Exclusive Q&A with Nicolas Colin, co-founder of The Family and author of Hedge: A Greater Safety Net for the Entrepreneurial Age

You can find the interview on your favorite podcast app by typing "Parlons Futur" (means "let's talk about the future" in French), for instance on PodBean.

The interview is quite long:

• please refer right below to the list of questions and main points for ease of navigation.
• the full transcript of the interview can be found further down below

Interview happened in Singapore with the help of the French Tech Singapore and the ENGIE factory in March 2019.

Nicolas Colin is the co-founder of The Family, a company that helps European startups scale. He's also the author of Hedge: A Greater Safety Net for the Entrepreneurial Age

Q&A is between Nicolas Colin (twitter.com/Nicolas_Colin) & Thomas Jestin (twitter.com/thomasjestin, thomasjestin.com)

Questions from the public

FULL TRANSCRIPT (lightly edited for length and clarity), with illustrations and links

Thomas Jestin:

Thanks, Everyone, for being here tonight. It's my pleasure to introduce Nicolas to you, based out of London. I'm a reader of Nicolas' newsletter, and I realized he was visiting Singapore, so I offered for him to talk to whoever would be interested about his work. So, I'm glad you accepted. Thanks, Nicolas.

Tonight, I'll be asking Nicolas a few questions about his work, about what he's doing at The Family, about his book, and about his understanding of the digital ecosystem both in Europe and in Singapore - I mean, in Asia.

First of all, Nicolas, I wanted you to let us know what you are trying to build at The Family. And even, first, let me say some words about yourself. I understand you graduated from an engineering school in France, Telecom Brest. I think you graduated at the time the dot.com bubble burst, and so then you were a bit disappointed about job prospects then, so you studied political science. Then you went to the French National School of Administration. Then you worked as a civil servant for the French State. I think, at some point, Emmanuel Macron was a colleague or something. So, then, I think you got disappointed.

So, maybe you'll say something about that later, about your work there, about the possibilities there. You started a startup. Then, I think you joined, again, the civil service, and then you founded The Family. So, that's where you are now.

By the way, my name is Thomas Jestin. I've been in Singapore for the past six years. I'm the CEO and Co-Founder of KRDS, a digital agency. And I'm a big fan of his writing and, so, the connection.

Nicolas Colin:

Thank you for inviting me today. I'm spending a few days in Singapore following my participation in a conference last week called Les Rencontres Economiques de Singapore (Singapore’s Economic Meetup), which was with a French delegation, mostly economists and me and a Singapore delegation.

We were talking about the future of the world economy. So, it's a very large topic. I decided to spend a few more days here to learn more about the startup community here and what the government's doing to support entrepreneurs in Singapore. And I'm doing that as a Co-Founder and Director of The Family. So, The Family is a firm we co-founded six years ago in Paris. We were three co-founders. So, that's me, that's Alice Zagury who is the CEO of The Family, and the other co-founder is Oussama Ammar.

And the three of us had had bad experiences in the past with building startups in Paris, so Oussama and I, because we were actually entrepreneurs, that's when we were both entrepreneurs when we met. We both left our respective companies at about the same time, and then we spent a lot of time together debriefing that bad experience, trying to understand what we had failed as entrepreneurs and realizing that it was in part us - we were not really tailored for being good entrepreneurs, but it was also in part the environment and the difficulty to get startups in Paris at the time.

Alice, for her part, was the head of a Paris-based accelerator named Le Camping which is now Numa, if you know the Paris scene. Alice, had, although not an entrepreneur herself, had this interesting perspective seeing many entrepreneurs all day long working with mentors, with venture capitalists, with the corporates.

We had that discussion, the three of us, and we came up with so many ideas about what didn't work that we decided that it was worth it partnering and founding a new firm that we called "The Family." And The Family from the start was about two different things that combined themselves in our model.

The first was to work with entrepreneurs and to grow an asset that is a portfolio of companies and supporting them in various ways, and more and more financially over time. And the other thing was to work on their environment. And the idea was that if we made the effort of reaching out to all the players that have an influence on the startup ecosystem, it will be good not only for the entire ecosystem but mostly for our own companies.

So we decided to dedicate a significant fraction of our time to speaking with the government, with large corporations, with academia, the press, everyone that has an influence on the startup scene in Paris. And, so, fast forward to today, now The Family has owned quite a lot. We have four offices in Europe. One in London where I'm based. One in Berlin. And the last one, the most recent one, is in Brussels in Belgium. And, so, we operate those four offices as an integrated platform that we provide to all companies in our portfolio. And that's more than 250 companies as of today.

The majority is still French, based in France. But, more and more, we are managing to attract a deal flow from other European countries. And, we've raised money last year from a very large institutional investor. We raised $10 million. So, it's not a lot of money for an institutional investor that is actually managing $55 billion, but the reason they are interested in The Family is that they see The Family as a funnel through which they can deploy a lot of capital in Europe and technology.

Since last year we have been accelerating our fundraising. We want to make the brand known all over Europe. We want to make the brand known in Silicon Valley because Silicon Valley has a lot of influence in Europe. So, my colleagues are literally touring Europe all year long to connect with local entrepreneurs, with local investors, and to map the ecosystems in various European capitals.

As for me, because we've grown so much, we have many people working at The Family now, so I can focus on what I do better than the other which is everything related to policy and ecosystem building, and I write a lot about all those topics.

Thomas:

Can you maybe comment on one of the key points from your manifesto here? Maybe the two or three that are very defining.

Nicolas:

The manifesto is a short text that we wrote when we founded the firm six years ago. We like to think that it's still valid today, so we didn't change a word since then. And the manifesto was, as you can read here, was really designed to shock everyone. We are firm believers in the power of polarization. We think that the best way to force change in the world is to divide, to draw a line in the sand, and to divide the world in two and to make it so that some people hate us and some people love us and support us. And, so, we quite managed to do that with that manifesto and with many other things.

I think a very important concept here is the idea of the entrepreneurial age. So, that's directly extracting from a blog post written in 2013 - so, just a few weeks before we founded The Family. And it was written by a guy named Babak Nivi who is one of the two founders of AngelList in the U.S. He has since left AngelList for reasons that no one knows. But he's a brilliant guy, very intellectual. And, so, he had this blog at the time, and one of the blog posts published that year in 2013 was titled "The Entrepreneurial Age."

It's a very short text that basically says, "We used to be in the age of physics. And in the age of physics what made the difference between the winners and the losers in the business world was, 'Did you have the tangible assets, the physical assets, that make it possible for your company to have the competitive advantage over others?' And then we left the age of physics to enter the age of information. And that age runs from about 1960 to very recently, actually. The key asset was information. If you had the proper information, the valuable information, you had a competitive edge over your competitors and you could win most market shares and crush competition, and so on."

The thesis in that article is that now we are leaving the age of information, because information is effectively commoditised, and having some information doesn’t provide you with any competitive advantage anymore, because it flows so easily that, soon enough, your competitors will have the same information as you. And, so, you can't rely on information to best your competitors.

Hence today, we are in the age of entrepreneurs, which means that what will make the difference between competitors on any market is, "Do they have the entrepreneurs?" And the entrepreneurs are people. As defined in that article, it's a very precise definition that we love at The Family. Entrepreneurs are the ones that are seeking to achieve quality and scale simultaneously, which is made possible today by technology but was impossible in the past.

In the past, if you were building a business, you always had to choose between quality and scale. You could either be a three-star Michelin chef, but you were stuck with a very small restaurant serving very few clients. And it was impossible to scale your three-star Michelin restaurant because, as you scaled, the quality inevitably went down and you lost your stars.

Or you could choose scale, but scale came with a price. It meant that you had to provide your numerous customers with sh*tty products, very standardized one-size-fits-all. No one was really served according to their needs. And everyone building a business was stuck between those two options - either you had quality without scale, or you had scale without quality.

What's really changed today is that technology, that is, competing, networks, through increasing returns to scale, especially network effects and machine learning, and so on, you can reconcile quality and scale. And the more you scale, the higher the quality of the product, actually. And, so, those who understand that are the entrepreneurs, and entrepreneurs use technology so as to deliver quality at scale. And you can't survive as a company, either small or large, either young or old, if you don't have those entrepreneurs who know how to harness the power of technology to deliver quality at scale.

So today’s strategic asset is entrepreneurship and entrepreneurs. When we read that, Oussama and I, we had an epiphany, we said, "This is it. We need to build that firm that will attract the best entrepreneurs of the day and support them with everything they need to succeed." And having a relationship with those entrepreneurs while educating them, partnering with them, etc. will be our most valuable asset. So, that's the idea.

Thomas:

At The Family, you have a lot of ambition. I think your ambition is to become the new Berkshire Hathaway (as detailed here in that long blogpost). That's quite ambitious, to say the least. You claim to provide capital and unfair advantages to entrepreneurs. Can you mention some of these unfair advantages and how you are extending out of the clutter with all these people and VC's and mentors out there?

Nicolas:

Well, The Family is a platform, and when an entrepreneur joins The Family, what we provide is continuous education, which means that we deliver advice, mentorship, resources, articles, content. And that's the most valuable part of being in The Family. Because it's very intangible. A lot of people are doubtful that it adds any value, but that really makes a difference. Like, all the entrepreneurs that have been successful in The Family, if you ask them what made the difference, "What do you like being part of The Family?" it's the relationship we have with them, and that made it possible to educate them on a continuous basis.

"Unfair Advantages" is the name we used and we didn't invent that. That's the name we gave to all the partnerships we have with many providers, third party providers, service providers, software providers. I must say, over time, that's actually the least important part of our value proposition.

The other important part is what we call "access to capital." So, we provide some capital and more and more so thanks to our financial backers now. And The Family is becoming more and more the traditional financial VC firm. But the most important part of our model is that, because we are The Family, we're constantly investing and building strong and trusted relationships with the best VC's in town, either in Europe, in the U.S., and maybe one day in Asia. I don't know. We are vetting those VC's, and we have a white list that is semi-confidential of VC's you should work with. And we have a black list of VC's that you should avoid at any cost.

What we provide to entrepreneurs is, when they're ready to raise funds, they usually raise fast with good terms, with good VC's, because we provide the access. And those VC's know that when we send a company to raise funds, if it comes from The Family and it has the support of The Family, we think that's the right time to raise funds, then it's effectively the right time, and they usually reply favorably.

Thomas:

What I like as well about The Family is that you have contrarian takes on some aspects of the startup world. Like, for instance, you don't believe so much in co-working spaces, in having space to host startups. And you don't really believe in mentorship. You believe in partnerships, in reaching out to many people within your network, but not so much in mentorship. Can you elaborate on that point?

Nicolas:

Actually, those are two lessons that Alice my co-founder and CEO of The Family drew from her experience running Le Camping in Paris. Le Camping, before becoming Numa, was a non-profit organization, and it was mostly financed by corporate sponsors, plus subsidies from the Paris region and stuff like that. When she was put in charge of designing that new accelerator, she didn't know a thing about startups or accelerators. So, she convinced her employer to pay for a world tour of accelerators and incubators. She had this extraordinary experience of touring the world to ask questions to everyone who had created a successful accelerator. And she came back with what she thought were good practices, where good practices included having a co-working space to put all the startups in the same space and building a community of mentors.

Then, after two years doing that, she realized that those two things had been a strategic mistake. Because she couldn't undo that, she decided to leave and found The Family.

When you have a co-working space and you put all the startups of your batch in the same space, in any batch, you have good startups and bad startups. What happens is that the bad startups are usually bad because they're unfocused. They don't work as hard as the other. They have all the time to talk and drink coffee, while the good startups don't like that. They like to be focused on their products. Because they're disturbed the entire day by the bad startups, they decide to leave and settle elsewhere than in the co-working space. In the end, it's a natural selection problem. You're surrounded by the bad startups, while, all the startups that stay in the co-working space are the bad startups.

Thomas:

I think it's a great learning that we very seldom hear about.

Nicolas:

Three or four years ago, there was a discussion launched by Sam Altman who, until recently, was the President of Y Combinator on Twitter. He said, "Well, everyone in the world assumes that Y Combinator has a co-working space. We don't, and we think that's the key reason why it works so well."

And then Keith Rabois from Khosla Ventures intervened in that discussion and said, "Yes, that's because a startup is like a church." No, it's like a cult, and you can't have two different cults in the same church. And that's why each startup must have their own office to build their own culture and not to be disturbed by the others.

A lot of people pushed back against that because so many people have created co-working spaces, thinking that it was the right thing to do. But, no, it's different for me. Believe the experience of my co-founder, it really doesn't work. It always leads to that anti-selection process where all the good people leave and all the bad people stay, and you have to deal with them all day long.

As for mentorship, actually, Alice realized that mentorship didn't work in Paris, at least at the time. When Oussama Ammar was selected as a mentor for Le Camping; that's how they met, actually.

It changed everything. He arrived, and started to mentor startups. And all the startups came back to Alice and said, "Well, this guy is amazing. We don't want to see the others anymore." And, so, then she realized…

Thomas:

That's the Oussama effect.

Nicolas:

Yes, she realized that something was wrong with those mentors, and they reflected a lot together on what was wrong. The thing is that, in Silicon Valley, mentorship works because it's a mature ecosystem that, over time, has selected the right practices through a ruthless, Darwinian process. For any question, there's an answer not by certain people but by the entire ecosystem. This is how we do things there. And if you ask, "Why?" they say, "Because it works." And, that's it. And if it ceased to work, then we change the practice and switch to another practice.

A mentor is not someone who has reflected on the best practices. It's someone that knows what you should do because it's worked for everyone else. In an ecosystem that is mature, the best practices are known, and the mentors are only those who pass those best practices on to you, the young, inexperienced entrepreneur.

But in an ecosystem that isn't mature, like Paris was at the time, you don't know what the best practices are because nothing works, or things work for certain people but not for others. And, so, depending on the mentor that you look for, that you ask advice to, they'll answer, "Well, the answer to your question is black or it's white or it's gray or it's a different nuance of gray." And in the end, the entrepreneur hears four different answers to the question, and they don't know what to do. They've just lost time talking to people who all provided different answers.

In that case, if you don't have a mature ecosystem, it's better to go without mentors at all, or to select them carefully to make sure that they're all saying the same things. Because what's important is not what they say, it's the fact that the entrepreneur hears the same answer to the same question, which makes it possible to execute fast. And if everyone fails following the one advice that everyone is giving, then the ecosystem shifts and comes up with a new advice.

So, I'm not even sure that, today, Paris is mature enough to restore the practice of mentorship. I think we're far from there because an ecosystem is mature when it has given birth to several billion-dollar companies. And we're far from that in Paris.

Thomas:

Thank you. I think it's a very strong piece of advice, a very contrarian one. So, here I've listed some of the companies from your portfolio. I understand there are more than 200 companies you've helped across the years. I think that together, as of now, they’re worth close to two billion euros. Very impressive. Of course, some of them have disappeared, as well, along the way. Can you maybe talk about a few that are quite representative of your approach and how you've helped them and where they stand now?

Nicolas:

Just to explain where I'm positioned in the organization, over time I've been working less and less directly with the entrepreneurs in the portfolio. So, I'm not the one who knows them all. There's another part of the team who knows every startup in detail and has the continuous daily relationship with their founders. That's not my case. So, I'm biased because the ones I know better are usually the older portfolio because, at the time, we were so tiny that everyone worked with everyone.

Thomas:

Which one is the most valuable as of now?

Nicolas:

The most valuable is probably Algolia, and Payfit is second. Captain Train has been sold, it's exited, we now own shares in Trainline, the acquirer.

Thomas:

For those who are not from France, can you maybe say what they do?

Nicolas:

Among those, one that I worked a lot with is Heetch. Who knows Heetch here? Basically, they're now doing the same as Uber and Grab. It's ride hailing. But, at first, before doing that, they were organizing that small community of drivers who just for a few hours every week would drive young people partying at night in Paris and having to go back home in the suburbs of Paris. There were two problems that Heetch tried to solve.

The first is that those young people don't have the money to pay for a taxi, and they want cheaper rides. And those drivers, because they were amateurs providing a service just a few hours every week were ready to drive in exchange for a lower earning. And the other problem that exists is, even though you have the money to pay for a taxi, if you live in the French suburbs, that is, most of you are French, so that would be Gennevilliers, Sarcelles, Grigny, etc., the cities with a lot of crime, shabby housing projects. No one wants to go there except those who live there, especially not the taxi drivers because they're afraid of being robbed.

If you say, "Well, my destination is Grigny, no taxi driver, even if you show the money and you pay them before the ride, they won't go there. So we have a problem. At night, the public transit doesn’t work anymore. Taxis are too pricey. And, even though you can pay, no taxi driver will effectively drive you there. The only option is to drive while being drunk and which leads to many accidents. That's the problem Heetch was solving.

They had so many problems with the governments, with the incumbents in the taxi industry, they went on trial, they were convicted in court. They had to switch their model from amateur drivers to professional drivers. And now they are effectively a copycat of Uber and are really good at competing with Uber in Paris. And they're expanding very fast in Africa.

They’re an exceptional company because after all those problems and the fines and the trials and convictions, they've been able to rebound and to raise more money and to switch their strategy and to focus on a new market - that's Africa. They're exceptional. I've been working so much with them because I'm the policy guy in The Family. I was the one who was trying to manage the conflictual relationship with the government which was not easy and, ultimately, not successful. But we learned a lot doing that.

Thomas:

I think it's very interesting because you were, yourself, sued by the CEO of the leading Taxi Company in Paris.

Nicolas:

You wouldn't believe that, but there are many people in the entrepreneurial world in Paris that have been sued and tried in court for various reasons. Mine was that I had written this very harsh blog post in 2013 denouncing the backward-looking vision of innovation, expressed by the owner and CEO of the largest taxi company in Paris, called G7. And the guy sued me. He still lived in the old world at the time and thought, like the old French elite, that if someone says something bad about you, you just sue. You're certain to lose, but it's so intimidating to be tried in court and to have to pay a lawyer, etc. Plus, it costs money. You still have to pay your lawyer. So, he thought that he would crush me somehow. Which didn't work because, first of all, I was a colleague of Macron. That's not Macron that's in play here, but on to that French “Grand Corps”, the “Inspection des Finances”, which makes me indestructible in the French system. (laughter) And the other thing is that, today bad publicity is good publicity, as you know. And, so, that guy, Rousselet, actually provided me with my first thousands of followers on Twitter because I simply tweeted, "I'm sued by this guy” that everyone hates in the startup community anyway, it brought a lot of support and a lot of love.

Thomas:

Just a word maybe about growth hacking. At some point, at The Family, you were short of money, you could not even pay the rent, and you managed to pull out an offer for online learning. And thanks to all the sales that came in the following days, you managed then to move to a larger place. It's a crazy feat of growth hacking, maybe you can talk about that.

Nicolas:

Yes. That's it, more or less. Who among you knows the story of the AirBnB cereal boxes? Those who don't know it, AirBnB is a company that failed and failed and failed and failed, again, until they finally succeeded. Because they were failing so much and they failed so many of their launches, they had to make money on the side. They came up with different schemes and very creative ways of making money. One of those was during the 2008 Presidential campaign. What they observed was that there were all those crazy people that were fierce supporters of either Obama or McCain at the time. As Brian Chesky is a designer, he had this idea, "Let's design some cereal boxes, a series for Obama." It was called something like "Obama O." And "Captain McCain" for the Republicans.

Buy cheap cereals, wholesale, and fill the boxes, and sell the boxes so as to make a bit of money, because those crazy supporters are ready to pay an insane price for a cereal box that bears the picture of their favorite candidate. And, so, they actually made money. And these anecdotes of creating the cereal boxes just to get the company going is actually what convinced Y Combinator to take them in, because they said, "These guys are so clever, and nothing can stop them if they can come up with such ideas”

We had our own version of the cereal box experience: we started The Family in a small apartment in Paris, a very nice apartment in le Marais, in which we hosted events for about 30 people. But there were a lot of events. And, so, there were a lot of people going back and forth. A lot of noise for the neighbors. Neighbors in that area of Paris are extremely conservative and don't like to be disturbed. They complained to the landlord who kicked us out after one year.

We said, "Well, that's not a problem. We wanted to expand anyway." And we were looking for a new office, and we found this large space that we still have in Paris, which is still in le Marais. We said, "That's perfect for us." And what was perfect was this very large space on the first floor that can host events up to 400 people. But we didn't have the money. So, we had two options. One option was to go back to our investors and say, "Why don't we invest a bit more so that we can take the lease on that great office space that will be perfect for us, not a co-working space, as you understand, but to host events?"

We decided against that because we said, "Well, those people, those investors, would have been rational and said, 'You're crazy, that's too large for you. That's too large a financial commitment, and we won't invest in that project.'" So, we decided to make the money ourselves. We figured out that a good way to raise some money very fast was to design an education product and to sell it to people who had to pay in advance in exchange for the program. So we designed a program to teach entrepreneurship that we called Koudetat. At first, it was an in-presence program. You would attend an entire day of lessons and workshops every Saturday during three months. We sold that for the price of 2,500 euros. And we sold that to a hundred people in three weeks, which brought in the money to make the initial installment for taking that space. And that's how we expanded in a larger office.

Thomas:

Amazing. Who has already watched a video of Oussama Ammar on YouTube? Yeah. Almost everyone. He's an amazing, mesmerizing speaker, and I strongly recommend you go watch some videos of his. There are so many, so much content on YouTube.

Talking about the Airbnb founders, I like what Paul Graham, the founder of Y Combinator, has to say about them. There are different ways to qualify entrepreneurs. One of them is ramen entrepreneurs, entrepreneurs that can live off ramen noodles, very low maintenance. And there's even a higher level and Paul Graham talks about the cockroach entrepreneurs. So, the cockroach entrepreneurs, nothing can kill them. They are so low maintenance, they can live off almost nothing. And, so, their startups can survive forever. And I think the Airbnb co-founders were the best description of what the cockroach entrepreneur is.

Nicolas:

Well, until last year, we've used that argument a lot as The Family, because many of those entrepreneurs came to us complaining, "I don't have any money left. What should I do? I need to raise more." And, we said, "No, don't raise. If you raise now, it will be with very bad terms, very high dilution, and so on. Look at us. We're The Family, and we've always managed with a very short time horizon and very short on cash."

We had that kind of leverage that we led them by example. That's now over because we've raised enough money, and there's a time for everything. We contributed to making those people realize that you can effectively try to take inspiration from the Airbnb founders, and be like the cockroach entrepreneur.

Thomas:

Let's discuss your book now a bit. You wrote a book about the Greater Safety Net that we need for the 21st Century (Hedge: A Greater Safety Net for the Entrepreneurial Age). It goes back to a phenomenon that we call "the great decoupling," which basically is the widening gap between, on the one hand, productivity gains and, on the other, real household income gains. There is more unemployment. Companies don't last as long. But the thing is, it happened in the past. It happened in the 1920's in the age of the automobile and mass production, and we had a response for it. The world had a response for it - the West, at least. And that was the first original Great Safety Net, a set of policies including the welfare state and strong unions among others. But the thing is, now it's getting exhausted and we need to move to a new safety net, the greater safety net, the great safety net dot two zero.

Can you maybe talk about what that great safety net was in the first place and, then, we'll talk about the new one.

Nicolas:

Maybe just a few words about this book and why I wrote it. Three years ago, something started in U.S. that is known as the "tech backlash." People started to turn against tech companies as opposed to supporting them. It's true a bit for the general public, but it's mostly true for politicians and the corporate world.

Oussama Ammar, my partner, came to me and said, "Well, finally, the Americans are experiencing what we in Europe have been experiencing forever.” That is, everyone hates startups or mistrusts startups because they're seen as an agent of job destruction, industrial destruction, privacy invasion, and things like that.

We in Europe are used to battling against that hostility that surrounds entrepreneurs every day, they're used to it. That's part of the game. Whereas, in Silicon Valley, they're not used to that because they're insulated in their Bay Area far, far away from all the rest of the country, and they have so much money that whenever people say bad things about tech companies, they can hire the lawyers and the lobbyists and the comms people to handle the problem, which makes it possible for entrepreneurs and VC's to focus on products, markets, building companies.

With the tech backlash, there was this idea that finally they understood, that they were becoming a bit more European in the experience of what it is to being an innovative entrepreneur. This time, Oussama said, "Well, that's an opportunity for us. For the first time, we have something to teach them as opposed to them teaching us. And, so, you should write a book about that."

I reflected a bit, "What kind of book would it be? Would it be a general book about tech and policy? Is it a book about the backlash?" And, finally, I decided to write a book about the welfare state, not only because it's a topic that I like, that I know well. I've been teaching that at Sciences Po (a French school of political science) a long time ago. I think, in the policy field, the welfare state actually covers the most important policies, the ones that make the most sense for the general public.

If you talk to average people about policy, they usually don't care. Like, copyrights, they don't care. But if you talk to them about jobs, steady income, being covered in case of problems, that makes sense for them because that's all the key components of having a good life, "I have a job. That job provides me with a high enough purchasing power. And if there's something bad that's happening to me or my family, someone will be there to support me."

That's really what people care about. And because they don't have that anymore, today, because that whole system doesn't work anymore, they're angry and turning against the elites, the banks, the immigrants, whatever you can hate for cheap.

That's the argument of the book. The reason people are angry and, in particular, they're angry at tech companies, is because they don't have that anymore. They don't have jobs. If they have a job, it doesn't pay well. And if it pays well, if they have a problem, they lose everything.

We have to restore that kind of stability and security that makes people more serene and more forward looking. And that means that we have to reinvent, what I called in the book, "the great safety net." We had one that worked very well, from World War II to 1975, about that, and then after that it worked less and less well until the crisis 10 years ago when it completely blew out. So, that's the old safety net.

Just bear in mind that the most important message here is that the old safety net was built with the corporation at the center, because the corporation was the central institution that provided us with a good job with high enough purchasing power and security.

Around the corporation, the governments in every western country, at least, over time, built social insurance systems, financial systems, systems that provided households with the capital they needed to buy houses, to buy cars, the things that used to be important in the past. They provided, also, workers with the possibility to organize through strong trade unions who make sure that the workers' interests were well defended against employers.

Amazingly, although corporations are usually extremely worried when you talk to them about that, all of that created a lot of value for corporations. Social insurance provided corporations with the steady consumer demand, because if you're covered against risks, that means that if you get sick, you can still consume. If you get old, you have a pension. You can still consume. And, if you lose your job, you have employment benefits, and you can still consume, which is ultimately good for the corporate world.

The financial system provided corporations with more solvent households because if you needed to buy a car, no one could buy a car with cash. You couldn't pay cash for a car. It's too expensive. But if you provide banks with the security that they need to lend money to households so that they buy cars, it's good for car makers. Likewise, for houses.

And trade unions, that's probably the part that the corporate world hates the most. But trade unions, in effect, are a good thing because they extract more from corporations which is recycled in the economy in the form of higher consumer demand. Actually, that's a lesson that's well understood here in Singapore. Maybe you know the system where they work together, employers and unions and the government, to make sure that everyone has their fair share of the pie and which preserves the balance of the Singaporean economy. (see image below)

It's all a virtual circle, and it's been working so well until it stopped working. So, why doesn't it work anymore? It doesn't work because social insurance has become too costly because we don't have enough tax revenue anymore to pay for all the social insurance.

The financial system that we inherit from the past doesn't work anymore because it provides you with all the money you need to buy houses and to buy cars but, today, more and more people go without a car. You don't need a car when you live in cities. And more and more people renounce buying houses because houses have become so expensive.

Thomas:

It led to the bubble in 2008…

Nicolas:

Yes, and, now, you're usually renting or moving around. Well, unions have completely disappeared. Not so in Singapore, because the government needs them to connect with the workers. But in the West, they effectively don't exist anymore. So, social insurance is weaker. Unions have disappeared, which means that the entire mission of providing security to households have been resting exclusively on the financial system. And that, in large part, explains why we went to the financial crisis. Because, if you ask too much from one pillar, as opposed to three pillars, then it finally breaks under the weights of what you ask from it. And the financial system alone cannot provide the entire economy with the prosperity and the economic security that we need to take risks, invest, plan ahead, move forward, and so on. And, so, this is why we need to reinvent the entire safety net.

Thomas:

Before you tell us about the new, greater safety net, some important notions from your book: at the center of the new, greater safety net, there is not the corporation anymore but something that you call the "multitudes". You wrote a book about it before (in French, here), and it's different from the masses. It's different from the people. It's something that you can maybe elaborate on. What is the "multitudes"?

Nicolas:

About the Multitudes… My current book Hedge is my third book, and the two firsts were written in French. The Multitudes a concept I wrote about in my first book, written in 2012 with a friend of mine called Henri Verdier who went on to become the CTO of the French government. And he's now Macron's Ambassador for everything related to digital technology.

Thomas:

It’s not Mounir Mahjoubi ? (note : at the time of the interview, Mounir Mahjoubi was still Secretary of State for Digital Affairs in the French government)

Nicolas:

Well, there's the Minister who makes speeches, and there's the Ambassador, which has to deal with the U.S., other governments, large tech companies abroad, and so on.

Because they don't take startups seriously, we will never come up with a Google or an Amazon of our own. So, we need those people to understand what startups are about so that instead of not giving a f*ck, they'll actually care about startups and support them and help them grow.

We wrote that book, it was a very simple book in a way. It was just to educate the French elite about the digital economy. Sorry, it's a long story but it's interesting, I think, to understand that concept. Henri used to work for the French publishing house Odile Jacob. So, he knew publishing well, and he, as everyone who's worked in publishing, he knows the recipe for a book that sells, so I'll give you the recipe so that you can write good books. So, a book that sells is a book that bears a very strong and polarizing idea that you can sum up in one sentence. That's it.

And it takes a lot of work. So, we had to work very hard for many weeks and months. What is that key, strong, central idea that will make the book successful? And we came up with a very simple idea which is, "In the digital economy, there's more power outside than inside organizations." That's it. That's the idea. And if you understand that idea, you understand everything about technology, computing, networks, tech companies, and so on.

What's that power that lies outside organizations? The reason why power has moved from inside to outside is because we individuals are now equipped with powerful computing devices - so, laptops, smartphones, connected devices of all sorts - and we're all connected one to another through networks, which means that we can pool our individual power to turn it into a connective power that effectively is exerted through networks.

It's the same individuals that form the people in politics or the masses in consumer markets. But the dynamics are very different because they're equipped and they're connected. So, we needed a name to put on that, and we decided to call them the "multitudes" which is actually a concept that goes back to Spinoza. So, it's many people, but connected together, and all different from the others. Our book was called "The Age of the Multitudes" (in French, here.) I've been using that concept a lot ever since because that's the idea that sums up the entire digital economy.

Thomas:

And there's something very contrarian, again, about what you said before. You're saying that today’s age is not so much about data. It's about entrepreneurs. And in the book, you go even further, and you say entrepreneurs leveraging the multitudes, and at the center you have the multitudes.

Nicolas:

Because if you want to deliver quality at scale, you need to harness that power that's vested in the multitude. How do you do that? You do that by serving them, and in exchange for a good experience with your product, they'll provide you with what you need to deliver quality at scale. It's a virtual circle. The more you manage to deliver quality at scale, the happier your users are and the more they provide you with the resources that make it possible to deliver quality at scale.

If you serve a larger market, if you scale up in the digital economy, you don't have to downgrade the quality of your product because, as you scale, you access a larger multitude of connected individuals, and in exchange for the good experience that you delivered to them, you can ask them for more data, you can ask them to interact with each other, peer to peer, and you can even hire some of them as an amateur, auxiliary workforce, like Heetch drivers, for instance.

Thomas:

So, the first one would be, for instance, when you browse Facebook, people barely realize they’re giving data to Facebook.

Nicolas:

Exactly.

Thomas:

And then there’s the more active, conscious way to contribute, like when sharing reviews on Amazon or on TripAdvisor.

Nicolas:

Yes. That's the data collected by Google or Facebook about you. That's the reviews that you submit to Amazon. And that's the Heetch drivers, or you renting out your apartment on Airbnb a few weekends a year. And all of that together generates that surplus that, in turn, can be reinvested on the supply side into lower prices and higher quality. That's how you manage to deliver quality at scale. And on the demand side, that surplus makes it possible to create more jobs and to pay your workers more. And, so, that's the key to understand why we can build a new safety net. That's because we have that surplus that can be reinvested in providing people with better jobs and with more security.

Thomas:

In the past, dominant companies were protected by their patents or some barriers to entry. Right now, the dominant companies, they cannot be as complacent because their power rests on the multitudes, and it's a very capricious bunch.

Nicolas:

That's the key difference. In the past, power was on the inside. That was the assets on your balance sheet or your brand, for instance. Today, your assets and your brand and the number of employees doesn't really matter if you don't, because you'll always be bested by a competitor that has no assets and very few employees but that is better than you at harnessing that power from the outside.

Thomas:

Another very interesting concept is your definition of a tech company. And that definition excludes the traditional telco companies for instance. Can you share your definition of a tech company?

Nicolas:

A lot of companies like to be called "tech" companies today because they think it's fancy and hype, and everyone used to love, tech companies until a backlash. We've heard a lot about, like, banks or tech companies, or telcos, or tech companies, but having a lot of computers in a high-rise building doesn't make you a tech company. What makes you a tech company is that, if you use that computing power to harness the power of the multitude which, in turn, provides you with all these resources and with a surplus that you then reinvest to better serve the multitude and, so, you have that virtual circle.

The three criteria for being a tech company is, first, you need to be a company that delivers an exceptional experience to customers, an exceptional experience that means it's fast, it's cheap, it's high quality, it's personalized.

Second criteria is, you need to collect data and resources from your users on a regular and systematic basis.

And this, in turn, can be used to generate increasing returns to scale. And increasing returns to scale is the micro-economic formula that makes it possible to improve the quality of the experience. So, that's it, it’s a virtual circle.

So, better experience leads to more data and more resources. It leads to higher returns to scale, leads to a better experience.

Thomas:

In the past, the big players were looking for economies of scale, and it worked to a certain extent until they got diminishing returns, while in the case of the today’s tech companies, there is no end in sight. The more data you have, the better you can serve your consumers.

Nicolas:

And Amazon is the best example of that. Amazon, I remember, 10 years ago, when I was working in a startup in the city of Paris, you still had the idea at the time that, "Okay, the Americans are dominating everything except for e-commerce where we still have our champions." So, we had like Ventes Privées and Pixmania, and stuff like that, Price Minister exactly. Ten years later, they’ve all disappeared, or almost disappeared, or they're only operating in France. And that's because Amazon has… Well, everything that I write about corporate strategy has been thought by Jeff Bezos 20 years before, except that he's busy building the company, so he doesn't write everything in details. But we're all learning from him, basically.

Thomas:

That leads us to the new, the Greater Safety Net 2.0

Nicolas:

Yes. So, that was a long detour to explain that, today, in the economy, it's not the corporation that's central anymore. What's central in the digital economy is the multitude, the networked individuals. And, that's a very important paradigmatic insight. It means that you need to build the new safety net, not around the corporation like used to be the case in the 20th Century. You need to build it around the multitudes, or the connected individuals. And, ultimately, it's to provide the networked individuals with everything they need so that corporation can harness their power and make profits. But corporations are nowhere to be seen here because they've become marginal. They're important, obviously, but they're marginal. What's at the center is the multitudes.

Inventing the new safety net is, effectively, very simple. It means that you simply have to reinvent each of the three pillars so as to provide the same outcome but in line with what the digital economy's about. So, you still need to cover risks, but a different economy calls for a different kind of social insurance. You still need to provide people with access to capital, but it's probably capital to invest in new things, not houses and cars, but other things.

You still need to help people organize and defend their interests collectively which, actually, is made easy by competing in networks. But it should be to serve the needs of the networked individuals and not the workers of the old 40's corporations. So, it's a very different kind of unions that I called "exit" unions. I can go into detail if you want.

Thomas:

About the future of the financial system for instance, you write that it will be not so much about borrowing money against what you will own in terms of tangible assets, but in terms of your earning power in the future, or maybe the education you’ll invest in, or what you would be able to earn in your future jobs.

Nicolas:

One of the frameworks that people like in the book is the concept of dividing the workforce between hunters and settlers. In the past, most people were settlers. Like, you found a job in a company. You could expect to be there for 30 years. Which means that you could buy your house nearby, put your kids in a school nearby, buy your car to go between the factory, the house, and the supermarket, and the school. And, that's it. Your life was settled, literally.

Because those settlers, especially the factory workers, were the most productive part of the workforce, you really needed to design the safety net around those because those were the ones that were the most critical to economic growth.

I think that today in an economy that's driven by the multitudes here, settling is not an option anymore if you want to succeed in your working life. And that's because the economy is now driven by the multitudes : the multitudes are impatient, fickle, they want higher quality, cheaper prices, shorter delivery times. And when they have that, they want even more. And if you don't provide them with that, they'll go elsewhere and leave your company and serve the interests of another one.

That's why companies, today, if they want to stay relevant and alive need to implement innovation on a daily basis. They need to be ready to expand, to take risks, to experiment, to iterate, to launch new products, to diversify, to reinvent their business model. That is exactly what Amazon is doing, and that's why they've been surviving through all the booms and busts of the last 25 years. And, so, again, Jeff Bezos is the master in strategy. He's the Sun Tzu of the modern corporate world.

So, that's the key. You have the entrepreneurial age, but from the worker perspective, people wrongly assume that the entrepreneurial age is about all of us becoming entrepreneurs or self-employed or freelancers. That's not true. In the future, well, let me say that, most of us will still be employed by organizations. But those organizations will have two options. Either the organization we work for is entrepreneurial, which means that it will reinvent itself on a daily basis, and if you want to stay with them with your employer, you'll need to reinvent yourself at the same pace. Or you will work for a non-entrepreneurial organization which means that it will go bankrupt at some point and you lose your job.

For workers, it's a very different world. It's not settling in the same company and the same job for 30 years. It's about either you stick with the same employer at the price of constantly reinventing yourself, or you lose your job on a regular basis because your employer goes bust. And that's the entrepreneurial age for workers. Which means that, the workers that will manage to survive and to make the most of that new age are those who are hunters more than settlers. They have to be ready to hop from job to job, to switch from one industry to another, to move from one city to another, constantly in search of opportunities, detecting before others that their employer is going in the wrong direction and is about to go bust at some point. And, so, you need to be on the hunt if you want to have a successful career. That's the best option in the new world in which value creation is effectively driven by the multitudes.

This illustration is meant to show that, in the past, the corporation was at the center as in the previous illustration. Around the corporation were the settlers, represented by those middle-class suburban houses, and at the margin of society were the hunters, because hunters have always existed, but they were despised, overlooked. Those were, I don't know, the students, immigrants, or jet setters, or expatriates, for that matter.

You could either be a very successful hunter if you were a jet setter or an expatriate working in Singapore with a very generous package from your employer. Or, you could be a low-end hunter, an immigrant, working in the kitchens in restaurants in exchange for small money. And, so, those were really at the margin of the economy.

Today, the ones who make the most of the new economy driven by the multitudes are the hunters. So, suddenly, the hunters: hunting becomes the winning way of life. And the settlers find themselves stuck at the margin along with corporations. And, so, that third circle that you see here is the people who voted for Trump or Brexit or the Gilets Jaunes (Yellow Vests in France) by the way, people who live in suburban houses that they thought would be a good investment and realized that it entraps them far away from all the jobs and opportunities and vibrancy of the new economy that's mostly located in large cities.

Then, you have the old corporations that try to innovate, to stay relevant but fail at doing that and so they're stuck at the periphery about to go bust. That's the new world. Workers, today, should be more like hunters. Which means that the institutions that we build, the new safety net, should encourage people to embrace the hunting way of life as opposed to settling in their job. Those who have to settle because they have kids, they are too old, they have an old parent that they must take care of, we have to mitigate the very bad consequences of having to settle in an economy that rewards hunting not settling. That's the goals of the new safety net.

Thomas:

I think it's interesting to reflect on that framework in the context of Singapore and in terms of their government policies because they pretty much want to attract hunters and, at the same time, retain the Singaporeans and get them to actually settle here. Of course, the government is happy the brightest move abroad to learn and study and gest experience, but its goal is also for them to come back because they are very scared for their survival (see Can Singapore Survive ?, by Kishore Mahbubani) and it's important for them to retain their talent. In Singapore, people are encouraged to settle by subsidizing housing: provided you are married, you can get subsidies to acquire your home. And, also, you get subsidies if you move close to your aging parents. So, they really want to foster that kind of family relationships. It’s quite different from what you are advocating, but still Singapore is successful in this world.

Nicolas:

But, then, on the other hand, it's at the scale of a very small state, and that's a city not a state. And, so, in a hunting economy, at the scale of a large country such as France or even larger in the U.S., you need to be able to move around and to follow the jobs and the opportunities, which is not easy at the time because of real estate, schools, and many other things. But at the scale of Singapore, I don't think that you need to make it easier, that it's not critical to make it easier for people to move from one apartment to another.

What's critical is the fact that if you want Singaporeans to stay, settle in Singapore, it comes with a price. It means that these people will be deprived from all the opportunities that are elsewhere. And, so, how do you mitigate the consequences of that? You mitigate that by attracting enough hunters to create as much local value as you can, and that value can then be taxed or redistributed to the settlers, and that's effectively how Singapore works.

All the value that is created here is because Singapore has designed its entire economy to attract hunters, and hunters create a lot of local value on top of the value they retain and take back with them. And that local value provides Singaporeans with a good life.

Thomas:

Let's talk a bit about that idea of exit unions. You say that any individual in any organization needs a voice or an exit, needs to have a way to be heard, or a way to vote with his feet and leave. What is an exit union?

Nicolas:

Well, an exit union is, the concept is a framework designed by a social scientist called Albert Hirschman, and it's about voice and exits. So, Hirschman explains that if you want to defend your interest, you need these two different levels : you want to voice your concerns and your anger, what you have to say, but you also need the possibility of exit. If you can't exit, you can shout as loud as you can, but it won't make a difference because you're trapped here. And the other party at the bargain knows that, and so they, "Keep screaming. Keep voicing your concern. We don't care. You're stuck here with me." And, so, you need both voice and exit.

In the past, unions used to rely mostly on voice, and that's because their goal was to defend settlers. And if you're a settler, what do you want? You want to keep your job, and you want your job to pay more year after year. They were voicing to obtain just that, to keep the workers in place and pay them more year after year. The toolbox for voice unions was going on strike, bargaining, things like that.

I think that in an economy that rewards hunting as opposed to settling, you need unions to serve hunters as opposed to settlers. That calls for a very different kind of unions. Maybe they won't be called "unions." You need to be able to provide your members with an exit as opposed to a voice. Which means that, so the example I'm using a lot, it's based in the U.S. So, there were a lot of articles at the time about the coal miners in West Virginia. And those economists were writing, "What would it cost to train those coal miners in West Virginia to become solar panel installers and move them to Arizona where there's a shortage on the labor market for solar panel installers?" It wouldn't cost a lot, actually. It's much less than the tax cuts voted by Congress last year.

Here is the idea of the exit union: imagine if those coal miners, as opposed to having a voice union, had an exit union that would come to the employer, the coal baron, and say, "Well, without you knowing, every Saturday, for six months, we've been training all our members to install solar panels. And we've been exploring the real estate market in Arizona. We found houses for them. And, so, that's now. The decision is now. Either you raise wages and we stay, or we all leave together, move to Arizona, take new jobs in a new, growing industry that is the solar industry, and you'll be stuck with no one working in the mine."

If you're an employer, you can afford losing one or two disgruntled workers. But if you lose all of them at the same time, your business goes bust. That's a powerful bargaining lever to be able to provide everyone with an exit. That's really not what unions are doing at the time, because unions depend on people settling in their jobs and staying in place. We need that new kind of unions that will use technology to provide people with an exit and become the new platforms for learning new skills, reflecting on what you can do on your next steps, connecting you to people that have advice for you, and helping you move when you decide to move and leave your house and move to another city, which costs a lot of money. Because it's not only the house, you have to be prepared to renounce your earnings for several months, and you have to take your spouse with you who will have to find a new job. And you need to change the schools for the kids. It's a lot of money. And, today, no bank lends you money for that. They'll lend you money to buy a car but not for hunting on the job markets, which is stupid.

Thomas:

You argue that entrepreneurs, startups are the ones that will bring about that greater safety net, not so much the state that is just too exhausted and not agile and nimble enough. I have one startup in mind that I think is doing a great job in that regard, especially when it comes to education, I’m talking about Lambda school in the U.S., they basically provide free education. You just study with them and then you get a job. It's for computing skills only for now, so, it's still a niche. But what's crazy is that last week they just announced that now they will even pay students to come study at Lambda school. So, not only was it free until now, but now you even get paid to study with them, and then you'll have a job and they'll take a cut of your salary for a few years. The idea is just brilliant, and they’re making it work. They're not so much a union. And let me ask the question, "Do we really need unions? Can’t startups take care of this part as well on their own?

Nicolas:

Just unions in the sense that it's about empowering workers and defending their interests.

Thomas:

So it could be a startup

Nicolas:

Yes, it can definitely be done by a startup.

Thomas:

You're a thinker. You're a writer. But you are also a doer with The Family. Can you tell us about two or three startups at The Family that are actually helping bring about that greater safety net, helping make it happen?

Nicolas:

We have many of them. So, we have a startup providing insurance products for freelancers, helping them find an apartment to rent or be property covered, or prepare their retirement. We have one that's called Side.co which is a gig platform, essentially, they're really focused on students. Students have very high skills but just a few hours to dedicate to working in the week. And, so, they've created that platform that makes it easy for students to find gigs with employers. That would be two of them, and we have many more.

Thomas:

About the universal basic income. We hear a lot about it. It's very trendy. People from the software world argue that it’s the solution for all our problems. But, again, you think it's a diversion and clearly not the answer. Can you say why?

Nicolas:

Well, now that you have those two illustrations (about the first and new great safety nets) in front of you, you see that it's a very complex system. And, as you know, you don't build a complex system in one day. You need to build, to create, the simple systems, each solving a single problem, and then combine all those simple systems into a nexus of institutions. And that becomes, over time, after many decades, that becomes the new safety net.

The problem with universal basic income, I don't discuss it much in the book. I only mention it in the conclusion, the idea is very simple: now that you've read my book and you've realized how many problems we need to solve, and the pain we went through the last time to solve those problems, you might realize at that point and at the conclusion that sending a check every month to everyone is a bit short as a solution.

So, I think basic income is an illusion that has been inspired lately by people in Silicon Valley who don't know a thing about the history of social policy and don't really care. And, so, when people have been asking them like, "But don’t you see people are losing their jobs and inequalities are rising and housing has become unaffordable, and so on?" And, "Oh, okay, problems, I don't have time for these, and I don't want to interact with the government, that large, heavy inefficient bureaucracy. I have one hour to dedicate to coming up with a solution, and let's come up with the simplest solution of all which is sending a check to everyone every month. And I can go back to building my product and growing my company, and so on. And don't bother me with those social, political, problems anymore."

I think that's a bit simplistic, but that's really what happened. Those guys realized that, "Oh, there's a problem, and how can we come up with a solution that is attractive enough for those people, before going back to business?" They didn't have the time to dig deeper into that long and complex and messy history. They invented universal basic income as the universal solution to every one of those problems, which it can't be because that's a key lesson from the policy world: "You cannot solve two problems, you cannot kill two birds with one stone." It never works.

If someone comes up with a very seductive proposition like, "I have this magical solution that will solve everything," you know it's a crook, or it's a failure that's on the way.

Thomas:

Because this is your first time in Singapore, you live in London, we know how much of a mess the Brexit is, and you have Boris Johnson who said that London can just become the next Singapore. Is that going to happen, and is it affecting your work as a pan-European startup investment firm?

Nicolas:

What will happen is that the U.K. will take a hit as a whole, but because London is so strong and the rest of the country so weak, London will preserve its standing and its wealth and its economic well-being. And it's the rest of the country that will suffer even more, which is a paradox because that's the part of the country that actually voted for Brexit. But that's the rule of network effect and clustering. If you make resources scarcer, it's always the strong part in the system that wins, that maintains its position and the weakest part that has to account for the new scarcity. So, that's what will happen.

I don't think that London can become the new Singapore. Did some of you read that book called "How Asia Works" by Joe Studwell? It's a fascinating book about why some Asian countries succeeded while others failed in the second half of the 20th Century. The successful ones are South Korea, Japan, Taiwan, and China. And the failed ones are around here - Indonesia and Malaysia, Thailand, and the Philippines. And it's called what development economists call the "middle income trap." So, they were stuck at the middle-income level and never achieved development.

Studwell explains in the introduction that he won't cover neither Hong Kong nor Singapore because those are not countries. They're cities.

Thomas:

Not fair.

Nicolas:

And a city cannot be compared to a country because a country, by definition, has the overhead to handle. You have the cities that create value, and you have all those people that you need to drive along with you that lives in the suburbs and the countryside, especially in a more digital economy.

London could become the next Singapore if they secede from the rest of the UK and build a fence around the city to prevent desperate people from entering the city. Then they can become Singapore. And that actually happened to Singapore. Like, Singapore became Singapore after they were expelled from Malaysia, which was a good thing for them because it made it possible for Singapore to become Singapore. But London, geographically, you realize that it's more complicated. You can't expel London from Britain.

(note from Thomas post-Q&A: one could counter-argue that Singapore had its share of country people and villagers back in 1965, when they became independent, so it was then a tiny country with its own overhead, but they got all these people to move to brand new housing projects, and got jobs from them thanks to globalization and Lee Kuan Yew’s efforts to bring international companies in to benefit from cheap labor and good infrastructures, it’s still an open question whether this could have been achieved at the scale of Malaysia, but there are no clear compelling reasons why not)

Thomas:

About GDPR. Is it helpful for European startups? Is it counter-productive, or is it neutral?

Nicolas:

No. GDPR doesn't work because it's a regulation that's been designed by European governments to regulate U.S. companies. And if you design a regulation, not to regulate your own companies but foreign companies, there's always a bias that is protectionism.

Thomas:

So, it's not just neutral. It's counter-productive.

Nicolas:

Yes. It's counter-productive, and everyone knows that. Every economist knows that. The stricter the regulations, the harder it is for small players to make their way onto the market. Plus, as an internet user, you don't have that problem here in Singapore. But my problem as a European internet user is that GDPR, the only tangible consequence of GDPR is that I have to click more on “I agree” buttons and cookie information. That makes browsing the internet a very sh*tty experience, and I don't think that will last forever.

Questions from the audience 

Question: apart from market size and homogeneity and the fact that European governments don't understand startups, why don't we have European Googles or Facebooks?

Nicolas:

I usually explain that the two main problems of Europe on the global map of the digital economy is that it's too fragmented, and we have too good a life. So, if you travel around the world, you realize that the situation may be bad in Europe from a European perspective, but if you compare yourself to the rest of the world, even U.S., maybe not Singapore. Singapore might be the exception, like life is better here than in Europe. But life is, in Europe, effectively quite good. And, so, we are lacking that urgency, like things are going bad and we really need to come up with new products, new solutions, like Lambda school exists, Thomas mentioned it, because American students are dying, burdened by student loans. And, so, they came up with that solution, like, "Can we reengineer the financing of training people so that they don't have to borrow money for studying?"

That's typically American. So many problems and so many entrepreneurs, and when entrepreneurs meet problems, they build great companies. We don't have that many problems in Europe. That's the first thing. Too good a life.

The other problem is the fragmentations, market size. And that fragmentation is very tricky because it's not only languages, it's also cultures, and you get French and German are so different, for instance. And a product that works in France won't work in Germany because its people are so different. And that's also regulations despite the single market that exists only in certain industries, not all.

Maybe we'll lose in the end, but I think that what we need to do is to come back to who we are, how fragmented the continent is, and come up with a different way of building companies, maybe target industries in which fragmentation becomes an asset as opposed to being a liability. And no one has done that work. I usually explain that I like traveling in Asia because, for a very long time, we Europeans thought that there was only one playbook to build great tech companies. And that was the Silicon Valley playbook.

A lot of efforts have been done in vain trying to emulate what the Americans were doing, which doesn't work in France. And Alice Zagury's thing with mentors (note : Alice is Nicolas’ partner at The Family), her ideas about mentors, is a very good example. Mentorship works there. It doesn't work in Europe for obvious reasons, I hope, now.

What Asia provides us is an alternative playbook, very different from the U.S., and plus you have different playbooks. You have the Chinese playbook and the Southeast Asian playbook, and the South Korean playbook. We can learn from those, not to emulate them, per se, but to combine, to realize the breadth of the diversity of solutions for building tech companies. And maybe, in Asia, lie some of the ideas that if applied in Europe will lead us to finally be successful.

That's my next book, actually, building great companies in Europe. And another secret about writing a book is that the ideas are clear in the end when you write the last page, but before writing the book, it's still blurry and…. Let's meet again in one year, and I have the solution.

Question: are Alibaba and Tencent tech companies based on your definition? Despite the size of their operations and processes?

Nicolas:

Oh, I think they're tech companies, definitely. I think they match the three criteria. You can be a very large tech company. That's not what makes you or makes you not a tech company. Plus, if you're a good tech company, you scale up. It's easy to scale, and you're taken away by the growth, and you can't resist it. So, it's normal that a successful tech company ultimately becomes very large, especially if it relies on a domestic market that is so large. And they'll get larger. There's a part of the book that is about it. I think that, basically, Chinese companies will expand their market along the Belt and Road Initiative, and they'll be the preferred payment solution and logistics provider all along Central Asia and Africa and, ultimately, that will arrive in Europe. They're already in Italy. Well, they're already negotiating with Italy to include Italy in the Belt and Road Initiative. So, it's coming.

Question: you talked a lot about consumer-based businesses, what about the future of enterprise businesses (businesses targeting businesses) in your opinion?

Nicolas:

I think there's a convergence between consumer and enterprise businesses. I've not done that in a long time but, usually, I think I use different reasons to explain that. The first reason is that, you see a lot of enterprise companies that are selling to users before talking to buyers. So, that's typically Slack and Dropbox. Dropbox is a very good example of another thing which is that you start by serving people in their private life as consumer and, then, those people are the ones who actually demand, well, go to see their boss and say, "Why is it so simple to synchronize files at home when it's about pictures of my kids? And why is it so complicated to do the same thing in your sh*tty ultra-secured information system that no one likes?"

That's when Dropbox knocks on the door and says, "Oh, we have a Dropbox enterprise version for you."

The next thing is that, there used to be a time, a long time ago, when enterprise B2B was about very long sales cycles. But once you have your clients, you get very high margins, because the client is a sucker, and he's trapped with you forever. That's the model.

I think that, today, the pressure is from consumers, the multitudes, because they're so powerful, so much depend on them, that enterprise providers cannot expect to be able to build such high margins, and they have to be ready to compete on a more regular basis with other providers. I think that's the easy life in B2B is over. There's that convergence in terms of mindset and approach and culture between enterprise and consumer companies. I may be wrong, but I have many examples for that trend.

Question: do you think that the networked individual system works or already works in China? Does it have potential in Africa in the future as well?

Nicolas:

Yes. Absolutely. I don't know much about China. I've read a lot about China. I've traveled there, not a lot. So, I won't pretend to be able to explain such a large, old, populated nation, civilization, anyway. But the simple version of the story that I'm using is that, they've given birth to large tech companies in industries that were devoid of powerful incumbents. That was retail for Alibaba. Retail didn't exist in China before Alibaba. And, so, they had the entire market for themselves, as opposed to having to compete with established retailers.

As for Tencent, they started in an industry that was completely new, that was contents, communication, gaming, so the entire cyberspace, in a way. They've been able to succeed in those easy industries because they hadn't any incumbent to battle against, and they grew so large because they were lifted up by a very large market, domestic market, that now they have the power, the talents, the access, the support of the government. And they can answer more difficult, harder, industries like banking and healthcare, housing. They invest in all of that. And they're doing that not as a startup but as a very large company that tackles established incumbents.

What they bring about, entering those industries, is their mindset and the very different relationship they've learned to build with a multitude of connected users. So, I think that the expansion, both product-wise and geographically, of Alibaba and Tencent and the others will come up with replicating the playbook of working with a multitude of new industries and in new countries including Africa.

Question: what are your expectations at The Family from the ideal investor?

Nicolas:

What we like is a swift answer, good terms, and that you can count on people when the inevitable problems come up, as opposed to taking too much time to respond, offering very bad terms, and not being supportive when trouble arises. Because we've had so many startups going through our portfolio, we've been working with every VC in town, well, in Paris, and learning to know the others in other cities. We've had very bad experiences with some of them, very good experiences with others. We think we don't have a critical mass yet to disclose what we think because, usually, it's based on confidential information, like founders are not allowed to disclose the specifics of their deals. You can't really disclose that.

But, over time, we're more connected to more people and, so, people know who's on the black list, who's on the white list. And, so, I would say that those three criteria. But one thing we have at The Family is, there are certain things that we don't abstract too much. It's just that our team likes to work with certain teams, and that's the mindset. People are nicer, and that's it.

Question: what are you looking for when assessing an early-stage startup to help and invest in?

Nicolas:

Intensity. We're so early stage where there's usually no product or not much to see. So, what we see is the founding team, and what we're looking for is intensity. That means energy, ambition, speed. You take all that, and you can sum it up in terms of intensity. It's down to the last detail. Like, it's, 'How fast do they reply to emails?" After a few days, like me, or like real entrepreneurs, that is, in the hour, there are many criteria, but you can sense the intensity. I'm not part of that team, we have a very small team of people who have that gut instinct. Like, they can tell in a minute, "This is a good team."

The idea may be bad, the market is not good, but we don't care. We want that team in The Family because that will make it possible for us to build relationships with them. And even if their startup fail, they'll build the next one in The Family or we will redistribute the talents to other startups that desperately need the talent. Because we invest so little at the beginning, we have the luxury of not being too selective, and we can rely on that gut instinct on, "How intense is the team?"

The end.

That interview happened in Singapore with the help of the French Tech Singapore and the ENGIE factory in March 2019.

Thanks a lot to Nicolas for accepting to do that Q&A, you can follow Nicolas on Twitter at twitter.com/Nicolas_Colin and I strongly suggest you subscribe to his very insightful weekly newsletter here, and again here is the link to his book Hedge: A Greater Safety Net for the Entrepreneurial Age

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