My 10 Most Read (Paid) Essays This Year
Today: Starting the 2020 retrospective with the list of essays most enjoyed by European Straits’s subscribers.
The Agenda 👇
Maybe there will never be liquidity in European venture capital.
A customer base is an asset and executives need to act accordingly.
Most founders and investors are attracted to SaaS. Is it today’s defining category?
The world is fragmenting. It was fragmenting in the 1930s, too.
Construction isn’t an industry, which is why software has a hard time eating it.
Expanding on Peter Zeihan’s idea that the new America is bound to lag behind.
My preferred approach to writing investment memos.
Brexit is a decision from another world, but we can’t stop it.
We’ve lost too many memories of what happened in European tech in the past.
A hint at how The Family is repositioning itself in the post-pandemic world.
Over this week and the next, I’d like to share a retrospective view of my work. I have several ideas for curating essays, some around a given topic, others using different criteria.
Today, I’m starting with the simplest approach: the paid essays that were read the most over the past few months. Enjoy!
#10 Round 2 on Liquidity & Exits (October 9)
A specter is haunting Europe: a lack of exits—and the scarcity of liquidity that comes as a result. Some time ago, Nicolas von Bülow (an investment banker based in Paris) was the first to point out to me how that makes it difficult for European tech companies to raise funds, and for Europe-focused investors to convince LPs that they should trust them with their money. It’s been haunting me since then. There are three theses as to how exactly this story will unfold. Read more…
#9 Your Customers Are More Than Their Collective Purchasing Power (November 13)
I [like] to think in terms of technology making it easier to invite customers (who are traditionally seen as belonging to the demand side) to also participate in the supply side—through data, peer-to-peer interactions, and taking over part of the company’s work in exchange for money. This logically leads to considering a customer base as an asset that needs building and investing, just as an audience in the media industry. Read more…
#8 SaaS Is the New Manufacturing (Round 1) (November 20)
You don’t need a given sector to represent the majority of a country’s GDP (or the workforce, or any other indicator) for it to define a given techno-economic age. It’s enough that the sector generates the highest returns, is easy to understand from an investor’s perspective, and plants the seeds of a new social contract—just as manufacturing did in the 20th century!
I’m not saying SaaS is doing all of that in the Entrepreneurial Age. In particular, I don’t see SaaS as the ground on which a new social contract will be built. But if software is eating the world, in time every company will become a tech company—therefore we need a narrow category of what kind of tech company will dominate our collective psyche of what the business world is about. Read more…
#7 Tales of a Fragmenting World (September 25)
What we’re witnessing is the slow dismantling of the ties that connected nations in the second half of the century: international trade, heads of government gathering to try and address global threats (usually in vain), sharing a currency or a legal framework (as is the case in the European Union), and, for individuals, the occasional stay abroad, either for studying or enjoying a vacation. All of these things are currently in retreat, either because of a long macro trend or because of the pandemic. But there are other signs that reveal that it can all be compensated for by more connections in other spheres or at other levels. Read more…
#6 Why Software Has a Hard Time Eating Construction (October 22)
Most of what I know about software eating the world, I learned studying the music industry. I built up an entire framework to trace what’s happening in any industry that I modeled after what happened in the music industry (see The Five Stages of Denial). Before I designed that framework, however, I had to go through many different industries so as to spot common patterns. One that taught me a lot, on which I spent quite a bit of time back in 2012-2013, was construction. Read more…
#5 America As a Technological Laggard (November 17)
America won’t simply fade away: it still has land, security from a geopolitical perspective, good demographics, and what remains of the great American middle class. However, none of those suggest that America can stay technologically advanced forever. As Peter [Zeihan] wrote, being a laggard is not a bug, it’s a feature—and to me the trends are rather clear. Read more…
#4 A Memo About Writing Investment Memos (September 1)
Earlier this year I decided to summon everything I know about strategy and finance and to design the ideal outline detailing everything I’d like to see in an investment memo—and how it should be structured. Read more…
#3 🇬🇧 First Manufacturing, Then Financial Services, Then Brexit, Then What? (December 7)
First you manufacture things, then you trade them, then you broaden the scope of your value proposition to offer pertinent financial services to your ever more numerous customers, thus making it easier for them to purchase from you. Eventually, it becomes evident that it’s easier to pursue increasing returns to scale by focusing on the financial services rather than the manufacturing, which leads to divesting or outsourcing the latter, depending on your strategy. In a way, it’s the story of capitalism. Read more…
#2 European Tech's Forgotten Stories (November 26)
The history of European tech has simply suffered too many interruptions. Great things happened in the 1970s, but it didn’t keep rolling (as in the case of Lutz Kayser), and so we had to start again in the 1980s. Then great things happened in the 1990s, with the European version of the dotcom bubble, but when the bubble burst it was all wiped out (and, to a large extent, forgotten) in an instant. We then started again, almost from scratch, following the 2008 crisis. Read more…
#1 A Memo About My Firm, The Family (September 24)
This edition shares thoughts about my own firm, The Family, following the memo format I introduced some time ago in A Memo About Writing Investment Memos. I find it virtuous to practice what is known in the tech world as ‘dogfooding’ (that is, using your own product). I also like the spirit of “working in public” that’s been inherited from the world of open source software and that is increasingly making its way into the startup world in general, and into venture capital in particular. Read more…
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From Munich, Germany 🇩🇪
Nicolas
