The Agenda 👇
Author Kelly Hoey on what becomes of personal networks in the digital age
Apply to On Deck Catalyst ten-week remote program
Europe is sliding behind. Here are 10 potential reasons as to why.
Stripe continues to impress: a curation of all I’ve written about them
Can seed funds and accelerators work together? Views differ
I’ve long called the current period ‘the age of computing and networks’:
The ‘age of computing’ because we are all equipped with a growing number of digital devices whose computing power is increasing exponentially.
And ‘the age of networks’ because we use these devices (our computers, our smartphones) mostly to connect with one another.
Many online connections with other individuals are implicit and invisible. For example, we’re connected to one another when we read reviews posted by other customers before buying a product on Amazon. Or take our daily habit of asking Google questions, which are then analyzed to suggest, in real time, better ways to pose those questions. This is possible because we are connected in a network whereby each individual’s contribution helps to improve the Google search engine for all.
What happens to personal networks—which, contrary to the examples above, are formed consciously and explicitly—in a world where interconnectivity is the norm? Things change on various fronts.
First, the ability to connect everyone together tends to devalue individual connections. In the past, having someone’s business card had a lot of value. It indicated that you had met that person and that they had judged you to be trustworthy enough to share their contact information. Today, however, that same information is available to everyone via LinkedIn. The business card has thus lost its economic value, as well as its symbolic value. It takes much more than a business card to indicate that someone has entered the inner circle.
At the same time, developing a relationship with another person no longer implies that you’ve met that person ‘in real life’. Twitter has gotten us used to the idea of having interesting conversations with people we’ve never actually met. And for the past year, the pandemic and the difficulties in moving around have further anchored the idea of getting to know one another from a distance.
What will happen to all these long-distance relationships once the pandemic is over? Will we go back to how things were, returning to our old network of acquaintances who all live nearby? Or will we continue developing these relationships regardless of physical distance, using more and more apps that let us connect more and more easily with others? It’s not just Facebook, LinkedIn and Twitter anymore, but also TikTok, Discord, Clubhouse—and others that we haven’t discovered or even invented yet.
This latter hypothesis is what Balaji S. Srinivasan foresaw in his 2013 article Software is Reorganizing the World (in Wired). For him, the Internet is less about nourishing relationships that initially developed in the real world, and more about developing new relationships with people that we may eventually meet IRL later, only then perhaps deciding to live near one another. Balaji gives the example of Silicon Valley: a location where people (entrepreneurs, investors, operators) go to live because they first connected with one another via the Internet and then later decided to use the San Francisco Bay Area as the place to meet up and work together at building tech companies.
In that regard, it’s clear that the pandemic has changed things. With it, we’ve learned how to build companies remotely, a shift that devalues the idea of collecting everyone together in Silicon Valley in order to succeed. But that, of course, won’t impede individuals who connect with one another from deciding to move to a given area based upon other shared affinities.
All in all, the economy of personal networks was upended by both the digital transition and the pandemic. Kelly Hoey, author of the book Build Your Dream Network: Forging Powerful Relationships in a Hyper-Connected World, discusses the new state of networks with my wife Laetitia Vitaud in the latest episode of the Building Bridges podcast.
⚠️ On Deck Catalyst is a ten-week remote program for young leaders who want to solve the world’s most pressing problems and take an unconventional path to building their career. The curriculum includes:
Deep dives on how startups work: what core positions look like day-to-day and why that role is important to the business.
Learning the ins and outs of founding and investing in companies alongside the best in the industry.
Speaker sessions from Keith Rabois, Aileen Lee, Jack Altman, and others as part of the Leaders and Protégés track, an in-depth look into mentor and mentee relationships, and a launchpad for eventual success.
How to create your own opportunities—make roles that previously didn’t exist at any startup you join, launch a startup from scratch, or break into the world of venture capital.
⏰ Their next cohort kicks off on June 5. You can apply here before May 4th. Applications will be reviewed on a rolling basis.
📉 10 Hypotheses As To Why Europe Is Lagging Behind
For all the debates about Europe and how it’s doing, one indicator certainly shows that things aren’t going swimmingly: GDP per capita, which is going in the wrong direction in multiple key European countries. But why is this happening? How is it that in the last 20 years, the average French, English, Italian citizen is getting noticeably worse off than many of their global counterparts?
Observers posit various hypotheses, some of which I find more convincing than others. For example, I don’t think that Europe is necessarily slow in adopting technology, and I also don’t think that the problem comes down to an excess of regulations.
Still, it’s undeniable that something’s going on, and identifying the proper hypotheses as to why it’s happening is critical to turning things around. Europe would certainly benefit from taking a more outward-looking view on business, using the entire world as its stage rather than remaining within the borders of the EU. And given the current repositioning that the US is undertaking, not least because of the chaos that grew out of the Trump White House, there could be an opening for Europe to rediscover industrial policy levers–so long as those levers match the requirements of the Entrepreneurial Age.
👉 Read on in 10 Hypotheses As To Why Europe Is Lagging Behind.
💰 All About Stripe
The big news in the startup world last week was Stripe’s new fundraising round which brought the tech giant’s valuation to $95B. The company’s rapid rise since its founding back in 2010 by Irish brothers Patrick and John Collison is part of the process of constructing the foundations of the digital economy, in Stripe’s case by focusing on payments.
But beyond the eye-popping valuation and inevitable musings about when the IPO could occur, Stripe is definitely worth knowing more about, quite simply because of what it reveals about that ongoing digital construction process. Namely, the Entrepreneurial Age is showing just how much larger markets can be when they’re truly digital, with returns on invested capital getting much, much higher than ever was the case in the 20th century.
So while companies such as Visa or Mastercard did quite well for themselves in processing payments, their reach was necessarily restricted by physical constraints (credit cards, payment terminals, phone lines, etc.). In shrugging off those constraints thanks to digital tools, Stripe, on the other hand, is playing a different game indeed.
👉 Dive further into fintech with All About Stripe.
🏎 Accelerators vs. Seed Funds
As entrepreneurship spreads throughout the globe, more pressure builds throughout the system. One of the places where that is most felt lately is early-stage investing. More and more money is flowing as investors attempt to back startups that might turn into tomorrow’s tech giants.
That led London- and Tel Aviv-based investor Gil Dibner to recently question whether the accelerator model was doomed, given the multiplication and increased sophistication of seed funds like his Angular Ventures. Indeed, this new generation of seed funds now competes for some of those same early percentage points in a startup’s cap table, with a proven ability to add as much (if not more) value than accelerators.
I think that Gil’s idea of conflicting interests between seed funds and accelerators is accurate, although I don’t think the conclusion is necessarily that accelerators don’t have a part to play. For one, accelerators still have some advantages that seed funds don’t, including one that we at The Family treasure: the ability to work with many more founders since their entry into The Family doesn’t involve us signing a hefty check. Another important nuance is whether it’s about a mature entrepreneurial ecosystem or one that is still in its infancy—and where the toxicity requires as much help as possible at the pre-seed stage.
👉 Think more about the ongoing shift in Accelerators vs. Seed Funds.
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🚀 My latest contribution to my firm The Family’s newsletter is a tribute to Jeff Bezos (and Kevin Kwok): Learn to draw flywheels.
🎧 I was invited by Odin for a one-hour conversation with their founder Patrick Ryan. You can listen to it, and read the transcript, here: Building an Entrepreneurial Ecosystem.
From Fixing Today's Economy Is About Humans, Not Technology (November 2018):
Today’s power is vested in the mighty “multitude”—the billions of individuals who are now equipped with powerful computing devices and connected with one another through networks. And it inspires a lesson in strategy and management that every corporate executive needs to keep in mind: the businesses that succeed in the digital economy are the ones that realize how power has been redistributed outside of their organizations. The winners are not the companies who use the most technology. Rather, they are the companies that best use technology to harness human power, which in turn fuels growth and generates profits.
All recent editions:
10 Hypotheses As To Why Europe Is Lagging Behind—for subscribers only.
All About Stripe—for subscribers only.
Accelerators vs. Seed Funds—for subscribers only.
Government in the Entrepreneurial Age—for subscribers only.
Moneyball in Consulting Services—for everyone.
All About Companies Going Public—for subscribers only.
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From Munich, Germany 🇩🇪