was the only place with a pandemic at that time. Then the world shut down. Foreigners couldn't enter China regardless of their visa status, and at some point, I had to move my life back to the US.

I guess you still had to get your stuff out?

Yes, it was in boxes for a while, then on a boat. I think it showed up six months later. I didn't even bring a laptop to Malaysia because it was supposed to be a relaxing trip.

Learning Mandarin: “Electric Brain” and Beyond

You mentioned recognising the Wuhan accent, which reminds me and should remind the audience that you're fluent in Mandarin.

Can you explain how you learned Mandarin? For us Europeans who are not native English speakers, we have to learn English first. And then if you tell me after that you have to learn Mandarin, I'd say that's just too much. How did you manage it?

I wouldn't say fluent. I would say on the journey. I started in 2017. It's been eight years now. Chinese is a very vocabulary-dependent language as opposed to romance languages, which are much more grammar-forward. With romance languages, if you know one, you get 50% of the vocabulary for free when learning another, or even 75% if you're going from Spanish to Italian.

Since I'm not living in China anymore, my vocabulary and comprehension are weirdly spiky. I can read a Xi Jinping speech very well or understand discussions about semiconductors or AI, but casual conversations or following multiple friends talking at once becomes much more difficult.

There are aspects of Chinese which are much easier than people expect. Once you get over the initial challenge of the writing system, the characters build into each other. Words, especially modern ones, are very logical. The word “computer”, for instance, translates into “electric brain,” which is fun. You're making new words with ancient characters.

The grammar isn't difficult, which means you can ramp up quickly. There's not the pain of people correcting you on subjunctives like I experienced with four years of high school Spanish. With Chinese, once you know the words, you can pretty much say what you want to say.

How do you practice in the US? Do you have a tutor or friends with whom conversation in Mandarin is mandatory?

I have a friend group in New York City. There's a cool diaspora community worldwide now. People used to leave China only for economic reasons, especially after '89, but over the past decade, there's been a new wave. If you're gay or lesbian, or uncomfortable with the politics and have enough money to study overseas, often the choice is to stay abroad, not just for the salary but for the lifestyle.

In New York, there's a fun left-wing, feminist monthly comedy event all in Chinese. You see people doing stand-up making fun of Xi and masculinity in China. This is speech that's not allowed in the PRC. I get to participate a bit in this diaspora community. I also do online tutoring through Italki.com, which is incredible—you can book tutors for $5-15 an hour.

I watch a lot of Chinese TV too. The best show last year featured four celebrity couples who'd been married for at least 10 years and were all on the verge of divorce. Initially, you think there's no way this is real—who would sign up for this? But after one episode, you realise it's incredibly authentic. No one would fake having the arguments they've been having with their spouse for 10 years in front of the whole country. I try to have at least 2-3 hours of Chinese from podcasts, TV, and conversations every day to keep progressing.

The Sine Wave of US-China Relations

The reason I reached out to suggest we record this interview is because I listened to what I think was your latest episode of ChinaTalk [as of 28 April 2025], where you interview Rush Doshi. I'll let you tell more about Rush and his work. But yesterday, I believe you wrote that it was probably the most important episode of the year.

In this episode, part of your conversation is about how there are too many ups and downs in how we perceive China. We go from bearish to bullish and back again.

This echoes my own experience with China. I grew up traumatised by the Tiananmen protests and how they were crushed by Deng Xiaoping. Then years later, I read books about Deng and how he contributed to developing China, which was impressive. I became bullish about China because they excelled in tech. Then I became bearish because of how they handled COVID. And suddenly this year, since Liberation Day, everyone seems bullish again.

We can't keep track, and I appreciate your take on why it's so volatile.

I think it might just be human nature. We were talking about Europeans, and everyone was pessimistic for the past 5-15 years. Then suddenly Germany starts spending money, Europe's back, and the stock market's up.

We saw this in the Cold War too. JFK went to his grave convinced the Soviet Union would overtake America. Throughout the Cold War, America was frequently convinced its adversary was gaining ground.

I wonder if the media environment is compressing these sine waves. In American history from the 1830s-40s onward, there was quiet confidence that America would eventually overtake Britain. Maybe not tomorrow, but at some point—whether in 1880, 1910, or as it turned out, 1945.

I agree it's been wild. I've been following politics professionally for about 15 years, and to have experienced so many flips between “America's back/China's back” and “America's cooked/China's cooked” suggests it's less about fundamental changes and more about how people use these narratives rhetorically or simply want something new to discuss.

Can you tell us a bit about Rush and how his work is relevant to what we just discussed?

Rush Doshi is a scholar with a PhD in China studies. He wrote an excellent book about China's long-term ambitions called The Long Game that everyone should check out. In 2020, he joined the Biden administration on the National Security Council, which coordinates national security decision-making for any presidency. He's since left government and works at a think tank.

He and his colleague Kurt Campbell, who was his boss and later became Deputy Secretary of State under Secretary of State Anthony Blinken, tried to step back from that compressed sine wave of “China is winning/China is losing” and “America is winning/America is losing.” They performed what's called a “net assessment” of the long-term factor endowments, strengths, and weaknesses that we can plausibly project over a decade or two.

Net assessment has been part of American strategic thinking for at least 50 years. Andy Marshall, a legendary figure in American strategic history, started at RAND and then founded the Office of Net Assessment in the Pentagon in the early '70s. It works as the Secretary of Defense's personal think tank to help think beyond the next budget cycle or current war to the long-term challenges America faces.

When you're a defense secretary, your decisions matter 10-20 years down the line in terms of research and development investments, platform purchases, and force evolution. Rush and Kurt did an abbreviated version of this assessment in a Foreign Affairs article, stepping back to look at what the US and China will likely bring to the table in coming decades.

China's Technology Rise: Hardware First, Software Second

Can we revisit a few episodes of this recent history? I'd like your views on specific events that contributed to my perception of the US-China balance.

Before 2014, I was completely dismissive of China regarding tech. I wrote a book about tech in 2012 with a friend who suggested including content about China. And I said that in my opinion there was nothing interesting there—they'd never export anything relevant to Westerners in the technology field. Then two years later, the Alibaba IPO opened everyone's eyes to the big things happening in China that might be on par with US tech giants. What was your perception at that time?

In 2014, I was 24 and just starting my career, so I didn't have well-formed thoughts then. But looking at when Chinese software and hardware really started making a global impact, there's a wonderful book coming out called Apple in China that covers how China scaled production of iPods and then iPhones at an exponential rate throughout the 2000s and 2010s.

To understand Chinese technology, you need to look at both hardware and software, with hardware being the more impressive story that starts earlier. In 1976, China was one of the world's poorest countries—poorer than India. The party recognized that the Mao era was a disaster and decided to take a different path, changing the incentive structure for government officials from ideological purity to economic growth.

This created incredible competition across provinces to attract business, provide free land, and make deals. It got things moving. They imported the East Asian development playbook from Japan, Taiwan, and South Korea. China's size and education system allowed them to scale from assembly to management to developing and selling their own products globally.

This remarkable interaction of international capital, engineering know-how, and management expertise was absorbed, domesticated, and then re-exported under Chinese brands. They saturated their enormous domestic market, which was protected to help firms get a head start. Now we have Huawei, Xiaomi, Oppo, BYD, DJI, and other hardware-forward global firms that are as competitive, if not more so on some dimensions, than the best the rest of the world offers.

The next step for me was 2016. Uber, trying to compete in China, had to retreat and sell its operations to local rival Didi. This signaled that US tech companies wouldn't be global after all and would concede significant market share to Chinese competitors.

The Uber/Didi story illustrates how software and operations developed in China. Several Chinese software companies benefited dramatically from protectionism—Facebook was banned, Google was banned, and there's a list of about 250 banned platforms.

Smart, hungry Chinese software engineers built remarkable companies like Tencent and Alibaba. There were also localisation challenges. It's harder to compete if you're trying to do Finnish e-commerce against Amazon, but if you can leverage all of China, there's a higher total addressable market where you can use local knowledge, understanding, and hustle against foreign companies that might be arrogant.

The large market made it easier for companies like Didi or Alibaba to take on Uber, eBay, or Groupon. Scale is the big moat for both hardware and software companies, and China is really the only place where you could achieve enough scale, with some government assistance.

But I think government intervention is sometimes overstated. Didi still paid significant money to buy Uber's China operations. If the game was entirely tilted in their favor by the government, they could have just appropriated it or revoked Uber's license. There's a sliding scale the government considers with all companies—Tesla is a great example. How much foreign competition do we want to help upgrade our own players? What consumer surplus and jobs can foreign players bring? But ultimately, they prefer Chinese firms to win domestically, then be disciplined by export competition.

China's “Wolf Warrior” Miscalculation

Then Trump was elected, and there was an inspiring article in the New Yorker by Evan Osnos titled “Making China Great Again.” It suggested Trump was so rude, clumsy, and incompetent that China had an open road to conquest, influence, and making new friends.

But then, as you discussed with Rush, they blew it with wolf warrior diplomacy—being clumsy and threatening to many countries. Why did they squander the chance to gain advantage using Trump as leverage?

Regarding Trump and wolf warrior diplomacy, 2016-2020 was a tumultuous time in US-China relations. Trump went on a remarkable arc. Initially, he seemed aggressive toward allies, but in retrospect, he wasn't threatening to invade Canada. Xi was riding high and seemed to think that being able to say “F-you” to many people was the mark of a great power—or perhaps the domestic upside of being praised for confrontational statements was more important than winning over Indonesia, Vietnam, or India.

China's engagement with the world became even more noxious and concerning than what Trump brought, to the point that by the end of his administration, most countries had decided to ban Huawei—an outcome that wouldn't have been predicted in 2016 when Trump seemed intent on dismantling alliances.

So Western cohesion was basically saved by China's twisted incentive system that rewarded confrontational statements on social media rather than building long-term alliances?

Yes. Also, recording this in 2025, Trump feels much more consequential. During his first term, it didn't feel like he was really about to reshape the international order and abandon America's alliances. Countries doing 20-year assessments were still pricing in a high probability that America would get over this phase and return to being a strong, reliable ally. The discount factor of America being there when it counts is much lower in capitals now than it was during Trump's first term.

The COVID-19 Response: Strengths and Fatal Flaws

Which leads us to 2020, with both the pandemic and Trump leaving office after losing the election, replaced by the Biden administration. That's when everyone around me became bearish on China because they seemed to close everything down. There was the crackdown on tech companies. Jack Ma disappeared in November that year.

A significant influence for me then was Peter Zeihan, who emerged as a go-to expert explaining why China is doomed to fail due to weak demographics, poor geography, and other problems. What's your take? Did we become too bearish? Is Zeihan right that China will break apart demographically?

I haven't read much of Zeihan, so I'll pass on that assessment. But the arc from 2020 to 2022 is interesting. People were angry at China because they “created the virus,” whatever that means. But from 2020 to 2022, we saw both strengths and weaknesses of contemporary Chinese governance.

People forget that the entire world was locked down in crisis, yet for a while, there was no virus in China. Their playbook—intrusive lockdowns and mass testing with targeted containment—worked until the virus mutated to become so virulent that the approach no longer applied. The Western approach of partial shutdowns meant our deaths came earlier—a million people died in America over 2020-2021 from essentially unchecked spread.

The Chinese government made catastrophic errors affecting millions when they took too long to accept the new reality with Omicron. You couldn't lock down your way back to normalcy, yet they shut Shanghai for 10 weeks with people unable to leave their apartment buildings, only to reopen and have the virus return.

They made the incredible decision not to buy Western vaccines, perhaps due to nationalism or misinformation reaching leadership. By the time they opened up, more people died than necessary because they were using inferior vaccines instead of mRNA technology.

You can analyse factor endowments like demographics and debt levels as Rush did, but there's an enormous unpredictable variable about China's performance over decades: the party and its governance system. On one hand, they've strategically enabled industrial upgrading that created incredible EV companies and advances in semiconductors, batteries, and manufacturing. On the other hand, you have a leader who appears to be another leader for life, making succession scary. Information flows during COVID showed the dangers of lacking mechanisms to speak truth to power or media that can raise issues. The risk from politics going wrong is much higher with this system than with the more collective decision-making of the mid-90s to 2013.

“Hardware Eating Software”: A New Pendulum Swing

Now we're in a different period. Since Liberation Day, everyone seems bullish again. Nick Denton, the Gawker founder, has left the US and bet everything on China. He's working with my friend David Galbraith, a European VC, on a thesis that China is winning the industrial war because software is now embedded in hardware, and China dominates hardware manufacturing.

The thesis follows that while “software is eating the world” (Marc Andreessen's thesis), now “hardware is eating software” because software is so cheap it can be given away free with hardware like EVs, drones, or whatever Chinese manufacturers export.

The overarching view is that China owns the world now because it's about manufacturing hardware at scale. This, along with various other things, seems to be prompting Noah Smith to write about the “Chinese Century” with everyone seemingly giving up on the West's ability to compete. Are we going too far to the other extreme?

Tom Friedman has been writing something similar about China's hardware capabilities, and he admitted, “Whenever I'm writing about China, I'm really just writing about America.” For casual observers (Friedman visits one week a year), these broad narratives are often focused on making statements about domestic politics through arguments about adversaries.

Noah Smith deserves more credit—he's spent time in Japan, he's an economist, and he's been thinking about industrial policy.

This pattern repeats throughout history—in the Cold War regarding the Soviet Union, with Japan in the 1980s, and with Americans talking about the British Empire in the 19th century. People mainly think about themselves and want to win domestic political fights. They craft the adversary to support their domestic policy priorities.

Regarding Nick Denton's “hardware taking over the world” thesis—if you look at global GDP or manufacturing, China isn't at 100%; it's around 30-35%. There are many other countries. The point Rush and Kurt emphasize, which resonates with me, is that the world is uncomfortable with the Chinese government as currently constituted. There will continue to be lingering discomfort with a world where the commanding economic heights of the 21st century are completely controlled by China.

Given this discomfort, leaders and policymakers with liberal democratic leanings should recognise that the G7 collectively equals or exceeds China. China represents only about 25% of global land mass, resources, and population, meaning 75% of the world could counterbalance them if it cooperated more effectively. Whether hardware, software, or something else determines who shapes the 21st century, it's important for countries to work together to reach the scale needed to counter China.

The most frustrating thing about the Trump administration was its failure to recognise this. I worry about what happens if America truly steps back—will the rest of the world fold? Or will they create their own arrangements, like what happened with TPP?

I had a fascinating conversation with a Japanese nuclear analyst about the US nuclear umbrella becoming less reliable. He said 95% of Japanese hate the Chinese government and fear a world they dominate. Despite being victims of Hiroshima and Nagasaki, he believed Japan would acquire nuclear weapons before allowing China to dictate terms. There's significant latent energy even without America.

Europe's Position: Caught Between America and Chin

I'm curious about Europe's position, Nicolas—both in accepting America's disengagement and taking military and economic steps to address that reality.

Good question. I think Europe will take a long time to realise America is drifting away. They heard JD Vance's speech in Munich but will need three or four similar messages before they truly accept it and act. Europe still sees itself as too fragmented, with power distributed among national capitals, to leverage its size.

As Rush argues, we have size but lack the ability to convert it into scale and ultimately power. What I'm hearing lately is “if we can't count on America anymore, maybe we should get closer to China.” It's always either/or—either America or China. Europe struggles to imagine its future without relying on a larger protective trade and security partner. America used to be both. China can't be a security partner, but it can be a trade partner.

Look at Germany—they need the Chinese market for cars and machine tools. A world without that is hard for them to imagine, creating pressure on their government not to cut ties with China. We're stuck in between, and it's difficult to predict our direction until we've invested in our own capabilities and sovereign infrastructure.

That's fascinating—you'll need three more JD Vance speeches. Maybe a war starts and America doesn't show up. That would be the ultimate message. It's hard to imagine how much more obnoxious he could be.

What I meant is that the JD Vance speech would have been enough, but followed by the incompetence displayed with Liberation Day and its aftermath, everyone thinks “they're not that serious after all, they're still incompetent.” Maybe they didn't really mean what they said in Munich.

From a European perspective, the Trump administration looks like “clowns” (to quote Tom Friedman)—dangerous clowns because they're in charge—but it's difficult to imagine they have a thousand-year plan to cut ties with Europe and end security guarantees.

Just wait. Trump's pretty old. You might get a JD Vance president before you know it. That might be what Europe needs to take this seriously.

That brings me to another aspect. We all prefer to rely on economics, trade, and hard data, but as you say, a key part of your message is that it all depends on the party and what it becomes regarding China. For America, maybe it depends on how the culture wars evolve.

I was impressed by Noah Smith's piece suggesting America is drifting away from Europe because Europe no longer presents the image of a white Christian continent. America liked that about Europe, but Europe has changed, so Americans are disappointed and less interested in our problems.

I don't know how to answer that directly. It has been interesting to see how race and religion influence foreign policy, with America often showing more sympathy when white Christian people are under threat. I don't know if Europe not benefiting from that historical bias in American foreign relations is a factor, but what I will say is that the US has elections every two years. As extreme as governance gets, the pendulum tends to swing back, particularly after swinging hard in one direction.

China sometimes has that feedback loop too—you can see it in how the tech lash has evolved to Xi Jinping meeting with Jack Ma five years later saying “We really need you guys.” But they have an aging leader who's been in power for over 10 years with no term limit. History shows strange things happen when people hold power too long.

The potential for errors is orders of magnitude larger than what an American president could do, constrained as they are by courts, public opinion, and elections. This is the big unknown that's difficult to project. On one hand, it's impossible to know what Chinese governance will look like in 20 years. On the other, Trump has expanded our understanding of how damaging an American president can be—willing to dismantle global free trade and alliance networks that have served America well since 1941.

This makes analysis harder but also more interesting. The error bounds around both a personality-driven Chinese state and a norm-breaking American presidency create more uncertainty than we've seen in decades.

The Uncertain Future of China Analysis

One last quick question: you're an American analyst focused on China and technology. Can you confirm that people like you haven't been able to return to China for research in recent years? The tensions seem too high for people interested in sensitive topics to be allowed in. How do you conduct research, and what happens to China analysis in 10 years if no Americans have been able to immerse themselves?

During COVID, no one could enter for two years. After Meng Wanzhou, the CFO and daughter of Huawei's founder, was arrested [in Canada], China detained two Canadians who were doing normal analyst work and dramatically expelled others. Some Americans have been stuck there for uncomfortable reasons, making Western analysts nervous about conducting research in China.

The situation has improved slightly with more delegations and track-two dialogues. Tom Friedman visited recently. But right now, we're in a trade war with significant uncertainty. I wouldn't go today because arresting people and using them as bargaining chips is one of China's escalation options. In such an uncertain environment [we're recording on April 28, 2025], I wouldn't want to be caught in the middle.

I would like to return eventually. There are safer approaches, like being invited by universities or organizations, rather than what people used to do—arrive on tourist visas and conduct interviews. That's clearly no longer viable. If you're discussing politics and technology, you can't do it secretly or on a tourist visa, as they might label you a spy and detain you.

More broadly, the number of American students in China has dropped from 10-15,000 to perhaps 500 now. That's a significant disruption. Young people who listen to my podcast and ask for career advice face challenges. The language is difficult and takes time. It's much less enjoyable studying at your computer versus living there and absorbing the culture.

China is an enormous, gorgeous country with incredible food. Chinese people are similar to Americans—personally forward, outgoing, and interested in random conversations, with little pretense. Everyone dresses casually without rigid social hierarchies like in Japan, making it a fun and exciting place for foreigners to explore.

It saddens me that fewer people pursue this path due to political challenges. It's also problematic for policymaking that fewer people have experiences like mine and Rush’s, spending substantial time in the country and learning the language.

Essential Reading on China's Past, Present and Future

Finally, apart from ChinaTalk, what would you recommend for listeners or readers interested in learning more about China today and tomorrow?

I have two book recommendations to start. First, a biography of Xi Zhongxun (Xi Jinping's father) by Joseph Torigian coming out this summer. Joseph is a unique scholar who speaks both Chinese and Russian, which helps understand Cold War history through Soviet archives.

Biographies of Xi Jinping tend to be boring due to limited source material, but his father had an incredible life—he was a prominent general who was purged, then returned as a forward-leaning provincial leader. His son witnessed this during the Great Leap Forward and Cultural Revolution, seeing his father nationally shamed for being a “bad Communist.” Joseph's book is monumental, both in research and narrative.

For deeper Chinese history, I recommend Jonathan Spence, considered the best English-language writer on the subject. His The Search for Modern China, starting around 1600 and continuing to the present, is getting a new edition this summer updated to 2025. It's beautifully written and shows how current challenges faced by the party and Chinese people have been addressed differently over centuries. Many people read this book and fall in love with learning about China.

Lastly, Julian Gewirtz's Never Turn Back covers China in the 1980s, the most exciting period in Chinese cultural thinking. There was tremendous openness and possibility before the government's response to Tiananmen in 1989. Given how static Chinese governance feels today, it's refreshing to remember that not long ago, there was enormous internal debate about what China should look like and how society should be organized. Julian, also a poet, provides a human, literary, and grounded sense of the possibilities people imagined in the 1980s. That future was blocked, but similar changes will likely occur again in our lifetimes. His book expands your imagination of China and prepares you for the changes it will almost certainly undergo during the 21st century.

Great. Thank you, Jordan. You've been very generous with your time, insights, and book recommendations. I'm very happy we had this conversation.

This was a ton of fun.

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From Paris, France 🇫🇷 (and New York City, US 🇺🇸)

Nicolas

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.driftsignal.com/subscribe

The Agenda 👇

* The Building Bridges podcast: a conversation with Azeem Azhar on his book Exponential 🎧

* My latest Sifted column about French startups raising money like never before

* Thumbs up/down for the last weeks

* A list of recently unlocked essays from the archive

📓 What a journey! My first encounter with Azeem Azhar, writer of the Exponential 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.

👉 Read more in It's been a record year for French Tech; what's next? 🇫🇷

😀 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:

😐 I call it “The Great Fragmentation”. David Halpert of Prince Street Capital calls it “Digital Decolonization”. And this article published in Bloomberg discusses an interesting variant, which they call “Westlessness”. Give a read to “Westlessness” Is the Word if the Old Established Alliances Fall Apart:

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.

😒Another one along the same line: Who needs expats? (from The Economist). It discusses trends that I already covered in my 2015 essay The Power of the Tongue: English in the Digital Economy, and I’d like to share this fascinating quote:

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 two more essays from the European Straits archive recently:

⚖️ Principles for Capital Allocation (April 2020) 

👾 Unai, VR, and the Hardware Lottery (September 2020)

And here’s the whole Twitter thread including all unlocked essays since last June:

Sign up to European Straits if you don’t want to miss the next issues 🤗

From Munich, Germany 🇩🇪 

Nicolas

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.driftsignal.com/subscribe

The Agenda 👇

* Chris Bruntlett talks about cycling in cities in the latest episode of the Building Bridges podcast

* A complementary reading list on the future of urban transportation

* Thumbs up/down for last week, and a few unlocked articles from the archive

Here’s my investment thesis in a few bullet points:

* we long thought that the only playbook to build tech companies was that of Silicon Valley;

* but then China opened our eyes to the existence of a very different playbook;

* 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.

* 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:

* This is the year a major European city will ban cars from its centre (Martin Mignot, Wired UK, January 2020)

* 11 cities that have joined the car-free revolution (Adele Peters, Fast Company, January 2020)  

* Coronavirus: a huge push for cycling to work (Robert Wright, The Financial Times, May 2020)

* Bikes starting to push cars out of cities thanks to COVID-19 (Florence Schulz, Euractiv, May 2020)

* Now is the moment for European cities to get a move on and leave cars behind (Emily Brooke, Sifted, May 2020)

* Cities Have a Small Window to Save Themselves From Cars (David Zipper, Slate, May 2020)

* Why We Need Feminist Cities (podcast w/ Leslie Kern—Laetitia Vitaud, Building Bridges, October 2020)

* Mass Transit Is the Way to Get Cities Moving Again (Lionel Laurent, Bloomberg, July 2021)

* Welcome to the 15-minute city (Natalie Whittle, The Financial Times, July 2021)

* The Gender Divide in Transport Is Starting to Crumble (Carolynn Look and Elisabeth Behrmann, Bloomberg CityLab, July 2021)

* How to end the American dependence on driving (Gabby Birenbaum, Vox, September 2021)

😀 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. 

* Another interesting experience of escaping the Big City has been that of my friend Stefano Bernardi, an investor who’s been living in the Dolomites (from San Francisco) for several years, and has now launched a project named Trento Remote to provide everyone with the opportunity to join him in this experience. Read Stefano’s announcement here: Launching Trento Remote: a curated batch for remote mountain living ⛰

🙂 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 🤗

From Munich, Germany 🇩🇪 

Nicolas

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.driftsignal.com/subscribe

The Agenda 👇

* I spoke with Toni Cowan-Brown about everything that’s changing in F1 🎧

* Thumbs up/down for last week

I’m very happy to publish what will be the last episode of the Building Bridges podcast this season: a wide-ranging conversation with Toni Cowan-Brown about the fascinating world of Formula 1 🎧

Toni is the first repeat guest on Building Bridges, since Laetitia already interviewed her a few months ago about being a European in Silicon Valley. Being a Nation Builder alumnus, Toni’s main focus is the intersection of tech and politics. She’s currently the publisher and/or co-host of several inspiring lines of content, including her personal newsletter Idée Fixe; the podcast Unapologetic Women, which she co-hosts with Sorcha Rochford; and the podcast Another Podcast along with Benedict Evans.

As I explain in my opening, my personal story with Formula 1 can be divided into two parts. The first was my growing up in 1980s & 1990s France and cheering for 4-time world champion and local hero Alain Prost. Prost’s popularity was such at the time that I was watching as many races as I could and knew quite a lot about the teams, the rules, and obviously the drivers.

But then Prost retired after winning his fourth world championship in 1993, and like most of France I became bored and disengaged from Formula 1. In fact, I stopped following the sport altogether until I discovered Netflix’s (excellent) Drive to Survive earlier this year—effectively a 28-year gap between being a Prost cheerleader and enjoying the popular Netflix series about current seasons!

Hence my very first question to Toni: What has happened in Formula 1 over the past three decades? Quite a lot, it turns out, between the evolution of the power unit, the constant shortening of the pit stops, and many other things that you’ll discover if you listen to the podcast.

In our conversation, Toni and I cover the following topics:

* What matters the most, the car or the driver? Hint: it’s both, and so much more!

* Why spec series (that is, series in which cars are all the same) are the best opportunities for women to break into motorsports.

* Why the UK is the core of the Formula 1 world, and all about Motorsport Valley, a small area in England where (almost) all the teams are headquartered.

* Why Formula 1 teams are the best illustration of French economist Philippe Aghion’s concept of a “neck-and-neck firm”. 

* What the Formula 1 overlords are doing to try and win the interest of the American audience—including Drive to Survive, which has been tailored for the US.

* Why Formula 1’s weird (and sometimes dark) politics is being turned upside down thanks to social media (hello, Lewis Hamilton!).

* Who and what you should follow if you want to dig deeper and engage with the sport.

👉 Listen to my conversation with Toni Cowan-Brown in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify.

Also here are a few videos that Toni mentions in our conversation:

* Jos Verstappen F1 Pit Fire (full) (1994)

* Formula 1 documentary | Pit Stop in Two Seconds (December 2019)  

* Lewis Hamilton’s eyes get fully open when F1 V10 sound blasted past behind (December 2020)

* Over 4 Minutes Of Bono Coaching George Russell Team Radio 2020 Sakhir GP (December 2020) 

And don’t forget to check out some of Toni’s other works on Formula 1:

* A 3-part essay about Formula 1 as part of Toni’s newsletter Idée Fixe: part 1 (the basics), part 2 (the driver or the car?), part 3 (sponsorship & big tobacco).

* A conversation with Benedict Evans (Another Podcast): F1, the plane that never takes off 🎧 

* An episode of Unapologetic Women about athletes becoming activists 🎧

😀 The Dealroom team is doing an excellent job, along with Sifted and the European Commission, on documenting European tech and outlining the challenges it needs to tackle to get even better. After an excellent report on Corporate Innovation in the Entrepreneurial Age, they’ve just released another great report on Startup Cities in the Entrepreneurial Age 👉 Read it all here 👀

🙂 Our friends at Stripe recently launched a product called Stripe Tax—which, as you can guess considering the company and the product’s name, is about helping startups and small businesses comply with differing tax rules when doing business across borders. Read all about it here. Also, this:

😏 The piece I wrote last year about the future of construction featured a French entrepreneur, Pascal Chazal. Interesting that Pascal’s insight was that retail chains would take the initiative in disrupting the housing market, and now there’s this: John Lewis plans to build 10,000 rental homes.

😐 Everyone is finally awakening to the idea that venture capital is eating financial services. It’s a phenomenon that I call The Diffraction of Venture Capital (see this list of curated links on the topic), but now it’s made its way into the Financial Times: The new world of venture capital.

😒 There was a debate recently about Western European VCs writing (much) more than their counterparts in Central & Eastern Europe. Fortunately, Marcin Szelag, a VC investing from Poland, is remedying this with his newsletter CEE Venture Rounds Review. Keep writing, Marcin!

😖 I once wrote about investors needing to switch from a country risk paradigm to one focused on widespread uncertainty. The examples I used were Brexit and the CCP’s crackdown on Hong Kong. But this is also relevant: Didi Crackdown: Wall Street Should Have Seen the Regulatory Risks Coming.

From Country Risk in an Uncertain World (July 2020—just unlocked):

In the past you could confine your business within the limits of the vaguely global part of the economy in which risks could be assessed and managed. Today, the Great Fragmentation is destroying even that “globaloney” corner—starting with Britain, Hong Kong, and even the US—and forcing everyone to realize that uncertainty, not risks, rules the world economy now.

Sign up for European Straits if you don’t want to miss the next issues—starting again in September 🤗

(Credit: Franz Liszt, Angelus ! Prière Aux Anges Gardiens—extrait du disque Miroirs de Jonas Vitaud, NoMadMusic.)

From Normandy, France 🇫🇷 

Nicolas

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.driftsignal.com/subscribe

The Agenda 👇

* Laetitia spoke with Bloomberg Beta’s Roy Bahat about everything future of work 🎧

* My latest column in Sifted is about publicly traded VC firms in Europe

* Thumbs up/down for last week

* Recently unlocked essays from the European Straits archive

For the latest episode of the Building Bridges podcast, Laetitia interviewed our friend Roy Bahat, an SF-based venture capitalist with Bloomberg Beta and an inspiring leader on the future of work. Here’s what she wrote about their conversation:

For this new episode of the Building Bridges podcast, I’m excited to share my interview with Roy Bahat, who as the Head of Bloomberg Beta has been “obsessed with how we make work—the thing we do with more waking hours than any other—better”. He’s been an inspiration for me at least since I watched this video in which he speaks about two key drivers for workers: “Stability and dignity”.

Roy is used to making short, insightful and actionable pieces of content about work, careers, entrepreneurship and personal development. I recommend his series of to-the-point #thisisnotadvice interviews which you can watch on Twitter. They cover a wide range of topics like “Should I mentor someone and, if so, how do I do it?”or “How can I be the type of founders that VCs want to fund?”.

But I confess I wanted more time with him. I wanted to hear him in a longer format so he could tell his career story, what it means to be a VC specialised in the future of work and so we’d still have time left to speak about the future of work and how we can prepare for it. I’m so grateful he accepted!

As he explains in this podcast, he hadn’t planned to become a VC, let alone one who focuses on the future of work! But after doing tons of reading, talked to thousands of people and given the subject a lot of thought, you could say he’s become quite the expert. (More exactly, he’s reached that level of expertise where you become humble again. It’s a bit like Japanese martial arts: when you reach the highest level, you can wear a white belt again like a beginner!)

I simply love how he adresses the most simple yet profound questions. Here’s how he sums it all up neatly on his LinkedIn profile:

I've had a messy, hand-wringy career (in non-profit, professional services, city government, big media, video games, academia, day-zero startup, investing), where I was never hired for any job for which I was qualified (including starting a company, where I guess I sort of co-hired myself and was still unqualified). Only later did I realize the one thread that tied it all together -- making work better.

In 2013, Bloomberg L.P. gave me the opportunity to turn my obsession with the future of work into my job when we created Bloomberg Beta. I believe the fastest way to make change is to build extraordinary technology companies (and, these days, machine intelligence companies in particular).

We talked about a lot of things, including feminism and why it’s important to embrace it. Among the many themes covered were also the skills of the future. How do you make yourself “futureproof” in a fast-changing world? I asked him because in his book Futureproof, NYT journalistKevin Roose thanks Roy profusely for the inspiring conversations he had with him. (Check out this article I wrote about the book.) Here’s Roy’s conclusion:

How do we prepare? Most of the past thinking about preparation for the future that I learned growing up what “point preparation”—”here’s what the world’s going to be like: prepare yourself for it” (…) But if you believe that the pace of change is going to be more rapid, then learning is the most essential skill, rapid reinvention… In the tech world, I call this being the CIO of your own life… constantly looking for new tools and trying to integrate them and experiment with them. Another one is setting your own priorities. We don’t learn in school that this is a skill. The third one is the scientific method applied to everything around us. If the world is going to keep changing, scientific method is our best way of understanding how.

👉 Listen to Laetitia’s conversation with Roy Bahat in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify.

Normally when we talk about startups and IPOs, it’s in the context of which VC firms have won a big payday after making a bet on a company that grew large enough to go public. In my Sifted column this week, I look at a situation that reverses the roles a bit: VC firms that themselves go public, raising money from public markets and thus giving access to VC performance to a wider swath of investors. While it’s still a relatively rare occurrence, I believe we’ll see it happening more and more, all part of venture capital taking a more central role in the financial services industry.

👉 Read more in Startups IPO. Why shouldn’t VCs?

😀 Lots of interesting discussions recently over turning traditional companies into tech companies. It’s a topic I’ve covered a lot (see All About Shifting Patterns Across Industries). More recently I was interested in Dealroom’s report about Corporate Innovation in the Entrepreneurial Age and the latest episode of Another Podcast w/ Toni Cowan-Brown & Benedict Evans, about digital transformation 🎧

🙂 A while ago I wrote about the opportunities that European founders should pursue in Asia: read Should European Founders Look to the East?, as well as Martin Pasquier’s reaction in Another Round on Expanding in Asia (both unlocked). It turns out one of our portfolio companies, WeMaintain, just applied the playbook: Are Asian markets the secret to European proptech success?

😏 Lego is one of the most fascinating companies around—especially from a European perspective! Last year I contributed to covering it with my 11 Notes on Lego. More recently, there were lots of echoes in the media about their move to recycle plastic and turn the legendary bricks into more environmentally-friendly stuff. See Lego's lesson in innovation (Financial Times).

😐 I didn’t comment much on the Chinese Communist Party celebrating its 100th anniversary, but you can definitely find many pieces of background history. Here are some that are worth your attention: China’s Leaders – from Mao to now (The Guardian); The Chinese Communist party: 100 years that shook the world (The Guardian); and my own Primer on the Chinese Communist Party (unlocked) 🇨🇳 

😒 Andy Jassy has now succeeded Jeff Bezos as Amazon’s CEO. You can read related articles in the Financial Times, the Wall Street Journal, and Bloomberg, as well as my own 11 Notes on Jeff Bezos (unlocked). Also read this illuminating blog by Steve Blank about what happens when the visionary founder passes the baton: Why Tim Cook is Steve Ballmer and Why He Still Has His Job at Apple. 

😖 Maybe it’s simply me succumbing to the gloom that accompanies the never-ending COVID-19 pandemic, but I find that the awareness of climate change and its catastrophic consequences has gone up to eleven, and it’s definitely affecting everyone’s morale. Have a look at this in the FT: How to cope with the climate apocalypse. And this, by the ever-gloomier Umair Haque. And this about Europe. 

📚 Since the paid version of European Straits has been discontinued, I’m gradually unlocking the entire archive so that everyone can read and share. It’s not systematic in any way, but rather I unlock essays when they’re relevant and I want to quote them either here or on social media.

Here are the ones that you can now discover if you weren’t previously a paying subscriber:

🇬🇧 Notes on Britain in the Entrepreneurial Age (June 2020) 

💰 Notes on Revenue-Based Financing (July 2020) 

🇨🇳 A Primer on the Chinese Communist Party (September 2020)

🌏 Should European Founders Look to the East? (October 2020) 

🇨🇳 Industrial Policy: China Gets It, We Don't (October 2020) 

🏗 Why Software Has a Hard Time Eating Construction (October 2020) 

🇪🇺 European Tech's Forgotten Stories (November 2020)

🌏 Another Round on Expanding in Asia (November 2020) 

🗺 Business Strategy at a Small Scale (January 2021)

🇮🇳 A Great Writeup About India's Startup Scene (January 2021)  

👨🏻‍🦲 11 Notes on Jeff Bezos (February 2021) 

🕰 "Be Patient" | A Conversation About Angel Investing w/ Pascal Levy-Garboua (Part 1 & Part 2) (February 2021) 

Sign up to European Straits if you don’t want to miss the next issues 🤗

(Credit: Franz Liszt, Angelus ! Prière Aux Anges Gardiens—extrait du disque Miroirs de Jonas Vitaud, NoMadMusic.)

From Munich, Germany 🇩🇪 

Nicolas

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.driftsignal.com/subscribe

The Agenda 👇

* I spoke with Nils Gilman of the Berggruen Institute about intellectual history and the state of the world 🎧

* Thumbs up/down for last week

* Thread of the week: about productivity and work-life balance

* A new essay by Younès Rharbaoui about “time-variant business models”

For the latest episode of the Building Bridges podcast, I interviewedNils Gilman, who leads the research program at the Berggruen Institute, a think tank based in Los Angeles and Beijing.

Nils and I met in February of last year at Tim O’Reilly’s Social Science Foo Camp. We had an initial discussion in which I discovered that I had read his book Mandarins of the Future, an intellectual history of modernization theory—the framework designed by the US government in the 1950s and 1960s to offer countries in the Global South a capitalist path to prosperity. For several years now I’ve been interested in everything that relates to economic development, the global economy, and America’s role in the world. Therefore it was easy for Nils and I to connect and exchange ideas!

Indeed, Nils’s expertise in intellectual history was one reason why I wanted to have this interview with him. As software is eating the world, there’s necessarily much focus on entrepreneurs and the companies they build. What people don’t realize, however, is how much beliefs, perceptions, frameworks and, more generally, ideas determine the direction in which our economy is headed as we shift from the Fordist Age of the 20th century to today’s Entrepreneurial Age.

* A new paradigm, after all, is nothing more than a new representation of the world. It’s not the world that changes as much as the way we see it—and the words we use to describe it!

In this regard, I was very interested in the part of the conversation in which Nils describes the interactions and differences between “modernization theory” (the framework he discusses in his book), the strategy that was actually implemented by successful Asian countries such as Taiwan and South Korea in the 1970s, the neoliberal “Washington Consensus”, and the relevance of it all in today’s world. 

* As it turns out, there’s a collective job to be done: the world might only change slowly and at the margins, but our representation of it needs a radical upgrade!

And then there’s more to our conversation. On top of being a historian, Nils has had a career that spans across very different worlds and disciplines: the tech industry, in which he spent several years some time ago; national security, a field in which he co-founded a consulting firm in the wake of 9/11; and higher education, in which he once served as chief of staff to the Chancellor of UC Berkeley.

* Today, Nils puts his experience and knowledge to great use in tackling problems as head of research at the Berggruen Institute, focusing not necessarily on the most pressing problems of our time (like climate change), but rather on problems that are so elusive that we don’t even have the right words or frameworks to analyze them and understand them—as is the case with the declining legitimacy of democratic systems, for instance.

All in all, there was some very broad ground Nils and I could cover, and one hour wasn’t nearly enough. In our conversation, we also discuss the following:

* Nils’s birth in Denmark, his fluency in the language, and what it was like to discover that he speaks Danish “like the Queen” (which is not necessarily meant as a compliment).

* Why criminal organizations excel in arbitraging our cross-countries differences in legal norms and moral values—a phenomenon he calls “deviant globalization”.

* The respective positions of the US, China and Europe on the global stage, and the challenges that each region must tackle if it wants to succeed moving forward.

* Why the current transition calls for a new social contract and why Nils, along with his colleague Yakov Feygin, thinks we must build a new “mutualist economy”.

Here are the various ways in which you can dig deeper into Nils’s work:

* His book Mandarins of the Future: Modernization Theory in Cold War America (2007). 

* The (excellent) magazine Noéma, published by the Berggruen Institute, of which Nils is the deputy editor. 

* A few works by him that I liked a lot: The Twin Insurgency (The American Interest, 2014). The Official Future Is Dead! Long Live the Official Future! (The American Interest, 2017). The Long Shadow Of The Future (w/ Steven Weber, Noéma, 2020). Governing In The Planetary Age (w/ Jonathan Blake, Noéma, 2021). Who Controls The Past Controls The Future (Noéma, 2021). 

* His newsletter Small Precautions and, of course, his Twitter account—a place where he’s very active and doesn’t hold back.

👉 Listen to my conversation with Nils Gilman in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify 🎧

😀 I loved this recent Bloomberg article by Karl Smith about the radical shift that’s happening in the US housing market. In short, the market has been made more liquid by tech companies such as Zillow and Opendoor. The ‘downside’ is that houses get more expensive (liquidity premium!) and, more and more, only institutional investors can afford them—which is why renting might be the future.

🙂 More interviews with Marc Andreessen! Here’s one (in written form) with Noah Smith (who was my guest on the podcast a few weeks ago), another (audio) with Patrick O’Shaughnessy as part of the Invest Like the Best series, and a third one (written form) by Antonio García Martinez of The Pull Request. Enjoy!

😏 About the Diffraction of Venture Capital, I was interested in this Financial Times article about Baillie Gifford, a Scotland-based investment firm that makes tech-related bets on public markets. It’s interesting for two reasons: it’s made in Europe, and it’s happening on public markets—far away from the small, opaque and illiquid world of traditional venture capital.

😐 A new chapter in the series “Our Elite Is Failing Us”. Martin Gurri, the author of The Revolt of the Public and once a guest of mine at The Family in 2019, published a new essay about scientists not being better than the rest of the elite in sharing information and interacting with the public. Read it here: The Enemies of the Open Society - Discourse. 

😒 Wealth anti-management. A few years ago, I asked myself a question: if the wealth management industry keeps innovating, does that mean that wealthy families will stay wealthy forever? (Read my answer in The Future of Wealth Management.) In fact, however, there are many reasons why wealth evaporates over time. Here’s one: Rich professionals are scammers' favourite targets.

😖 We’ve seen this in Europe: the harsher the US gets on its own tech companies (see my column last week in Sifted), the more legitimate European democratic governments feel in implementing tough regulations that apply to the tech sector in general. Well, now it’s happening in authoritarian countries, too: Facebook, Twitter Critics in US Are Giving Ammunition to Authoritarian Leaders.

🕰 My colleague Younès Rharbaoui has a new edition of his Chasing Paper. Taking its impetus from the new series Loki, he thinks about how companies prosper by exploiting the potential of cross-border and/or time-sensitive arbitrage to discover business models that nobody thought were possible. Check it out (and the examples, including our own The Family) in Time-variant business models. 

From Marc Andreessen's Latest Lesson in Strategy (August 2018): 

The deepening of strategic thinking is always a sign of the maturity of a techno-economic paradigm. In his masterful The Lords of Strategy, Walter Kiechel tells the story of the big thinkers who revealed the complex secrets behind corporate success in the 20th century. But there are striking differences between the past age of the automobile and mass production and the current Entrepreneurial Age when it comes to strategy. Many of those can be found in the discipline itself, which has been radically reshuffled. Some differences also exist in the speed and ways strategic thinking is reaching maturity.

Sign up to European Straits if you don’t want to miss the next issues 🤗

(Credit: Franz Liszt, Angelus ! Prière Aux Anges Gardiens—extrait du disque Miroirs de Jonas Vitaud, NoMadMusic.)

From Munich, Germany 🇩🇪 

Nicolas

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.driftsignal.com/subscribe

The Agenda 👇

* Laetitia spoke with author and speaker Sophie Wade about everything future of work 🎧

* A new “Long Read” format: first up on the list is Formula 1 🏎 (in progress)

* Thumbs up/down for last week, as well as recent news.

For the latest episode of the Building Bridges podcast, Laetitia interviewedSophie Wade, a speaker, writer (and podcaster) about the future of work, who is the author of the bookEmbracing Progress: Next Steps for the Future of Work. Here’s what Laetitia wrote on the Building Bridges website:

Sophie was born in England but now she lives and works in the US. She lived in many countries before that, therefore she has a multicultural approach to the subject that I was especially drawn to. She worked as a consultant with numerous executives and acquired a broad, deep knowledge of work-related issues, such as corporate culture, recruiting talent, leadership, transformation and now “hybrid work” and how to make it right. We talked about all these subjects that are part of my own daily research too. She is adamant: working with empathy is the future!

What’s the most unexpected work-related transformation brought about by the pandemic? What does “hybrid” look like? What are the challenges associated with it? How do we make the workplace more inclusive in this day and age? How should leadership evolve? How does one change their mindset to become “future proof”? And how much of all this talk about the future of work is determined by culture? What can intercultural comparisons teach us?

A few years ago she published this book titled Embracing Progress in which she presents empathy as the solution to a lot of the problems faced by organisations. When it comes to leadership, for example, the battle between ego and empathy is the single most decisive battle. It involves “shifting identity and choice”:

The “ego” of the emerging brand of leadership is not the “command and control” type of autocrat that this word has evoked in the past. Now, it’s more about empathy—creating an environment based on trust and respect—in order to engage the workforce and improve employee ego, stimulating self-awareness and self-worth. Ego here is also about the company’s identity, the values and purpose that the leadership aligns with.

When leaders understand the identity of their company and the workers that comprise it, leading people is more about engaging and guiding them. Values echoed by the leaders of a company offer a clear and more “natural” direction for the workforce to follow in their own actions, relating to everything from daily tasks to long-term goals and career planning.

👉 Listen to Laetitia’s conversation with Sophie Wade in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify

As announced a few weeks ago, soon I will relaunch the long-form 10- or 11-point essays that many of you have enjoyed in the past. It will be occasional (I expect a monthly frequency on average, in addition to the weekly edition) and will cover a broad range of topics related to the Entrepreneurial Age, viewed from Europe.

The one I’m working on at the moment is “11 Notes on Formula 1” 🏎

Like almost everyone I know, I’ve been watching and enjoying Netflix’s Drive to Survive. It pushed me to go much deeper: going down the rabbit hole of F1 YouTube, listening to related podcasts, speaking a bit with experts I’m connected with, such as former podcast guest Toni Cowan-Brown, and realizing that a lot of what’s happening in the F1 world resonates with what we tech people have become accustomed to.

Below is the provisional list of notes I’m currently drafting:

* A manufacturer’s championship. You may primarily know about the drivers, but it’s the cars that make all the difference—and the various manufacturers taking part in the competition are required to design and build key parts of the car themselves.

* What about the drivers? Yes, they’re very popular, extremely competitive, and certainly accomplished athletes—but the harsh truth is that, contrary to other disciplines in motorsports (again, it’s a manufacturer’s championship), they’re only as good as their cars.

* The role of regulation. F1 provides the perfect illustration of the concept of a “neck-and-neck firm”—a business which, when confronted with pressure and challenges, doubles down on innovation. This is exactly how the best teams react to the FIA tightening regulations.

* An entrepreneurial ecosystem. Did you know that there is such a thing as Motorsport Valley? It’s located around Oxfordshire and the Midlands in England, and its very existence explains why Britain is the core of F1 (notwithstanding the occasional French term: grand prix, parc fermé).

* The importance of process knowledge. Usually when there’s such a thing as an entrepreneurial ecosystem, the pieces fit together thanks to people passing process knowledge from one to another. This is a very important feature in a manufacturing world such as F1’s.

* The importance of feedback loops. In an ecosystem in which process knowledge makes all the difference, it is absolutely critical for a firm to intensify said knowledge and circulate it as quickly as possible on the inside. This explains the downfall of certain teams recently.

* The dependence on the supply chain. There are many innovations that don’t endure in F1 because it’s impossible for the manufacturer that’s trying to race forward to force innovation on suppliers up the stream. As is often the case, the first-mover advantage is a myth!

* And then there’s Ferrari. It’s different in many respects, obviously because it’s located in Italy rather than the UK, but also because it’s strengthened by its position as a full-stack manufacturer that builds both the engine and the chassis—and its domestic base of supporters (the tifosi).

* The audience. F1 was a fringe discipline in the sporting world until a guy named Bernie Ecclestone forced it onto everyone’s small screen. It made the sport accessible to literally billions and radically changed the business equation. But what about the transition to social media?

* We need to talk about the US. Just like football (well, soccer), F1 is extremely popular all around the world, except for the US (whose audience seems to be more interested in disciplines such as NASCAR and IndyCar). Why is that? And can we expect changes in that regard?

The 11th note is always a reading list, of which I’m happy to share an extract here to tide you over (thanks to Toni for most of these links 🤗):

* Britain's Motorsport Valley – the home of Formula 1 (Lawrence Barretto, BBC, June 2013)

* Business lessons from Formula One (Alessandro Marino, ResearchGate, October 2015)

* The Top 50 F1 drivers of all time, regardless of what they were driving (Mike Hanlon, New Atlas, May 2016) 

* Being a Formula 1 Tire Supplier Takes Far More Than You Ever Imagined (Máté Petrány, Road & Track, September 2016) 

* Business isn't rocket science; it's formula 1 (Rafael Aldon, VenturesOne, March 2018)  

* The game changed and they didn't: The true cause of Williams' decline (Dieter Rencken, RaceFans, March 2019)

* The Motorsport Valley®: The biggest hub of motor racing in the world (Williams Johnson, Medium, July 2019) 

* Driving Growth: 5 Marketing Lessons From Formula 1® Racing (Yannick Bikker, Start it up, August 2019)

* Idée fixe 4.1: Formula One (Toni Cowan-Brown, Idée Fixe, June 2020—see also part 2 & part 3)

* Engineers, not racers, are the true drivers of success in motor sport (The Economist, October 2020)

* F1 - the plane that never takes off (podcast—Toni Cowan-Brown & Benedict Evans, Another Podcast, November 2020)

🎧 Also I plan to invite Toni back on the Building Bridges podcast to go through the whole discussion with her, so expect more than one round on this fascinating topic and its relationship to tech startups.

😀 Sajith Pai’s in-depth writeup about India’s entrepreneurial ecosystem made a big impression on me a few months ago (and I wrote about it here). Sajith just published another great essay about an entirely different matter: 'Exhaust Fumes', or, Understanding Startup Valuations.

🙂 Here’s a phenomenal Twitter thread by Steven Sinofsky, formerly at Microsoft, about the emergence of remote work and the future of work in general:

😏 Sometimes you read an article and learn a new word or concept that you can then put to great and frequent use. Today it’s “toxic positivity”, which comes from Sophie Lawson via Ian Leslie (in this case, about women’s football). I immediately thought about the Paris tech scene. Everything’s going well there, right? Especially with all those unicorns lately. Well, no, everything doesn’t always go exactly well, and it would go better if it was possible to say so, which it isn’t—and that’s “toxic positivity” for you 😨

😐 I’m always on the lookout for interviews with Marc Andreessen, not least because they’ve gotten so rare recently. But here’s a recent and VERY bizarre one (which Tyler Cowen says is authentic): The Dubrovnik Interviews: Marc Andreessen - Interviewed by a Retard.

😒 I wrote a long-form essay about Y Combinator last year. Some of the latest news about it centers on the apparent internal tensions around what can and can’t be said by members of the founder community. Here’s an overview in TechCrunch: Does what happens at YC stay at YC?

😖 I already mentioned Katerra last week—the SoftBank-backed company that was supposed to disrupt construction and is now bankrupt. Here’s a long inside look by a former employee (via Byrne Hobart)—interesting strategic deep dive: Another Day in Katerradise.

🦁 My colleague Oussama Ammar’ post in The Family’s daily newsletter this week, quite simply a book reading list for the summer: Summer is coming! 📚

From 11 Notes on Goldman Sachs (May 2017): 

What’s remarkable is how much Goldman Sachs enables innovation with specific features when it comes to design and architecture. First, there’s the managerial legacy of John Whitehead, a key contributor to making more room for innovation through scientific management and designing virtuous financial incentives for employees. Second, there’s the strong, cohesive culture that enables the retention of talent and more fluid communication: together these make it easier for the firm to move toward unknown territories. Third, there’s the preference for innovation rather than entrenchment every time that Goldman Sachs is facing danger or uncertainty. In that regard, Goldman Sachs is really what Philippe Aghion calls a “frontier firm” or a “neck-and-neck firm”, one for which “competition may increase the incremental profits from innovating, and thereby encourage [innovation] aimed at ‘escaping competition’.”

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(Credit: Franz Liszt, Angelus ! Prière Aux Anges Gardiens—extrait du disque Miroirs de Jonas Vitaud, NoMadMusic.)

From Munich, Germany 🇩🇪 

Nicolas

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.driftsignal.com/subscribe

The Agenda 👇

* I spoke with investor Saul Klein about European tech and the New Palo Alto 🎧

* My latest column in Sifted is about the capital deployed in grocery delivery startups

* Thumbs up/down for last week, as well as recent news.

I’ve been connected to Saul Klein for quite some time, because he was a partner at Index Ventures when the VC firm invested in my firm The Family in 2013. But I really got to know him after I moved to London in 2015. His name simply kept coming up as the person I should meet.

* Someone even told me “Saul is the London version of you”. I must say I’m lagging far behind in terms of track record, but it’s true Saul and I have many shared interests: not only startups, but also ecosystem building, the geography of entrepreneurship and venture capital, and the many (and overlooked) interactions between the worlds of tech and policy.

There’s a reason Saul’s name is mentioned so often in London, indeed. He was present at the creation of the contemporary UK tech system, as the founder of Lovefilm and an active angel investor. He then joined Index Ventures, arguably the most accomplished European VC firm, as a partner, before founding his own firm, LocalGlobe, with his father Robin Klein—another prominent figure in London tech.

* In between, Saul was also instrumental, as a cofounder, in launching projects as diverse and impressive as Seedcamp (one of Europe’s most successful seed funds), Zinc (a mission-driven firm that aims to tackle societal challenges), and Newton (a training program for VCs, LPs, angels, accelerators, and tech transfer officers worldwide).

Needless to say he and I talked quite a lot over the years about many tech-related topics. Our conversation in this podcast, however, is focused on something that really stands out in my view: LocalGlobe’s investment thesis, which I wrote about in On Trains and Geography (October 2020), 

Part of Saul’s investment thesis is that his firm should invest in tech startups within a 4-hour train ride from London—which includes cities as diverse and interesting as Cambridge, Manchester, Paris, Brussels, and Amsterdam. Here are his arguments:

* 4 hours is far from being a random number. It’s enough time to reach a given destination without being away from the office for too long. You can travel 4 hours to your destination, have a 2-hour meeting, and then travel back to sleep in your own bed, back with your team the next morning. (A bit extreme, but it’s doable.)

* You can actually be productive when traveling by train. Not only is it easier to get an Internet connection when on a train (either through wifi or 4G), but traveling by train also comes with many fewer interruptions than traveling by plane.

* Finally, Saul’s is a bet on the future. From what he told me, he expects plane travel to be less and less tolerated in a business context due to climate change, and at some point governments could decide to revisit the whole cost structure (from tax and other perspectives) so as to make planes more expensive...and trains cheaper.

A key implication of this thesis is that tech people in London and Paris, which despite Brexit are still well connected by the Eurostar, can work on building The New Entente Cordiale 🇬🇧🇫🇷 (in reference to a famous episode in the history of European diplomacy): merging the two ecosystems into one, building on each city’s relative strengths and advantages and ultimately building what Saul calls the “New Palo Alto”. It’s a compelling vision which, I believe, really deserved an in-depth conversation!

In the podcast we also touch upon the following:

* How Saul came to work in tech, what he saw in the growing London ecosystem over the years, and his vision of venture capital as a business.

* LocalGlobe’s office, Phoenix Court, and why Robin and Saul decided to settle in the London ward of Somers Town.

* David Ben Gurion’s lesson on innovation, and why Europe, long a frontier market, is finally becoming an emerging market.

👉 Listen to my conversation with Saul Klein in the latest episode of the Building Bridges podcast using the player above 👆 or on Apple Podcasts or Spotify.

(For unknown reasons, the sound is rather bad on my end (microphone saturation) but I did as much as I could to mitigate it, and Saul’s doing most of the talking anyway 😉 Enjoy!)

Even within a generally hot fundraising environment, one sector has stood out in the EU tech scene lately: grocery delivery. Some might look at it as just another part of a broader bubble, but I think there’s something else going on: namely, investors have realized that the narratives that dominated just 5 years ago, such as that around Uber’s presumed destiny as a global leader, have not come to pass. As such, they’ve seen that there’s room in various markets for great companies—and grocery delivery is one sector where that is being borne out.

👉 Read it all in my latest column for Sifted: How much is too much when investing in grocery delivery?

😀 A new essay by Jerry Neumann about uncertainty in entrepreneurship! It’s a topic I covered a lot in the past, and this time it’s been prompted by a guest post by Bill Janeway in my own newsletter. Go and read Jerry’s Embracing Uncertainty in Entrepreneurship Pedagogy.

🙂 The Great Fragmentation, as illustrated by… football. Europeans and Americans still see Asia as the market they need to conquer so as to scale up their business. I still think there’s something there, but in football it’s not working so well: Football’s relentless search for the ‘Asian fan’

😏 There’s this idea of the “Red Queen hypothesis”: the fact that in the Entrepreneurial Age, constant innovation is mandatory if a business wants to stay in the game and not go bust. Here’s an illustration: Microsoft stumbling with Skype and missing the COVID-19 opportunity that Zoom ultimately seized.

😐 Remember the passion economy? I wrote about it here. And you might know that the craft beer movement has long been the most analyzed case study in that field. Alas it seems to not be going so well at the moment: Britain’s craft brewers forced to confront sober reality. Also read this in-depth piece.

😒 Here’s an in-depth discussion by The Economist on how and why Europe is lagging behind in the global corporate world, all accelerated by the shift to the Entrepreneurial Age. Sad, but definitely worth a read (contrasting with Saul’s optimism): Europe is now a corporate also-ran. Can it recover its footing?

😖 Last year I wrote about startups tackling the challenge of making construction cheaper, faster and more convenient. Well, the flagship company in that space, Katerra, just filed for Chapter 11, which I think will mark an acceleration of the shift 🤔 Read it all in Axios.

🦁 My colleague Oussama Ammar’s post in The Family’s daily newsletter this week: How do you know when your startup idea has failed?

🇫🇷 Nouveau Départ (our small French-speaking family media operation). Check out my conversation with writer Gaspard Koenig about spending half of 2020 crossing Europe on horseback 🏇 and the liberal tradition in France: La liberté après la crise.

From Notes on Britain in the Entrepreneurial Age (June 2020):  

It took the financial crisis to change the situation in the recent period. So many bankers lost their jobs and were suddenly deprived of the perspective of getting rich quick that they had to consider founding a startup—which, although ridden with uncertainty, can generate great wealth. Hence a certain archetype on the London tech scene: the former banker attracted by the hype in financial services who then jumps to the next big thing (startups) and successfully raises capital from his (it’s almost always a “his”) former colleagues with a clean-cut business plan backed up by detailed spreadsheets 😅 (This is made all the easier because the infamous EIS, despite its obvious flaws, hedges angel investors against any downside.)

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(Credit: Franz Liszt, Angelus ! Prière Aux Anges Gardiens—extrait du disque Miroirs de Jonas Vitaud, NoMadMusic.)

From Munich, Germany 🇩🇪 

Nicolas

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.driftsignal.com/subscribe