Where Does VR Fit in the Transition?
Today: Max Coutte’s VR play, repositioning The Family, corporate venture capital, it’s the 1930s all over again.
The Agenda 👇
Virtual reality is hard
The Family: remote & global
Should you raise funds from a corporation?
War is coming (or not?)
😵 A VR Moment in Our Portfolio
Our portfolio company Chaosix, the startup launched by virtual reality polymath Max Coutte, is about to come out of stealth mode. Yesterday I discussed VR, why I’ve long been skeptical, its potential in the post-pandemic world, and the interesting strategic questions that it raises—starting with How do you foster adoption when you need to build both a hardware set and the experience that set gives access to?
In short, there’s a conundrum that VR founders like Max have to deal with. Software is rarely better than the hardware it’s running on. Then again, as a founder, building the best hardware possible demands so much focus and comes with such high sunk and fixed costs that there’s hardly anything left to devise a software value proposition with the potential to attract many users.
How do you solve this? This is where Max’s approach is interesting. Open sourcing the hardware was the first step: it made it possible to lower the related costs and to share the burden of focus and creativity with a large community. Finding the right value proposition to convince users to embrace VR as mainstream is up next. Discover the details in Chaosix, VR, and the Hardware Lottery.
🌐 Repositioning The Family
VR is not the only trend that’s accelerating with the pandemic and its impact. Every player needs to reposition themselves, and it starts with my own firm The Family. In the past, our focus was Europe and our base was our three offices in London, Paris, and Berlin. In the spring, we announced we were closing those offices down to become a fully remote firm and that we would focus on the global market.
I think such transitions are the perfect moment to build in public, and so I thought I would share a few ideas about the next steps we envision for The Family, from surfing the macro trends in venture capital to addressing a more global market to finally embracing the model of a proper accelerator—one that comes with (even) more online content, cohorts, and companies raising funds at the end of the program.
In this particular case (one that’s close to my heart), my approach to building in public has been to follow the outline I laid out in my Memo About Writing Investment Memos and eat my own dog food. You can read the whole thing here: A Memo About My Firm, The Family 👀
🤔 Doubling Down on Corporate Venture Capital?
The context I discuss in the memo about The Family is that of a constantly shifting venture capital landscape. There’s the rise of tech startups all around the world, well beyond Silicon Valley. There’s the diffraction of VC, with more and more diverse approaches to deploying capital. And then there is, quite surprisingly, the steady growth of corporate venture funds as major backers of tech companies.
I’m a CVC skeptic because I don’t really understand the incentive system. A financial investor has to generate returns; on top of that, they can gather intelligence and analyze it for other goals they define. A corporate VC, on the other hand, won’t make a dent on their employer’s P&L by generating returns, thus is often tasked with investing in companies so as to learn more about what’s happening on the outside.
My first question is: Why would you need to invest in companies to learn about what’s going on, now that everyone (myself included) is working in public? After all, as reminded below 👇, you can spot every trend and learn many things on the Internet. “The Internet is inside information”!
But I know there’s more to corporate venture funds than trying to learn what’s going on in the world of startups. Discover the whole discussion in The State of Corporate Venture Capital.
⚔️ The Great Fragmentation (Cont’d)
From a more global and historical perspective, I can’t even count the signs of the ongoing fragmentation of the world—there are simply too many! In my essay Tales of a Fragmenting World, I discuss the ongoing Trump/TikTok war, investors in public equities reallocating from the US to Europe, and investors in private equity having difficulty making deals beyond their domestic market.
I also cover the point of view of individuals. In the wake of the upcoming (and worrying) presidential election, there’s an interesting backlash against America’s influence at the global level, whether it’s in entertainment, culture, media coverage, or our way of life. The following thread by Croatian angel investor Jelena Jansson made the rounds (see the stats!) and is worth a read!
There’s only one problem: the last time protectionism rose and the world fragmented from every perspective (economic, financial, institutional, cultural), it fueled the rise of fascism and led to WWII. Are we in for a redux? Or can technology (computing and networks) and those who know how to use it help us avert World War III?
On that optimistic (?) note—subscribe to European Straits and let me know what you think!
🦊 My cofounder Alice just sent her monthly email highlighting what’s going on with The Family and our startups, where she opens with her thoughts on how founders are feeling right now and how they can lean on the community. There’s also news on fresh fundraisings, startups expanding to new countries, job openings, our online events, and more—read it all!
👫 Nouveau Départ, the small media operation I launched with my wife Laetitia Vitaud to make the lockdown more bearable, is growing as well. If you like your content in French 🇫🇷 and you have questions for either Laetitia or me, subscribe to Nouveau Départ to contribute to our first #AskUsAnything session which will be published as a podcast on Monday, October 5 🗓
📩 Also, as a complement to Nouveau Départ, Laetitia is launching Building Bridges, a a European podcast & platform featuring inspiring global thinkers (in 🇬🇧), which you can sign up for here ❤️
There’s no shortage of interesting thinkers in Europe and beyond. The reason we don’t know most of them is not that their ideas are uninspiring. Rather, it’s that these ideas are expressed in one of Europe’s many languages, and most Europeans who could be interested in them speak a different language.
Fortunately, the Internet makes it easier to connect individuals with one another. Now, with platforms such as Substack, it has become easier to produce and distribute content. And with powerful tools such as Deepl and Google Translate, it has become faster and cheaper to translate any content into as many languages as necessary. Well, Europe has 24 of them, and we can start with the most spoken across the continent!
From The Hard Truth About Deep Tech (June 2019):
If a region (like Europe) doesn’t have tech champions down the stream, most deep tech investments will benefit others. The market for technology is now global, and large companies are scouting assets all around the world. Thus there is no reason to think that a deep tech investment in a given country will necessarily create long-term value in that country. It will only do so if the resulting asset is used by local players to tackle local problems.
All recent editions:
Chaosix, VR, and the Hardware Lottery—for subscribers only.
The State of Corporate Venture Capital—for subscribers only.
Tales of a Fragmenting World—for subscribers only.
A Memo About My Firm, The Family—for subscribers only.
The China Model With Western Characteristics—for everyone
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.
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
