- Sunday CET
- Posts
- spray and pray
Hey there,
It’s Sunday, it’s time for another Sunday CET edition - welcome to the new people on the list. Lots of topics today, let’s go.
Enjoy,
Dragos
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Market talk
❓ Let’s start with a question. How many designers do you think the Whatsapp business needs for a team to stay on top of things?
10
20
50
150
The answer at the end of the email. 😃
🖖 There’s some data out indicating that Tiger Global's spray and pray approach to VC deals performed poorly during the ZIRP days.
not really a surprise for insiders - I mean Tiger doing seed deals was kind of weird to begin with, right? Insight Ventures, which had a similar approach, switched to a quasi-PE play today likely because of similar results - also this is where the smart money is these days.
and so this begs the question - is indexing the top X% of the early stage market as a passive portfolio manager working out in the VC world? Just like, say, it does in a hedge fund’s case.
it might - as everything in life, the answer is depends, and it’s not either/or, this could work as rather a tactic part of a larger picture. It’s not that complicated to build a data platform with an AI on top helping source deals and model the market - though will this standalone vanilla product be enough help out at scale and build a sustainable VC company?
the data and tech stack is more than a-nice-to-have thing if you want to matter in the market - nevertheless, incorporating it in a smart model and knowing how to use it strategically are equally important, just as well as the early stage investment biz requires a human element that’s hard to replicate by a passive position or an AI bot. You either have that qualitative skill or you don’t, that will reflect on the overall DNA of an enterprise, and can make the difference.
and remember, Tiger indexing the early stage was not just dumb money on top of a nicely branded data platform - its value add to startups was free advisory services provided via tier 1 management consultants. Therein lies an evident disconnect, as early stage building requires skills for chaos navigation and startup experience as opposed to number crunching followers.
the market leader at early stage indexing is YC, which has a hard-to-replicate network effect as part of their product, on top of the basic biz ingredients. However, the YC competitors also have been struggling to build sustainable ops - the whole world of startup accelerators finds it hard to make a living with an indie play, unless it’s a lifestyle business, of course. That could be because of the above-mentioned human element, or resources, or execution, or all of them.
also worth noting, the larger multistage VC funds, which have diversified reach in all sorts of segments up and down the market - all have a startup accelerator under wraps, alongside a scout program, both as ways of indexing the market at the early stage. All those complementing existing teams focused on a qualitative approach to navigate inbound and outbound leads.
this not to say that old school plays are not working anymore, au contraire - this is probably evidenced by one of the better VC in the world, Benchmark, which still is tiny, with five partners who make investments from a newly minted $425 million fund. Compare it to Andreessen Horowitz’s 80 investment partners based in five offices.
back to Tiger, indexing the market was a biz model component part of a larger scheme that worked until it didn’t - all those trials and errors represent ways for investment companies to maximize growth with different products catering to the investment market. Yes, there’s profound divergence in the industry, and different products require different strategies - it all boils down to why you exist as a firm and what you want to accomplish when you grow up.
and as the market evolves and grows, leading players are building complex models that come with size, hedging risks in different ways and ultimately with different KPIs, even though it’d be tempting to take everything through the DPIs lens.
bonus link: there’s a Regatta model of venture capital at the early stage.
🙈 The anti-VC sentiment is real in Europe. Alas, just like the startup world is riding a new tech wave, the VC business is also in a transitioning phase requiring adaptation and change, one can figure it from the think pieces produced to engage the social media.
and while entrepreneurs may be tired, the general mood in Europe is one of a gloom and doom as we’re all in the middle of an economic crisis with no ending in sight.
🇪🇺 The European Central Bank lowered interest rates for the fourth time this year, and signalled more reductions next year as inflation nears 2% and the economy struggles.
🇪🇺 A CEO of an EU company over 40 million revenue has to report 649 environmental and social indicators. Not a joke.
🇬🇧 HSBC fired 10% of staff as it looks to slash £2.35 billion in costs.
🇩🇪 BMW and Mercedes are said to be shuffling their leadership teams.
the industry is a blood bath, inundated by Chinese cheaper products against weak demand for electric vehicles in Europe.
also notably, the whole European supply chain employs 14 million people and produces some 7% to the EU's GDP - that makes it strategic for the continent.
so Europe is doing what it knows best and throws public money to unprofitable businesses instead of letting the market be competitive and do its natural course of things.
subsidising unprofitable business with public money is not saving it, it’s just postponing the death caused by bad management - strategy-wise, the car companies are being squeezed in a sandwich pushed by software companies selling cars such as Tesla and Chinese producers solely competing on price.
Europeans are able to compete neither on software nor on costs, sadly - that’s classic innovator's dilemma.
🙈 Encore: twelve out of sixteen planned European-led battery factories have been delayed or canceled. Meanwhile, ten out thirteen projects in the region by Asian manufacturers are on track.
🇪🇺 The new EU antitrust chief Teresa Ribera’s first case is the Formula 1 owner Liberty Media’s $3.8 billion effort to buy the MotoGP World Championship.
🇪🇺 TikTok launched its shop in Spain and Ireland allowing its users to purchase directly on the social media app - their GTM is paying users hundreds of dollars to spend time in the app, invite friends to join and purchase products on TikTok Shop.
alas, the Chinese are under an urgent EU inquiry as the platform was used for a massive Russian-tied campaign for a far right candidate coming from out of nowhere to take top spot in Romanian elections from last week.
on that note, the Russian digital army is also using AI voice bots for voiceovers on fake or misleading “news” videos. They use them for making fake phone calls too.
🇱🇹 How Vinted went from near collapse to being worth $5 billions.
🇬🇧 The City of London will move on with building its tallest skyscraper, a 73-floor office tower that will match in height London's Shard south of the River Thames, which is now Western Europe's tallest tower.
✈️ Ferrovial of Spain sold 38% for £3.26 billion in London's Heathrow Airport to Ardian (22.6%) and Saudi Arabia's Public Investment Fund (15%) - post deal, it retained 5.25%.
🇨🇭 Switzerland has approved Fully Autonomous Vehicles from March 2025 - meaning that drivers will be allowed to use the autopilot function on highways.
🇪🇺 An EU ad campaign on social media broke its own privacy and data protection rules, as it processed the sensitive data (political views) of citizens to target the ads.
the EU blames on its contractor and on Twitter for having accepted the campaign.
🇪🇺 It’s the third winter since Russia and China entered into a war against the Western World and Europe still has a huge energy problem - the Norwegian edition.
otoh, the largest gas producer in the EU from 2027 will be… Romania. Sizeable deposits in the Black Sea, apparently bigger than what’s in the Nordic Sea.
Also notable
💲 European SAAS survey:
growth rates for the €50m+ ARR companies are broadly in line with the previous year.
ARR per FTE is approaching €150k for growth-stage companies and remains significantly above 2021 levels for €50m+ ARR companies
Median Net Revenue Retention was 110% – 112% in 2023, nearly identical to rates these companies exhibited in 2022.
nearly half of all (private) SAAS companies surveyed are now profitable.
📊 Meanwhile, in the PE land:
90% of investors received requests from money managers for fund extensions as dealmaking remains slow
more than two-thirds said they’ve seen funds raise less than what managers had targeted.
nearly half of LPs view secondaries as a core pillar of their alternative assets strategy
operational improvements was viewed by European LPs as the primary avenue for managers to add value, whilst top of mind for APAC investors was organic growth in revenues.
nearly four-fifths of LPs feel comfortable with their GPs’ current alignment. Out of those, 32% believe that most of the GPs they are invested with currently demonstrate adequate commitment to the funds. That sentiment was prevalent among the North American investor base with 38% of respondents holding such a view. In contrast, European LPs exhibited the lowest level of confidence in this regard, with only 26% sharing that perspective, the smallest proportion of all regions.
🍢 More quick bites:
problem or opportunity? - insurance exists to cover events that are random, infrequent, catastrophic, & outside the control of the individual. That’s Econ 101. But here’s the rub: only 30% of medical events meet these criteria, yet > 70% of healthcare costs are borne by insurance.
women who pay extra to enhance their mammogram tests with AI are 21% more likely to have cancer detected.
stablecoins are the fastest growing payments technology and will eat the existing gatekeepers lunch.
Waymo's market share is now equal to Lyft within San Francisco.
Palantir has officially become the largest defense company in the USA.
McKinsey with a report about next big arenas for competition - or differently put, this is where McK sales leads are for the next year.
FMCG brands to watch next year.
Crypto is an anti-establishment technology for an anti-establishment age.
how WhatsApp ate the world.
🤙 The annual net migration - the number of people entering the US minus the number leaving - from 2021 to 2023 is 2.4 million people.
that’s the highest rate of new immigrants arriving since at least the 1850s.
for comparison in Europe, the net migration was two times as high at 4.3 million people - 7 million in and 2.7 million out.
🇬🇧 Some British chaps have launched LFG - Looking for Growth, a social movement dedicated to making Britain grow.
🇵🇹 You think moving to and living in Portugal is nice and all until you have to deal locally with everyday mundane tasks.
🇺🇸 Folks over the ocean are bracing for the Trump administration, with a bunch of seven figures donations announced this week from tech startups and corporations altogether for the newly elected president’s inauguration. Hard to beat Elon Musk’s $259 million contribution though - VCs are putting their things together too.
🐵 Are you guys on Mozi? Let’s hook up.
🛸 The US has a situation in New Jersey with multiple agencies looking into sightings of mysterious drones said to be as big as bicycles and flying mostly at night.
The winners of the 2024 App Store Awards - Kino (video edit - phone), Moises (music edit - tablet), Lumy (golden hour tracking - watch). A bunch more to dig through here, if you want to get the Apple nerds zeitgeist.
📺 Latest Jeff Bezos interview is a must watch.
♾️ Real talk - plastic recycling is a giant scam.
😱 How Kanye West brought a $60 billion company to its knees - Adidas that is.
💲 Youtube TV is now as expensive as the average US cable TV bill - $83.
🤟 Tokyo government gives workers 4-day workweek to make babies.
- Trivia answer - Whatsapp has a team of 150 designers.
That’s all folks, have a wonderful week!
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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.
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