Building a Pan-European Ecosystem
European Straits #85
Dear all,
As it is the rentrée, I thought I would use this newsletter to lay out parts of The Family’s plan for strengthening our position at the pan-European level.
Before that, however, there are three pieces of written content to which I’d like to attract your attention:
Since last week’s update, there have been more Amazon reviews from readers of Hedge. All are five-star, which is obviously flattering, and the latest one is by Tim O’Reilly! You can read it here: Key idea: The safety net is a hedge.
My penultimate article in Forbes, published last Friday, was about promoting smarter, greener growth as a central feature of the European economy. Government officials have tried for too long to save the environment from the top-down. It’s high time European governments learn to define a pro-environment “direction for innovation” (Carlota Perez’s words) and harness the power of the many innovators on the ground—in both the private and the public sectors. Read the article here: It’s Not Either Growth Or The Environment.
My latest article, published this Monday, covers one of the many European problems when it comes to building tech giants: the lack of a legacy from past generations. Seasoned entrepreneurs exist in Europe, of course, but they’re not at the level of scale, concentration, and involvement that triggers the compounding of good practices like in the US or China. The article urges European players to recognize and somehow compensate for this lack of a legacy. Here it is: Building An Entrepreneurial Ecosystem Takes Generations.
Obviously The Family is one of the many organizations working hard on the ground to do just that—compensating for what we Europeans didn’t build in the past. To be more precise, the strategy we’ve been pursuing from Day One has been about building a proprietary ecosystem of our own that would quickly recreate the compounding and clustering effects of the world’s leading startup hubs.
A key feature of a healthy ecosystem is that it retains the best entrepreneurs no matter what. This lets it concentrate the energy and insight that each of them is capable of bringing along, no matter what happens to their initial venture. One thing that is carefully orchestrated at The Family is the spotting of that kind of talent: If an entrepreneur has the potential to participate in building the ecosystem, we make sure they get involved over the long term by becoming a mentor or advisor to younger founders. Obviously if there was a successful exit (which some of them have already had), they can also be involved as investors in portfolio companies and The Family itself. This orchestrating the transmission is our way of accelerating the succession of generations that is so critical for the ecosystem to work.
We are also involved in the relationships between startups and venture capital firms. In a healthy ecosystem, VC firms have been selected by a ruthlessly Darwinian process (did they add value and generate returns or not?), which makes it easy for the most ambitious founders to approach them based on their reputation. In Europe, however, things are more complicated—as discussed in this May 2016 article: A Brief History of the World (of Venture Capital). And so we discovered that a key way for us to create value for our portfolio founders is to act as a proxy between startups and VC firms. All the firms that we interact with are evaluated and graded, and we make sure that the most ambitious founders in our portfolio only deal with the best venture capitalists on that list.
A third component of our effort at building an ecosystem is about services supplied to startups—services such as those provided by law firms, investment banks, accountants, etc. A significant part of the toxicity in Europe can be explained by the fact that startups cannot find providers at the level of quality and price that they deserve. In some cases, it’s just way too expensive for early stage startups. In other cases, those services are tailored for traditional SMBs rather than for startups, which makes the latter unwilling to pay a fair price. In a third category, there’s simply no supply at all.
Overall the market is broken in many respects, and this explains why early stage startups have such a hard time taking off. In some cases, we at The Family select the right partners and we educate them on how to work with startups; in exchange, we nudge our portfolio companies into paying a fair price for high-quality services, thus lifting everyone up and shifting the market toward a new equilibrium. In other cases, we found our own subsidiary focused on one segment of the market—a specific category of The Family’s business about which I’ll share more in the coming weeks and months.
As you know, our strategy of building a proprietary ecosystem now exists at the , based out of our three offices in , Paris, and Berlin. In that regard, please be aware that starting in early October, our wonderful team will be traveling to 10 key cities. These trips are about meeting great founders, understanding their local ecosystem & discovering how we can help the most ambitious entrepreneurs all over Europe. You can sign up for events and office hours by clicking here: https://www.thefamily.co/tour. Also, please don’t hesitate to get involved and suggest other destinations if your city is not on the list!
Another dimension of our pan-European strategy is on the idea front. Conversations about startups are very much trapped within national boundaries, and we’re still lacking thought leadership at the European level. This is my part of the job–including as a for the OECD’s Going Digital project, a member of the board of the World Economic Forum’s Digital Leaders of Europe (in which I’ll be focusing on building a pan-European ecosystem), and a Forbes contributor (stay tuned for the next articles!). I should add that my cofounder & partner Oussama Ammar is a proud member of EU High Representative Federica Mogherini’s Global Tech Panel.
I’ll be on my own tour for my book Hedge: A Greater Safety Net for the Entrepreneurial Age, which I hope will be a great opportunity to explore the European startup world from a policy perspective. Check out the .
And if you don’t have the book yet, you can purchase your copy by clicking on the relevant Amazon link depending on where you are: 🇺🇸US, 🇬🇧UK, 🇫🇷FR, 🇩🇪DE, 🇮🇹IT, 🇪🇸ES.
Warm regards (from Paris, France),
Nicolas