Hey there,

Welcome to Sunday CET.

Last week of a really lazy summer, with most folks still away. Today we talk hot AI startups founders from France leaving after three months, VCs meeting with the British PM, the EU being the EU and a whole lotta more.

Hit reply and let me know your thoughts and comments - and thanks for reading!

Dragos

Market talk

😱 Meta says it has been told by European regulators to delay using public posts on Facebook and Instagram to train its AI models not because any law has been violated but because regulators haven’t agreed on how to proceed.

• in other words, another day, another indication that the EU is a political hot mess that needs to figure out compromises rather than executing against a clear vision on how things should work in the tech business.

• that’s how business is conducted by the EU and how tech professionals need to adapt their dealings - not a surprise for anybody, as the other week Thierry Breton felt the need out of the blue to threaten Elon Musk publicly about the possibility of Twitter hosting content at risk of “serious harm” for users. This in turn triggered comm material from Breton’s EU rival, Ursula von der Leyen, who said he didn’t have her approval to write such a letter.

• media ping pong show because Thierry is said to want Ursula’s job, that is… not because the EU was in under any sudden threat whatsoever - btw, Elon told him to go fuck himself, literally.

• but those anecdotes are just history footnotes - apart from the acute lack of business professionalism, this also is a good reality check of how the state of affairs looks like in Europe.

• which begs the expectations question…

• how can you trust those people to build a meaningful European environment for tech? How can you invest on the future of Europe when anywhere you look around at top levels, you just see signs of contradictions, nonsense and incompetence? How can you imagine a functional ecosystem that is run by those guys?

• that’s rhetorical, of course - the hard cold truth is that the European startup ecosystem took shape and has gotten thus far in spite of the clueless European political leadership rather than because of it. And if the past is any indication, the future will likely follow the same pattern.

🇪🇺 While Breton acted like a teenager on social media, this week Ursula von der Leyen inaugurated a $10-billion-euro plant - half of which paid for by subsidies from the German government - done by the Taiwanese chip maker TSMC in Europe.

• that’s very strategic for both Europe and Taiwan - delicate game with Chinese dealings but the factory is an undisputable win for Europe.

• TSMC holds a 70% stake in the new factory - formally called European Semiconductor Manufacturing Company - along with European partners who each have a 10% stake: Infineon, Bosch, and NXP.

🇬🇧 This week, folks from the likes of Sequoia, Benchmark, Balderton or Index had a chat over at the British PM's office.

• AI, regulation and whatnot with important people in the ecosystem. Oh, and taxes too.

• would the Labour government be able to implement what the Torries promised but hardly make happen? They say they would alas all politicians are the same.

🇫🇷 Three of the founders of H, the hyped AI startup in France that raised $220 million in a pre-product investment deal led by Accel and UIPath, will leave the company - namely Karl Tuyls (chief research), Daan Wierstra (chief scientist) and Julien Perolat are out.

• they were poached from Deepmind and officially joined in May, when the company went out of stealth. CEO Charles Kantor and CTO Laurent Sifre will stay put.

• official reasoning - business differrences.

• that’s early and likely a healthy move if they didn’t get along even though it is a significant talent loss - stating the obvious here, but the number one reason for a startup failing is the founders disagreements.

🇩🇪 In Germany there’s a scandal brewing over its domestic carbon market as local biofuels suppliers discovered the Chinese rigged dozens of emissions-reduction projects.

• inadequate verification by regulators and auditors has led to lost income of €4.5 billion.

💲 Anyway you look at it - long on fintech startups.

• Klarna is said to be in the works to prepare a 2025 IPO that could value it at around $20 billion.

• Revolut was transacted at 45 billion earlier this summer.

• also, Stripe is offering to buy back employee shares with its own cash at a $70 billion valuation.

• btw, this week I looked a bit into the more promising VC-backed fintech startups that raised money in Europe this year - a hundred or so names at early stage, series A and late stage. You gotta have an eye on them if you’re a pro - yes, you need to be a N9 customer to access our intel.

🇸🇪 Now that the summer holiday is over in Sweden, the local union announced that it convinced more of the 100 Tesla employees in Sweden to join the strike against the local Tesla’s ops.

• the strike, which has been going on for about nine months already, started because the American company was not interested in signing a customary collective bargaining agreement.

• however, it turned out to be mainly an ego thing for the union since the strike was boycotted by most of the Swedish Tesla employees, who are in theory beneficiaries of the said agreements.

• also notably, Tesla’s business was not affected at all as it roughly maintains its market share of electric cars in Sweden, in a market that has been generally in decline over the past year.

🇩🇪 German retailer Lidl has made about $2 billion last year from selling cloud services.

• yes, you read that right - quite significant in absolute numbers, alas it’s a small cut out of a 170 billion yearly turnover.

• if you’re a subscriber to our intel service, you likely know already about the Swedes that try to give American cloud providers a ran for their money by building a lookalike - raised some 60 million to date.

Also notable 

✍️ Best unis in the worlds:

1. 🇺🇸 MIT
2. 🇬🇧 Imperial College
3. 🇬🇧 Oxford
4. 🇺🇸 Harvard
5. 🇬🇧 Cambridge
6. 🇺🇸 Stanford
7. 🇨🇭 ETH Zurich
8. 🇸🇬 NUS
9. 🇬🇧 UCL
10. 🇺🇸 Caltech
11. 🇺🇸 University of Pennsylvania
12. 🇺🇸 UC Berkeley
13. 🇦🇺 Melbourne Uni
14. 🇨🇳 Peking Uni
15. 🇸🇬 NTU

• of wait, there’s ONE European university in there?

• jokes aside, ETH puts good engineers in the market every year and the Brits have century old tradition with schools - but this is a bit depressing for Europeans, isn’t this? No need for drama though, it’s been like this for decades.

• one pragmatic way to look at it is acknowledging the immense discrepancy between what kids are taught in schools nowadays and what the labor market actually needs. On top of that problem, schools in Europe conventionally teach conformity and job security, which is the antithesis for free thinking and/or thinking outside the box in order to build something new and better from scratch - if you read history you will see that disruptive innovations and change in any field came as a result of status quo challenging. Change comes most of the time from crazy folks willing to take risks - yes, like startup founders, artists and grass root people in general.

• as an anecdote, every summer I spend time with a bunch of high school kids, talking about what they want to do when they grow up and mentoring them on how to become independent by starting startups.

• it’s an easy sell because social media pushes them already to want make money on their own like the influencers do - kids are super savvy, knowledgeable and hungry for finding the right models to learn from. Alas, one never forgets their first mentors in life, right? One usually finds those either in school or on the first job, if they’re lucky at all to find one.

• therein lies the opportunity - a practical program, complementing the theory-heavy college curriculum with no BS guidance on how to think independently and eventually build your own startup. Ya know, kinda like a startup accelerator. Anyone doing this?

• well, it’s 2024 and the supply is surprisingly limited, albeit fragmented and mostly in the US, just like the schools from the above list.

• is it a business model problem? Is it a people problem? Is it an ambitious problem? Probably a combo.

• in this business there is YC and everybody else. YC, btw, has had so many strong startup candidates over this summer program that they just supplemented another batch due to happen in fall.

• that’s simply un-fullfilled demand that YC has the luxury and flexibility to accommodate. Who else is matching this demand?

• or, broadly speaking, where else great startups should turn to for mentorships? Techstars is nearly bankrupt. EF or Antler? I guess so though they’re focused to turn accountants into startup people - but ok, good enough programs for a tech environment managed by Thierry and Ursula.

• well, there’s also the likes of Arc, Speedrun, Neo or Altcap - yup, big VCs turned into fully-fledged financial services providers that also have been running startup programs - smart ops while indexing at the very early stage done by the big boys in business.

• speaking of which, see below what indexing the market the right way looks like. This is not only about picking (you can use AI for building index portfolios, does that make you a great investor? Not really), but also about the quality of the support for a few hundred startups every year, and for an ever growing alum community on the way to liquidity → hard-to-replicate competitive advantages that create a secret sauce. Tier one stuff.

• related, somehow, thinking (it’s still summer holidays in most of Europe) - big dog economics and crazy European rich

🇬🇧 Mike Lynch was confirmed dead in yacht sinking, with cranes, 40 divers and almost £13m needed to salvage boat - a tragedy.

• in a twisted turn of faith, Stephen Chamberlain, Lynch’s business partner, died after he was hit by a car in Britain one night prior to this accident.

🇨🇳 In China, startups can take up financial loans by putting their intellectual property as collateral for loans.

• raised about $180 billion in the past 18 month - something the European bankers mind will never comprehend.

🇸🇪 Ikea is doing 24/7 inventory management with an AI-powered drones system provided by a Swiss company. Pretty cool.

🚙 Uber will distribute Cruise trips via its app starting next year.

• for noobs, Cruise is majority owned by General Motors and provides taxi services in self driving cars in the US.

🇪🇺 Europeans not running AC during summers is just silly.

• here in Switzerland, for example, you need permission from the city hall with a strong reason in order to be allowed to install one into your house - I know of similar cases in Germany, France and even Italy.

• this is just crazy and it will only get worse now that the global warming will lead to hotter summers that can actually affect health without proper climatisation.

₿ Crypto industry accounts for almost half of corporate donations in the American elections this year and Trump launched a crypto platform part of his electoral campaign.

🤯 If you’re having a few bad days, just think that some folks have been stranded in space for almost a year.

✨ China's 'throwing eggs' card game has become a thing.

That’s all folks, have a wonderful week!

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