The Family and Silicon Valley
European Straits #39
Dear all,
My firm The Family entertains a special relationship with Silicon Valley. When our CEO Alice Zagury, Oussama Ammar and I founded it back in 2013, our reasoning was that most local approaches to startup development in Europe were misguided:
Support was based in government and corporate money. Alas neither of these work, as the incentives of such money providers are misaligned with the interests of entrepreneurs.
Previous generations of (more or less) successful European entrepreneurs were thin in terms of their ability to share knowledge, teach founders and employees, and invest in new ventures.
Knowledge was available online, but since it came primarily from the US it was ill-suited to the European environment. We’re not the same, so best practices had to be adapted.
Indeed Silicon Valley is an entrepreneurial ecosystem that works because decades of trials and errors have given birth to all the institutions that entrepreneurs need to succeed. Decades after the early days of Fred Terman at Stanford, entrepreneurship is highly regarded in the Bay Area. Entrepreneurs work hard as they’re driven by sheer ambition. There are resources to cover higher risks during the growth phase. Talent moves around instead of being locked up by rent-seeking employers. And newcomers prefer to found startups rather than joining existing firms.
As a result, most of the knowledge and advice that come from Silicon Valley are based on the (correct) premise that this particular ecosystem is already healthy and thriving, as proved by generations of successful companies. This is why an incremental approach to startup development works well in Silicon Valley, where good practices have been tested and confirmed by previous generations and only call for refinement and optimization. Alas, that approach doesn’t work in Europe, where we’re still waiting for the first generation of successful entrepreneurs to shape and consolidate their own healthy ecosystem.
This was a very important motive in founding The Family. Unlike Silicon Valley, Europe needs a radical shift to thrive in the global digital economy. So in reaction to many others clumsily trying to emulate Silicon Valley, The Family set out to do two things:
We started working on transferring advice originating from Silicon Valley and adapting it for the European context. This culminated in my cofounder Oussama Ammar’s Twelve chapters to build ambitious startups in Europe, which you can read (or watch) here.
We decided to design The Family as an entrepreneurial ecosystem of its own. If entrepreneurial institutions were lacking in the broader environment, then we would work on building them ourselves, starting with serving companies within our own portfolio.
With time, Silicon Valley itself has become a part of our own ecosystem. We frequently welcome guests from the Bay Area, having them work with The Family’s entrepreneurs and speak in front of European audiences—we recently acquired Nomadic Mentors to double down on those efforts. We often travel to California to build up our network there and stay up to date on the latest trends. Vivek Wadhwa, a member of our board, is based in the Bay Area, as is one of our part-time directors, Tyler Willis. Finally, several prominent entrepreneurs and tech executives in the Valley have invested in The Family—among them Dorion Carroll, Liz Dunn, Thomson Nguyen, Nicolas Pinto, Ian Rogers, and Aurelia & Eric Setton.
It all worked well so long as Silicon Valley was still the shining city on a hill in the tech world. However in recent months Silicon Valley has come under question as a model, with fears mounting in reaction to the growing power and influence of the US tech industry. There was the fear of tech companies not paying taxes in Europe—a topic I know well. Then there was the fear for privacy following Edward Snowden’s revelations. Then the fear for jobs and inclusiveness, with Silicon Valley becoming a topic in the global conversation on the future of work. And now it’s the fate of our liberal democracies that raises questions, as revelations pile up about how social media can be hacked to influence the electorate.
This, I must say, is where we have something to teach Silicon Valley. European entrepreneurs don’t have the luxury of raising a lot of capital and buying their independence from incumbents, the government, and legacy institutions. And a key obstacle barring their development is the (more or less) legitimate perception that the kind of economic growth they bring about is neither sustainable nor inclusive. And so a critical part of The Family’s work has always been to participate in the wider conversation on building new social institutions for the digital economy—if only to help defuse the problems that entrepreneurs are bound to encounter along the way...for lack of a healthy ecosystem.
Tim O’Reilly’s book WTF? (which I just bought and will soon review) is a rare example of Silicon Valley reflecting on itself with that same institutional perspective and a deep sense of the social challenges that lie ahead. But I think it’s only a first step, and the European perspective that we (among others) can provide will contribute a great deal to making the tech industry stronger—and ultimately saving it from itself. This is a the core of my coming book 'HEDGE', about which I’ll bring news very soon.
Warm regards (from Paris, France),
Nicolas