Paul Graham at The Family
Dear all,
Paul Graham was at The Family’s Paris office last Saturday (April 1). His visit was announced only the night before, which led many people to believe that it was an April’s Fool’s joke. Well, it wasn’t, and our portfolio founders who attended had the privilege of participating in a fireside chat between the legendary early-stage investor and my co-founder & partner Oussama Ammar.
Among the many insights that Paul shared with us was his view on the most important quality that makes successful Entrepreneurs: being earnest. As always with Paul Graham, an engineer by training, it’s all about systems: when he looks at things he divides them into elementary components and looks at the forces that explain the dynamic relationship between those components. And indeed being earnest matters for a systemic reason: it helps founders resist the many acquisition offers they receive on their path to building a global empire. In Paul’s own words:
“There’s a very, very mundane reason for (the importance of being earnest). It’s because EVERY successful startup gets a large acquisition offer on the way up. EVERY startup that is worth billions of dollars, the founders have turned down acquisition offers for hundreds of millions of dollars. And if they were in it for the money, they probably would have taken that offer at the time. So, if you’re in it for the money, you can make hundreds of millions. But if you’re going to make billions, you have to have a sense of risk tolerance that comes with being very earnest.”
Paul Graham seemed surprised by the energy he sensed in the Paris ecosystem. But his impression echoes what we at TheFamily see everyday on the ground. For almost a decade, being an Entrepreneur in France has been rewarded. And in just the past few years—and we are proud to have contributed to this—, Entrepreneurs have become more ambitious and risk-savvy. Those earnest Entrepreneurs may attract mockery and trigger forceful resistance from entrenched interests. But they also signal the growing up of a healthier ecosystem, in which Entrepreneurs are put under the right kind of pressure.
What’s still lacking, however, is a safety net for Entrepreneurs to take even more risks as their company grows past product/market fit. France certainly has the energy spotted by Paul Graham, but it’s still lacking many resources that are critical along the way for earnest Entrepreneurs to succeed: a thriving venture capital market, talent available for hire, and established players (notably the government) that welcome innovation instead of smothering it to preserve the status quo. You can read more on this topic in this piece published last July: 5 Steps to a Healthy Entrepreneurial Ecosystem.
By the way, I just completed the latest chapter in my new book ‘HEDGE’, with developments about just how far politicians, notably liberal politicians, are from understanding the current transition to the age of personal computing and networks. This lag explains the difficulties that ambitious Entrepreneurs still have with most government officials. It is time for liberal politicians to upgrade their view of the world and realize that the new Entrepreneurial Age calls for yet another version of liberalism. Here’s an overview and related readings: Where Are Liberals When We Most Need Them?
Finally, I’ve recently published two more notes about business strategy (and corporate finance):
Warm regards,
Nicolas
