My Personal Journey with China
European Straits | Friday Reads
Hi, it’s Nicolas from The Family. Here’s a Friday Reads edition for paying subscribers. This is where I sketch new ideas and direct your attention to things you might care about.
Today’s Agenda 👇
A personal chronology looking at the relationship between China and the West
Following up on topics I covered over the recent weeks
The events currently unfolding around China and affecting its relationship with the rest of the world are forcing us all to reassess our perspectives on the state of things.
I find it especially difficult in this case because China has long inspired cognitive dissonance in Western minds. You’re never really sure if you should admire it, fear it, fight it, or just ignore it. And the signals we receive from our immediate environments are mixed at best.
As an illustration, I thought I’d share my personal history on the matter as a list of bullet points (with links when relevant):
1989 (I was 12 years old). This is the year of the Tiananmen Square protests and the CCP’s brutal reaction. Viewed from the West, Premier Li Peng was the big bad guy then. I remember being personally horrified by the People’s Republic and how they treated their own.
1997 (20 years old). This is the year when Deng Xiaoping died. I remember him being praised as the Great Reformer and the father of China’s economic development. I think I told myself “WTF, this is the guy who ordered the brutal repression in 1989, why is everybody praising him?” Also, I hated Deng’s famous quote “It doesn't matter whether a cat is black or white, as long as it catches mice," because I thought people should take sides out of principle (I still do 😉).
1999 (22 years old). There was a widespread controversy in France because then-president Jacques Chirac invited China’s leader Jiang Zemin to his personal residence (the Château de Bity) in Corrèze. (Not unlike Xi Jinping being hosted at Mar-a-Lago in 2017.) In subsequent years I was into French politics and was quite shocked by so many prominent French politicians being so nice toward China. The list includes the late Gaullist minister Alain Peyrefitte (who wrote the best-seller When China awakes… the world shall tremble in 1973) and former Prime Minister Jean-Pierre Raffarin (who’s somewhat popular in China because he braved the SARS epidemic while on an official visit there, and has been well rewarded by the CCP in return).
2001 (24 years old). China joined the WTO. The entire French textile industry closed down overnight. I was a student at Sciences Po at the time and I remember lessons and commentaries about what a turning point it was, and how it would change global supply chains forever (true).
2012 (35 years old). This is the year I published L’Âge de la multitude, a book about technology and entrepreneurship, with my friend Henri Verdier. I remember Henri telling me “Maybe we should write a few words about China in the book, I hear they’re building great tech companies.” But I admit I dismissed him back then: “China is not relevant: they’ll never be able to understand us Westerners, and their products will never reach our shores.”
2013 (36 years old). Philippe Ratte, of UNESCO, invited me to a bi-lateral summit with Chinese academics and intellectuals at the beautiful Fondation des Treilles. He told me: “We don’t have anybody on the French side that understands technology, yet it’s very important for our Chinese counterparts.” I didn’t interact with the Chinese much (language barrier), but I met Régis Debray, Pierre Morel (former Ambassador in Beijing), Jiann-Yuh Wang (a brilliant French-Chinese scholar who was the CEO of the Fondation Victor-Segalen back then), and an investment banker named Jean-Paul Tchang. At the same time, I discovered the work of Stéphane Grumbach and Stéphane Frenot, two scholars who were already writing about China dominating the global platform economy.
2014 (37 years old). Alibaba did its IPO. Suddenly, everyone in tech was talking about China. My wife and I decided to watch the movie Crocodile in the Yangtze. Our minds were blown.
2015 (38 years old). I was invited by the Hong Kong government to spend a full week there and learn more about the local economy and system of government. The visit was focused on insisting on ‘One Country, Two Systems’. I didn’t go to Mainland China, but I learned a lot about it. In Paris, I also spent time with Jean-Jacques Augier, a business executive, investor, and publisher who lived in China from 2000 to 2009 (and met his Chinese husband there). Later, Jean-Jacques introduced me to renowned French China expert François Godement.
2017 (40 years old). I heard that Sciences Po, where I was an adjunct professor at the time, needed to send a faculty member to teach for a whole week at Fudan University in Shanghai. To my surprise, nobody wanted to go, so I grabbed the opportunity and went to Shanghai—bringing along my then-PA Laurène Tran, who helped me set up many additional meetings with people from the tech world. I read everything I could about China, including materials by Andreessen Horowitz, which by then had its own in-house team of China experts led by Connie Chan.
2018 (41 years old). My mind was blown for the second time by China’s potential while reading Evan Osnos’s Making China Great Again in The New Yorker. I increased the pace of my reading (see my 12 Books on China), and dedicated large chunks of my book Hedge to the idea that maybe China would be to the 21st century what the US had been to the 20th. 2018 was also when Mike Moritz of Sequoia published Silicon Valley would be wise to follow China’s lead and Kai-Fu Lee released his landmark book AI Superpowers. Also, Bill Janeway published a new edition of Doing Capitalism in the Innovation Economy, with significant additions about China.
2019 (42 years old). I went to Mainland China for the second time for a speaking tour that led me from Beijing to Wuhan to Shenzhen to Guangzhou—this time with my then-colleague Emilie Maret (who wrote about our trip here). Last year is also when I finally read Joe Studwell’s How Asia Works and Ezra Vogel’s biography of Deng Xiaoping (which prompted me to revisit my previously negative assessment of Deng). Then Erik Torenberg, of the VC firm Village Global, introduced me to the work of Peter Zeihan, which is when I discovered the previously unknown world of China hawks and China skeptics. Reading Zeihan as well as people like Bill Bishop and Jordan Schneider, I get the feeling that maybe China has missed an opportunity and could end up never dominating the global stage after all.
2020 (43 years old). Now I know much more about China than 20 years ago, which completes my journey from China critic to China skeptic to China enthusiast to China cold-minded analyst. I still have difficulties reconciling all the lavish praise I’ve heard all my life about China with all the bad things everyone is saying these days—a strange echo of what I was saying to myself in 1989 before starting my intellectual and personal journey with China. Also, everyone taking political sides (see Ben Thompson) coincides with more and more people writing about technology in China, as exemplified by the excellent writing of Turner Novak or Eugene Wei.
By the way, have you seen this ridiculous controversy about David Cameron being disparaged because he had a beer at a London pub with Xi Jinping 5 years ago? Overall, I think we need to acknowledge the cognitive dissonance we’ve all been experiencing for decades, and then when it comes to dealing with China today, we need more Realpolitik than bons sentiments as we say in French. I’ll send a few additional links next week—but don’t let all the reading ruin your vacation 😅
IPOs & SPACs. It’s a topic I’ve been covering a lot, whether when writing about exits in general or IPOs in particular. It’s interesting how the discussion on IPOs moves in waves. Wave 1 was Eric Ries’s Long-Term Stock Exchange, wave 2 was direct listings, wave 3 is SPACs. Alex Danco wrote an excellent primer about them in the latest edition of his newsletter: SPAC Man Begins.
Cancel Culture. This is an intriguing controversy, very much US-centric for reasons I’m reflecting on. Have a look at this article by Chris Arnade (a former investment banker turned photographer, and a very original voice in the American conservative world): A Culture Canceled. Also, Paul Graham wrote an essay if you need more context about how the whole thing is viewed from Silicon Valley.
Startups in London. I wrote a two-part series about the UK in the Entrepreneurial Age: part 1 was about the background; part 2 was more focused on building tech companies in London. About that, this article in Wired made the rounds and is a good illustration of how ill-designed government initiatives can be when it comes to startups: How London’s Silicon Roundabout dream turned into a nightmare.
Amazon. My favorite tech company (check out my 11 Notes on Amazon if you haven’t)! And it’s now stronger than ever thanks to the pandemic, as I wrote about here. Check out the article How the Coronavirus Helped Grow Amazon's Profits and Power in Time as well as Jeff Bezos’s statement at the recent Congressional hearing about Big Tech and antitrust.
Homeschooling. We’re still not sure if homeschooling is the future, or if we even want it to be. But a while ago I was describing it as a new frontier. Here are two interesting articles in the same vein: 'Pandemic pods': microschooling phenomenon takes off in wake of fall distance learning plans (SF Examiner), and When to re-open schools? How about never? (by Arnold Kling).
Transatlantic Relations. We’re living the Great Fragmentation, and there’s probably no going back to the previous state of the transatlantic relationship. In the meantime, you might remember my note about recent decisions by European courts. It appears the consequences are radical for US tech companies: No grace period after Schrems II Privacy Shield ruling, warn EU data watchdogs (TechCrunch).
Investment Banking has long been an interest of mine, both because it’s genuinely interesting (see my 11 Notes on Goldman Sachs) and it tells us a lot about the future of large tech companies at a global level. Here’s a sign that local investment banks could retake the initiative in Europe: Europe Looks to Loosen ‘Overly Burdensome’ Rules on Sell-Side Research (Institutional Investor).
Goldman Sachs, in particular, has been in the news a lot recently (even more so than normal). Read this article about their successful diversification in retail banking: Marcus’ Adam Dell says Goldman Sachs' consumer strategy is paying dividends during coronavirus. Also, see Matt Levine’s fun comment on CEO David Solomon recently DJing at a party in the Hamptons: New Goldman Sachs scandal.
Cannabis. We have a cannabis startup in our portfolio at The Family which has had to fight on many regulatory fronts here in Europe while competitors on other markets have been growing fast. They recently enjoyed a hard-won victory in court, but it doesn’t mean the situation is about to improve if we believe this article: Europe's CBD U-Turn Set To Cause Widespread Harm To Businesses And Consumers.
Fred Terman. If you haven’t read my essay about Terman turning Stanford University into an entrepreneurial ecosystem, it’s a good historical read for your vacation. If you want to dig deeper, Bill Janeway recommended this book by Christophe Lecuyer about the early history of radio ham operators circa WWI: Making Silicon Valley: Innovation and the Growth of High Tech.
⚠️ You don’t need to read everything/click all the links. All will be available in the archive soon 😉 On the other hand, if you can’t access an article, just reply to this email.
🕰 I’ll share more articles about China viewed from the West in next week’s ‘Friday Reads’ edition! Stay tuned!
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From Normandy, France 🇫🇷
Nicolas
