The China Model With Western Characteristics
Today: Gangster capitalism, increasing returns & retail investors, startups & cuisine, work from anywhere.
The Agenda 👇
Trump wants to ban TikTok and re-educate Americans
The Entrepreneurial Age: we’re still early, and it shows
Cooking lessons for startups
Hugo Amsellem and the permissionless world
Work from anywhere in the world
Span Health: the best clinicians at your service
🇺🇸🇨🇳 The TikTok Ban (Cont’d)
The basis for Trump threatening to ban TikTok seems to be a mix of national security concerns (which some have said are legitimate) and Trump thinking that disparaging China and bragging about it is a winning electoral strategy.
He’s been doubling down over the past days: extending the threat of a ban to WeChat, and announcing a mysterious $5B contribution by ByteDance to fund a patriotic reeducation effort in the US (an initiative regarding which ByteDance has said they were unaware). Why does this education bullshit remind me of the Cultural Revolution... 🤔
Overall, there has been a lot of deal making happening, but in the end the process is rewarding individuals with a personal connection to Trump and a financial relationship with his campaign, including Oracle founder Larry Ellison and Sequoia Capital’s Doug Leone, an early financial backer of ByteDance who used the Trump connection to try and salvage his investment.
Perhaps the most shocking feature of the whole episode is how apathetic the US business community has remained in the face of such a degradation of business practices. Apart from rare personalities, most tech people in the US have been hiding behind mundane conversations about the right price for TikTok, how to redeploy a global network over a national cloud architecture, and the new trends in M&A.
I discuss the consequences for tech founders around the world and in Europe in my latest Sifted column: What the US and China’s tussle over TikTok means for Europe.
Also check out what I wrote on Monday about the presidential campaign and Trump’s standing in the wake of Ruth Bader Ginsburg’s passing: Is Trump Still in the Flow?
⏰ The Entrepreneurial Age: It’s Still Day One
Most people in tech know about W. Brian Arthur and his seminal article Increasing Returns and the New World of Business, which was published in 1996. Too many people, however, come out of reading it convinced that the world is strictly divided in two, with companies being subject to diminishing returns in the old world, and companies enjoying increasing returns in the new.
That’s too simplistic an interpretation, as I explain in An Important Point About Increasing Returns. It’s always been the point of capitalism to pursue increasing returns to scale, from Braudel’s “faraway trade” to the Entrepreneurial Age. The reason increasing returns are more visible today is that we’re not to the point of exhaustion yet, and most tech companies still have a very long runway ahead of them!
Another sign of our still being at Day One in the shift to the Entrepreneurial Age is how little retail investors have access to all the value created by successful tech companies. In yesterday’s edition of European Straits, I share Round 1 of my exploration of the world of retail investors and how they’re at a disadvantage when it comes to grabbing returns from tech companies as an asset class:
In general, there’s a high dose of cognitive dissonance between what we’re all hearing/reading about equities markets, and what is effectively within our grasp. Because of financial regulations and market imperfections, most investors are effectively cut out of the real game.
🍽 Startup Lessons From the Cooking World
We all love cuisine, don’t we? Alas for most French people like me, there’s this idea that it’s an ancient art set in stone and closed to innovation. In Friday’s edition, Three Theses About Cuisine, I make the case that nothing could be further from the truth, using three strong arguments to make my case:
Historian Rachel Laudan’s compelling picture of cuisine and its expansion as a foundation for building empires. Surely this resonates with ambitious tech founders!
My cofounder Oussama Ammar’s thesis that “Cuisine is the New Music, and Chefs Are the New Stars”. What if cuisine is reinvented with inspiration drawn from the music industry?
Finally, there’s this great book by Vaughn Tan, The Uncertainty Mindset, reviewed by my wife Laetitia here, which reveals how the best in cuisine are pioneering approaches to innovation.
Become a subscriber if you aren’t already!
🚀 Speaking of cuisine influencing tech entrepreneurship, my former colleague Hugo Amsellem and I have had many opportunities to discuss the reverse phenomenon: tech entrepreneurship being an inspiration for people in many other dimensions of the economy—from music to cuisine to travel to writing to small business building to freelance work.
For a few months now, Hugo has been pursuing his work on the “post-permission” world and the passion economy in general. Here’s where you can follow him:
A thread: Earlier this year I decided to leave The Family after 7 years of crazy adventures!
Hugo’s blog about Exploring the post-permission world ✊
An interview (in 🇫🇷) on Nouveau Départ: Entreprendre sans permission 🎧
😅 I’m still bragging about my best prediction ever: at the end of 2019, I wrote in Sifted that 2020 would be the year of remote working. Well it has been, indeed, even if for reasons I couldn’t foresee at the time (I don’t think I heard about COVID-19 before the end of January). And we at The Family think that it’s here to stay, which is why we’re happy to be hosting an event on Sept. 30 dedicated to getting the right mentality and best practices that are going to stay with us, no matter what happens next with COVID-19: Work From Anywhere Summit 👀
💊 Patrick Samy, the founder of Span Health, is one of my favorite portfolio entrepreneurs. Span is about bringing in the best clinicians to help you figure out what works for you from a nutrition and health perspective, and Patrick recently had an inspiring conversation with Gonz Sanchez on the Seedtable Podcast: Patrick Samy from Span – Reinventing Medical Nutrition.
From What Trump Did to Silicon Valley (October 2019):
If Silicon Valley companies aren’t able to compete in Asia and Africa anymore, it means that Europe becomes even more critical for them as a market. Obama was someone who could vouch for Silicon Valley, and that made a difference because he was so admired and respected here in Europe. But with Trump, it’s a whole different story.
All recent editions:
Retail Investors in the Transition (Round 1)—for subscribers only.
Is Trump Still in the Flow?—for subscribers only.
Three Theses About Cuisine—for subscribers only.
An Important Point About Increasing Returns—for subscribers only.
An Investment Thesis For Our Time—for everyone.
Is Being American Worth It Anymore?—for subscribers only.
China Saving Face on TikTok—for subscribers only.
A Thesis For Sector-Focused Hedge Funds—for subscribers only.
A 10-Point Checklist For Building a Great Company—for subscribers only.
What We Owe Rocket Internet—for everyone.
European Straits is now a 5-email-a-week product, and from now on all essays are subscriber-only (with rare exceptions). Join us!
From Normandy, France 🇫🇷
Nicolas
