create meaning

Hey there, welcome to Sunday CET.

This week’s edition has a few situational observations about how things work in Europe and what it means to build meaning.

Enjoy,
Dragos

Observations

Sam Altman, OpenAI’s CEO, toured Europe this week - after he faced a Senate hearing in the US last week, he has so far met with the French, German, Polish, British and Spanish Prime Ministers and had public conversations with local enthusiasts. It is a smart PR move - open dialogue is the only way for preventing the clueless regulate what they don’t understand.

The AI has become a mainstream topic, with anybody and their mothers - taxi drivers, hair dressers and Linkedin users - altogether chiming in on the topic. It has gotten to a point whereas some people are genuinely scared that a piece of technology can become dangerous for the society.

And this includes the EU decision-making folks. On one hand, they try to get a good grip of a tech ecosystem they have long lost touch with. Old money thinking, hardly familiar with the technology business most of the times - it is a political establishment designed to be profitable from policing the ecosystem, rather than enabling a value creation process.

On the other, they are afraid of what they cannot control. And the pace of AI-enabled change is so fast, amplified by the above mainstream hype, that they feel the need to do something. Anything. They cannot be caught off-guard, like they have been with the last cycles of technology evolution. And so far, what they have come up with is bad. It’s so bad that it will affect all the tech startups from Europe trying to build a business using AI technology.

Back to Altman, he’s a business man who happens to have become an AI evangelist. His job is to prevent over regulation from the position of a capitalist maximising profits of a private business. The EU otoh is in the position of minimising risk from a position combining American jealousy, historic mistrust, and a general misunderstanding on how the tech world is evolving. Both parties have seemingly good intentions, and the question is, where is the middle ground? So far, one side says that over-regulation will lead to technology not being available to European users - which is sensible, makes sense and could lead to big economic implications locally in Europe. The other is calling it a blackmail, and appears inflexible, at the risk of being left out from the history and at the benefit of feeling safe and secure.

It’s a normal back-and-forth process, overall, but those positions show that Europe is part of the problem, not of the solution, as it finds more and more acceptable the case of remaining marginal in the big scheme of things - nothing new, folks in Europe making a living from technology can see evidence of Euro struggles on daily basis.

And this brings me to the second story of the week, which may look un-related to what’s above, but I think it is related: Tom Blomfield, British co-founder at GoCardless and Monzo, joined Y Combinator as a general partner. And this is interesting to me not because he did join YC as his next career move, but because why he did not remain in the UK/Europe.

I have never talked to the guy, but from outside, Tom seems like an accomplished dude who is smart and ambitious:
- financially, he has exited from two multi-billion startups.
- then he turned pro on investing and has built an incredible portfolio, with most of his startups already up-marked - so he has peer recognition.

So why move, then? I think he’s put himself in a better position to create meaning, which, in my book, is a third pillar of anybody’s life, besides peer recognition and money independence.

He could have turned VC and raise a fund. Or build another startup. Or become a politician and/or public figure. Or whatever. Instead, he went outside his comfort zone to work with smart guys in the most competitive environment on the planet, where he is a nobody. Smart guys love to work with other smart guys btw, and opting for YC/USA is also not choosing the British/European environment, where he’s already known and has an easier path to make things happen. And that puts the EU struggles to figure out how to police AI in a better perspective, doesn’t it?

Other links:

• Sam Altman aims to discover a suitable location for a new office in Europe:

  Poland would be an interesting place. We want to do a research and engineering office in Europe, not a regulatory one. We are trying to figure it out. This is part of the goal of this trip.

• Altman in Munich, Paris, Warsawa, London

• OpenAI says it could cease operating in the EU if it can’t comply with future regulation. But it would like to stay.

Ecosystem pointers

Payment orchestration platforms in Europe AKA startups doing automated payment SAAS handling multiple markets. The sector is set to grow to $2.5 trillion by 2027 - markets, price points, and contributing startups from Europe, all in a handy cheat sheet. 

More cheat sheets
- the most expensive series A in Europe Q1 2023 - link
- 50 SAAS deals made in Europe by the angel investors in Q1
- most important 200 early stage deals in Europe in Q1 2023 - AI, deep tech, web3, climate
- early stage Euro startup lists - AI, climate-tech, marketplaces, fashion, heat pumps

Board compensation by stage: 426 responders, all salaries in £s 👇 link

VCs toolbox:
- VCs figuring out AI + European take
- what is a Chief of Staff and why are founders hiring them? link
- so you wanna break into VC?

Founders toolbox: 
- how to take negative feedback from investors
- what KPIs are investors looking at?
- building investor signals for a pre-seed startup

Euro intel This week’s intel include:
→ Nordic startup gets top tier American VCs onboard, more AI early stage and decently-priced series A/B
→ a bunch of pre-seed and seed funds popping out
→ fresh American funds/VC hires on Euro grounds
→ … and a whole lot more. High signal, zero noise - get it too.

Briefs

🇬🇧 Virgin Orbit, the bankrupt rocket launch company founded by Richard Branson, will shut down and sell its assets for nearly $36 million.

It was supposed to be some sort of an European SpaceX and proof that hey, Europe knows how to do advanced tech too. It failed because of incompetence - the writing was on the wall for a long time, particularly when it was announced going public valued at $3.7 billion via a SPAC vehicle - one of the get rich quick investment schemes strongly associated with ZIRP. Btw, Virgin Orbit was previously spun out of Virgin Galactic, another Branson space venture that went public via SPAC and whose shares keep trading well below par.

🇸🇪 Neo4J, a Swedish startup developing of graph databases, apparently held acquisition talks with Amazon in 2015 and they were not interested to sell. A VC-backed startup usually declines an offer from FAANG because the money is too little - at that time, Neo4J had just closed $20 million series C led by Creandum, joined by Dawn Capital, Fidelity, Sunstone Capital (now Heartcore) and Conor Venture Partners. To date, it raised about half a billion, and have cash in the bank that should last by 2027.

🇪🇺 5 years of GDPR:

• The highest number of fines for privacy violations: Spain, with 646, Italy, with 265, Germany, with 145, and Romania, with 138.

• When it comes to the total value of imposed fines, Ireland tops the charts easily, with a combined €2.5 billion. Almost half came from this week's €1.2 billion fine against Meta

• media, telecom and broadcasting firms (the big-brand technology companies among them) that got the biggest fines, followed by companies in the transport and energy sectors and those in finance, insurance and consulting.

• much more details here.

🛩️ Airlines make up the covid losses You noticed too that the air ticket prices have grown at least 30% lately, right? That’s because the industry is keeping capacity low so the industry can keep raising prices.

🇪🇺 Insult to the injury - EU economies are generating more jobs and better wages than Britain.

• Related: Foreign Direct Investment into Germany has soared since Brexit as British companies look to secure a foothold in Europe.

🇳🇱 The Dutch government is planning a wealth tax reform that would tax the unrealized gains. Yes, that means startup stock options.

🇳🇴 The recent wealth tax increase in Norway was expected to bring an additional $146M in yearly tax revenue. Instead, an estimated $54B-worth of ultra-rich left the country, leading to a lost $594M in yearly wealth tax revenue. A net decrease of $448M+. Back on the envelope calculation.

🛎️ Carbon credit validation JPMorgan Chase says it will invest more than $200 million to purchase credits tied to the removal of 800,000 metric tons of carbon dioxide by industry players. That includes paying $20 million to Climeworks, a Swiss company that does verified carbon removals through a process called direct-air capture, which sucks carbon out of the air using giant fans so it can be buried underground. Climeworks has raised more than half a billion from the likes of Baillie Gifford, Swiss Re, GIC, GFC and (that) John Doerr.

• Another JPM bit: JP Morgan is a travel agency for big spenders and a media company serving up restaurant recommendations - it handles 11% of America’s retail deposits and 17% of credit-card balances.

👓 Apple VR BOM is rumored to be about $1500, here’s the breakdown. Estimated to sell 500k units this year at $3k a pop, it would make it $1.5B in hardware revenue. Not too bad, huh?

👀 Meta fired 10k employees more. Meta hit with record €1.2 billion fine over EU-US data transfers. Meta is selling Giphy at a $260m loss, after it originally paid $400 million two years ago (that’s reckless value destruction by the British regulatory tbh).

• Anecdote: I asked a FB insider what’s the next big thing they’ll work on, now that every new shiny trend they jumped on in order to switch from being an ad-driven business focused on third world countries is simply not working - i.e. hardware, clubhouse clones, metaverse etc. The answer: jiujitsu (Mark recently got two medals in a Brazilian Jiu-Jitsu tournament). We both laughed - but people are pissed.

🤘 Hype cycles The Web3 mirage has turned into an AI fantasy in investors world, as dully noted in #154. It takes two sides for feeding a hype, and if the buy side is willing to spend into AI, basic econ suggests that supply should make stuff available for sale.

In a not very un-related note, look at how Google’s stock rebounded just based on an AI announcement at I/O. No economic value whatsoever, but pure PR product announcements aka market signals. The Google’s PR team is super active to catch up with Msft, just had the CEO tour Europe for meeting important people (he met the Swedish PM this week) and even publish an article in FT too. That’s how it works, folks.

🇸🇪 It’s not who you are, it’s what others think you are Speaking of market signals, an up and coming European CEO is pissed that he cannot control the media narrative. This shows he still feels the need of recognition - alas he needs to listen more to his PR advisors, or hire American ones.

🇬🇧 Clouds ahead Anne Boden, founder of UK's Starling Bank,  steps down as CEO . Wise CFO to quit after 8 years and a horrible accident while CEO says he will step away for taking a sabbatical. Execs churn at N26.

🇩🇪 A Tesla whistleblower has leaked 100GB of data to the German outlet Handelsblatt with thousands of customer complaints reported across the US, Europe, and Asia, from 2015 to March 2022.

The French did it

France officially banned short-haul domestic flights on routes that would take less than 2.5 hours to travel by train. The goal is to reduce CO2 emissions from aircraft (which account for 2% of all global emissions), though critics call the move mostly symbolic.

Closing notes 

🇫🇷 This week, Paris police fired tear gas to disperse climate protesters trying to block an annual general meeting of French oil giant TotalEnergies.

Fun fact - there is a Shirley Jaffe exhibition at the Kunstmuseum in Basel, she is an American painter who lived in Paris most of her adult life after WWII and which was impacted by social protests at that time. Reading the background materials reminded me that protesting every time for everything is part of the French DNA, there’s a long history (check the 20 and 21st century).

🤭 Tech companies are in Glassdoor crisis management mode after layoffs.

🤖 Would you be willing to implant a chip in your brain?

🥷 What would a ‘nice life’ look like? A detailed price tag breakdown for living an adult life in New York City.

🍺 Our latest record is out now on beer.

 🤖 Midjourney-created fake Ikea bomb shelter furnishings catalog.

👁️‍🗨️ A list of some of the most unusual places on Earth.

🦈 Follow tagged sharks around the ocean.

🎵 Dua Lipa covers Arctic Monkeys Do I Wanna Know?

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