Author Archives: Hervé Lebret

Xavier Niel – A real desire to cause trouble

Leave a reply

I listened to Xavier Niel on France Culture on December 6th and I had the confirmation of a relatively atypical character. Asked in particular about Elon Musk, here is his answer: Xavier Niel distinguishes between the entrepreneur, “probably the best in the world”, and the character, “completely crazy and potentially dangerous”. He praises his willingness to consider savings for the American state: “if he applies these savings in a reasoned way, to reduce the operating costs of the American state, I am sure that it will go very well. If, after that, we start to overflow, that’s nonsense!”, he qualifies. According to Xavier Niel, it is not so much the fact of paying fot Twitter 45 billion to own the social network that poses a problem, but rather the fact that the product takes on the image of its owner, “which is less exciting”, considers the boss of Free. The price doesn’t shock me if he sets up a plan that will make this company generate money. The purpose of a company is to bring together three parties: employees, customers and shareholders. Consequently, these three parties must be happy. However, the customers are not happy in his case.” In the dialogue he establishes with Jean-Louis Missika, we find a rather fascinating character who uses “ouais” (yeah) and “nan” (nope) as if he were still the kid from Crétail where he grew up. The character is a billionaire but his career has not prevented him from (or perhaps helped him to) staying down to earth unlike some of his counterparts in Silicon Valley.

I liked this book which doesn’t give advice but allows you to understand certain things about his character and his vision of entrepreneurship. A first example: I believe that youthfulness as a state of mind is essential. It is found more often in young people, because when we get older, we become richer, we harden. Youthfulness allows you to create incredible things. You don’t yet have the constraints that are imposed on you when you get older. With age, society imposes limits on you, you no longer have the optimism or the attitude towards risk that you had in youth. Whereas when you are 20 years old, when you leave school, you want to eat the world; you want to do crazy things. [Page 35]

Beyond the usual explanations about this world, Niel expresses unfailing optimism. When I started investing in startups, I was convinced that all entrepreneurs were going to be successful, that they were all going to create huge companies. Well, there were a few disappointments, but you get the idea. In another genre, I thought that Putin was threatening to invade Ukraine but would never act. Just like I thought that Covid would be over in 3 days, and that Brexit would never happen. I am a walking disaster when it comes to forecasts, because I am too optimistic. There are people who use the word “genius” to talk about me; it’s ridiculous, I am absolutely not a genius. I have two strengths, which are based precisely on my lack of intelligence: the simplification of problems, and naivety. […]
JLM: And when it fails?
XN: And when it fails, I forget and move on. Because if you let yourself get discouraged by your failures, or if you listen to everyone who tells you “it’s impossible”, you do nothing. […] When I created Station F, I hoped to welcome 1000 start-ups. And François Hollande, to whom I presented the project, said to me: “But are you sure there are 1000 start-ups in France?” Well, you know what, at the time, I had never asked myself the question! Yet it’s a logical question, I should have thought about it, done a market study, that kind of thing. [Page 39]

The important thing is not the project, it’s the founder. [Page 133]

With Kima, yeah, we have a method. We spread the risks. We invest small amounts – around 150,000 euros – in a hundred start-ups each year. Between failures and trade sales, we must have 1,500 participations.
JLM: Less than fifty that work out of 1,500, that’s not a lot…
XN: It’s part of the game. Yes, you’re wrong, and you’re wrong often. […] We don’t finance success, we finance progress. […] Of all my investments, [Square] is the most spectacular performance. I think we did x1,000. […]

The Americans I know who had success with their start-ups were all developers. [Page 139]

Not only did they have the idea for their product, but they also developed their own software, website or app. Google, Facebook, Snapchat, they were all created like that: by people who coded their own products. Hence this idea that a start-up has a better chance of succeeding when there is a coder among its founders. That’s why I created 42.
[whereas] unicorn founders, I love them, but they always have the same faces: three white guys who went to business school [page 145]

Being an entrepreneur is [page 146]

choosing what you do during the day. If you don’t want to make something, you don’t do it. You create your own job. There’s no greater freedom. Is that okay, is that convincing enough?
JLM: Rather. But you’re forgetting the pressure…
XN: That’s not what’s important. What’s important is what you’re capable of creating. […] For me, this desire to create something from an idea, to bring together different people to bring something to society, create value, invent a different product, help the most disadvantaged. Entrepreneurship is an attitude, a state of mind. You don’t need to start a company to be an entrepreneur. Are you launching an association, a project, a social media account with a real editorial line? For me, you’re an entrepreneur. Entrepreneurship isn’t just about business. You can be an entrepreneur in humanitarian, social, educational, environmental, and so on.

A desire for revenge? [Page 204]

The taste for the game is enough in itself. No need for psychology. Everyone likes to play; it’s the playing fields that differ. Mine was the telecom market. Everything is a fucking game. An eternal game, that people have been playing since the beginning of the world. So I play, and whatever the game, I want to win. I want to be first. It’s more or less long, sometimes you get overtaken. And then you catch up. That’s what gives life spice.

[…] When I try to understand why I failed, it’s not because I regret having lost money. It’s because I want to be number one. […] Nope, I just like winning. Money is just a signal that you have won a game, because you are playing with money. [page 205]

Niel is not naive. He is even a fighter. When he returned to Créteil to talk to the “kids” It is not easy to catch their attention. We are mostly white, old, even old fools. So I have a trick to wake them up. I tell them: “I also went to school here in Créteil, and then I went to jail.” And then all of a sudden, the kids wake up. [Page 22] He also admits “Me, since I was little, I wanted to earn money” [page 15] while his first words of the interview are “Frankly, I had the happiest childhood in the world. We were a very close-knit family. I swear, everything was perfect. I was so happy that I thought I was the king of the world, and that my parents hid it from me so that I could have a normal life.”

My closest friends are entrepreneurs, some are Americans, some of whom have created social networks or others are investors. I like entrepreneurs because they are different, because they have a little grain of madness, because I am never bored with them: people see me as a billionaire, but I see myself as an entrepreneur. [Page 222]

How do you explain the excesses of entrepreneurs? [Page 227]

JLM: When Elon Musk challenges Mark Zuckerberg to an MMA fight, everyone laughs but he ridicules the ecosystem. In a less visible way, the positions taken by Peter Thiel or Marc Andreessen are just as sulphurous, and give the impression of a caste that believes itself above ordinary mortals. You know them a little, how do you explain these excesses?

XN: The people you mentioned are very different from each other. There are some who are a little crazy and who believe they have superior intelligence. And there are others who are a little like children in the playground. It’s… special: But that doesn’t prevent them from having their charm and being interesting. […] But they’re not all like that. And besides, they left Silicon Valley. It’s a part of the ecosystem. Very noisy, yes, but only a part of it.

JLM: We don’t hear the others anymore. They’re nowhere to be seen.

XN: That’s not true, they just do something else. And then if you take the current boss of Google, Sundar Pichai, he’s an Indian immigrant who doesn’t consider himself superior to the rest of humanity. I don’t know his political ideas, but I’m sure they’re quite different from Elon Musk’s. […] Elon Musk only represents himself. He’s locked himself into a transgressive extremist persona and I don’t know how he’s going to get out of it, because by talking bullshit, the time comes when you pay for it. The moral is that you can be both a brilliant entrepreneur and a dirty jerk.

You know when you talk to them, you find yourself in an unreal world, where disruptive innovation is always for tomorrow morning. How many times have I heard that nuclear fusion is in a year. Same for carbon capture. That’s what makes entrepreneurs strong: for them, if you don’t try, you have no chance of succeeding: So they try, again and again. That’s why, despite all their questionable attitudes, I love these people so much.

As a conclusion

I have already discussed the excesses of Silicon Valley, for example here. Its excesses sadden me and yet, I have a certain fascination for the achievements of its entrepreneurs. This is probably the same reason why I also enjoyed reading Une sacrée envie de foutre le bordel (A real desire to cause trouble). We may not agree at all with Xavier Niel. We may not agree with everything Xavier Niel says. The book is full of exciting anecdotes and also of questionable points of view, we must simply remember that the man is optimistic and defends freedom almost without limits. His limit is the law, and even that… not at the beginning.

I take a step aside. My darling made me discover the beginnings of the MGMT band through an article of FIP MGMT: a magical video of “Kids” in 2003 surfaces

Xavier Niel’s book has a bit of this effect. We often find the child behind the billionaire, his style, his passions. We discover that the entrepreneur is a cataphile. He ventures there about once a month, much more when he was younger…

The last sentence of the book [page 300]: F…!, it’s still indecent, how lucky I was!

PS. For those interested in politics and Silicon Valley, a seminar throughout the first half of 2025 seems to have an enticing program, Digital Capitalism and Ideologies.

Silicon F…! Valley

Leave a reply

It’s a podcast from France Culture that introduced me to Arte’s new series, Silicon Fucking Valley. I’ll take two sentences from it: “Stories that are sometimes well-known but always necessary to recall in order to participate in our digital culture and allow everyone to be able to decode our connected world a little” and “I had a little more trouble with the sometimes frenetic pace of the episodes, which are stuck in 15 short minutes. A voice-over, very present, which accompanies the viewer a little too much, who would sometimes benefit from breathing to find the time to construct their own thoughts. The writing follows the recipes of videos published on social networks whose objective is to capture attention.”

And I want to add, without, I hope, coming across as the grumpy one, that the series is sometimes lazy due to its inaccuracies, even if of little importance:
– why say that the Stanford campus (7km2) is a third of the area of ​​Paris (which is 100km2)?
– why say that the diplomas of this university are awarded on the Quad when they are rather awarded in the stadium where Steve Jobs made his famous speech (1st article of this blog)?
– why say that the tuition fees amount to $80,000 when they are $65,000 already (forgetting to add that at the Master’s level, I think that a majority of students have a scholarship or a sponsor…)?
– why say that the Computer History Museum is in Menlo Park when it is in Mountain View?

If we forget these details and this frantic pace, then, yes, there are some very interesting things. You will discover Luc Julia and Adam Cheyer at the origin of Siri from SRI (check CALO), a startup sold to Apple for “$200M according to the rumor” and which did not leave me with very good memories because EPFL should have gotten a bigger piece of the pie during that sale. Julia is right, it was crap. The F… word is appropriate!

You will also discover Curious Marc. It may also remind you of what the “Mother of All Demos” was (with a strange acronym). And more seriously, the recent evolution with GAFAs. Here are two illustrations: the number of acquisitions of each actor and the amount of fines paid in Europe and the USA.


It’s also about Venture Capital and mythical San Hill Road

And despite all the nonsense, to say the least, of the founder of Tesla, the series confirms what I had discovered a few years ago about the demographics of parking lots: The University-based Startup Porsche Principle. Or is it the Tesla Principle?

But the most touching episode remains the 6th on the wealth gap, “for one tech developer, there are six poor people who clean, serve in cafeterias, provide security, drive Google buses” and have the choice between driving 6 hours a day or sleeping in a tent or a camper van on the side of the road. The title is then telling, Silicon Fucking Valley.

PS (Nov. 24, 2024) : my favorite documentary movie remains so far SomethingVentured, see https://www.startup-book.com/2012/02/08/something-ventured-a-great-movie/

Tech giants : nothing changes but their names !

Leave a reply

I love data and I love analyzing them at the micro (cap tables) and macro level (revenues, income, employees). But I am surprised to discover that I had not posted about this since 2021:
– Tesla, Google and Facebook do not suffer from the crisis showed the grwoth of these giants as of February 2021,
– The largest technology companies in Europe and the USA in 2020 compared about 30 American and 15 European public firms as of January 2021.

What I have updated below does not see much change, except may be Google is Alphabet and Facebook is Meta. Tesla has not changed its name but Twitter is X! So with not much comment, here are first the largest technology companies in Europe and the USA in 2024 :


The conclusion is similar, US companies are about 10 times bigger in market cap. and sales, 5 times in employees number. I even fear the gap is bigger. I also love the following three charts which illustrate similarites in firm growth.



Maybe all this is not that good and has contributed to the planet destruction with being aware of it. Maybe innovation is not solving much and destroying a lot. These are just numbers as food for thought.

Beyond Silicon Valley Ideology

Leave a reply

In my previous post, I mentioned this anthology of articles compiled by Loup Cellard and Guillaume Heuguet. Consisting of six articles (5 of which are translated) and a long introduction by the authors, it is a most interesting dive into what this region represents from a historical and political point of view.

So here is what I noted:

– the authors restrain the influence of the counterculture in the origins of Silicon Valley. “The economic power and the culture of technical innovation of the region far precede the hippie movement.” [page 18] then “government contracts or the existence of a surplus of capital should probably be given as much importance as utopian imaginaries” [page 19].

– The authors go further regarding the ideological inclinations of Silicon Valley entrepreneurs. I have already expressed a certain skepticism on the subject but the debate remains interesting. The authors mention another book on this subject that I am not familiar with, Une histoire politique de la Silicon Valley (A Political History of Silicon Valley) by Fabien Benoit. I do not believe that the following statement is correct: “Stanford University, which specializes in hard sciences, has the particularity of not claiming intellectual property rights on patents developed within its walls.” [Page 19] The subject is well-known (see here) and I am surprised by such a statement. Mariana Mazzucato is also called to the rescue of the arguments and if I have also expressed strong nuances there, one can hardly doubt the influence of Fred Terman, HP and MIT well before the emergence of the counterculture.

– In the same introduction, Bill Gates’ open letter to the Hobbyists of the Homebrew Computer Club is mentioned.

This introduction by the authors is fascinating and we have once again the confirmation of the complexity of the genesis of the region where hippies like Wozniak and engineers like Noyce often collaborated with the greatest respect. (See again this article for the curious, The tinkerings of Robert Noyce)

– The articles about design are surprising given how fashionable the subject has been (and had so far left me circumspect and silent). Fred Turner’s chapter Such Old Promises is an interesting analysis of the links between prototyping and Protestant puritanism! Ruha Benjamin’s article, translated as Le design est complice (Design is an Accomplice) goes much further. I take away the following strong statements: “Design Thinking is Bullh*t” and the author “urges practitioners to avoid jargon and trendy buzzwords and to engage more in self-criticism: what are the theoretical and practical effects of using the language of design to describe all our hopes, dreams, critiques and visions of change? What is gained and by whom in the process of associating such heterogeneous things under the rubric of design? […] I think one of the reasons it reigns is that it has managed to fold everything and anything under its agile wings”.

– The authors are very critical of some of the region’s personalities that they associate with the ancient world. Charlie Tyson’s Reactionaries invest (Les réactionnaires investissent) is an interesting analysis of Peter Thiel who would like to present himself as an intellectual. And the conclusion is: “The man himself remains a mystery […] who offers us the spectacle of a brilliant mind housed in a deformed personality, a man who has transformed his armchair philosophy into an imposed vision of the world”. The following chapter, Capital risks nothing (Le Capital ne risque rien( by Fabien Foureault is a fairly correct description of the history of venture capital. The only criticism I would make is that the transition from American roots to the history of the activity in France somewhat forgets the risks taken by the pioneers in the 60s and 70s. The criticism of venture capital remains well argued as follows: on three major criteria, VC is criticized:
+ a dysfunctional character that prevents stability through boom and burst cycles
+ a lack of social utility by moving towards short-term profitability that forgets the fundamental issues (climate, affordable health)
+ an unprofitable activity, at best with a low return of 8% in the long term. I discovered a researcher, Ludovic Phalippou, very critical of Private Equity in general which lack of transparency leads to undoubtedly very overestimated performances. I encourage you to read How Ludovic Phalippou Became the Bête Noire of Private Equity. The post-sciptum will undoubtedly make smile fans and connoisseurs of French venture capital…

– What can I say about the last two chapters? They are simply fascinating. First of all, Optimization Replaces Progress by Orit Halpern and Robert Mitchell. I had the intuition that optimization, a subject that is dear to me since it was at the heart of my doctoral thesis, was reaching the limits of progress. We no longer seek the best, but to be smart, intelligent, whether it be the city, mobility, education or war. The best being inaccessible, we simply seek to do better, and often while minimizing resources and costs… and to be resilient, which the authors describe as the ability not to be robust in a stable system, but to survive and win in an uncertain and unbalanced system. Disruption is not far away. The chapter’s conclusion may seem scary: “Instead of seeking utopian answers to our questions about the future, we focus on quantitative and algorithmic methods and logistics: how to move things from point A to point B, rather than asking where they should end up (or whether they should even be there)” [page 129].

– The last chapter is called Apocalypse Replaces Utopia by Dave Karpf. It is about long-termism. “The moral value of human life today is no different from that of potential post-humans who might come into existence in the distant future. From this premise, they come to fantastical and counterintuitive conclusions. They claim that economic growth, technological progress, and the prevention of existential risks, i.e. risks that could wipe out humanity (asteroid strikes, deadly super viruses, hostile artificial intelligence, etc.) matter most to humanity. Improving the situation of humanity today by addressing systemic inequalities, curing cancer, and preventing malaria are lesser initiatives. Today’s humans are merely the precursors of a post-human future scattered across space.” The promoters of such ideas are known and the author speaks of the Californian Ideology. I would like to think that they are only in the heads of a few deformed minds. The author concludes: “We should therefore recognize long-termism as a pernicious movement of thought. It is a philosophy that says we should not concern ourselves with the fate, dignity or injustices suffered by people living today, because these people do not matter more than those who will live millennia from now. […] It is a recipe that too easily excuses cruelty, suffering and social harm.

So this is a fascinating little book, which does not describe Silicon Valley, but through its roots and wings, some of its most astonishing excesses. And as I said in my previous post, this does not necessarily represent the majority, but at least a minority, perhaps tiny but undoubtedly very and too visible.

PS: for those who are not interested in long analyses, here is a rather funny video

Politics and Silicon Valley

Leave a reply

This post is motivated by an article by Olivier Alexandre for La Tribune. This CNRS sociologist, whom I have already mentioned here because I appreciate his analyses of Silicon Valley, summarizes an interview on his LinkedIn page entitled The tragedy is that Silicon Valley has come to push reactionary programs, La tragédie est que la Silicon Valley en vient à pousser des programmes réactionnaires.

I wanted to react on LinkedIn but this site limits the length of comments. Here is what I would have liked to write: There might be a book to write about the left and tech, particularly in Silicon Valley. If Silicon Valley has always been a progressive region, at least in the north close to San Francisco and Berkeley, I don’t remember meeting many “left-wing people” at Stanford or in tech companies. Not to mention that being left-wing in the United States probably doesn’t have quite the same meaning as in Europe. The individualist, even anarchist component (I prefer not to talk about libertarians who I’m not sure represent a large number of people) remains very strong among Republicans and Democrats who always seem a little wary of central power, a central power whose attraction remains a very French particularity on the contrary. There was indeed the dinner offered by Obama at the White House with the tech elite, www.startup-book.com/2011/03/28/the-whos-who-of-silicon-valley/ and it is anecdotally quite amusing to see in the donations to the parties (see for example here www.opensecrets.org/industries/contrib?cycle=2024&ind=F2500) that the two major historical funds of American venture capital lean differently, Sequoia towards the Republicans and Kleiner Perkins towards the Democrats, even in 2024.

It is not surprising that entrepreneurs are rather right-wing, it seems quite universal to me. Looking back at the early days of Silicon Valley, it seems that the big semiconductor entrepreneurs like Robert Noyce were mostly moderate Republicans who mostly tried to influence Washington to protect their industry from Japanese competition. More recently, Kleiner Perkins had recruited Colin Powell as a partner (www.nytimes.com/2005/07/13/business/colin-powell-joins-venture-capital-firm.html), who was not known for being a very left-wing politician. Finally, I have never really seen the founders of Apple or Google take a position on any political issue, but I have noted how all these companies from Intel to Google were “scared to death” of seeing unions set up shop in their company. Politics seems rather absent. Perhaps Fred Turner could inform us on the subject and write the book I am talking about if it does not already exist?

And a blog post allows to go further, so I continue. I talk about politics from time to time, as the #politics tag indicates, but probably not enough. I have rightly or wrongly stayed away from activism and taking positions, just like a lot of people in the world of technology and Silicon Valley, I will come back to that. But again, you can browse the articles linked to the previous tag. I have also just ordered the book entitled Au delà de l’idéologie de la Silicon Valley (Beyond Silicon Valley Ideology) after reading the one in Esprit magazine a few years ago.

What more can I say? I found another site that doesn’t give the amounts of people’s donations to political campaigns, but a profile of tech personalities, including their political leanings. It’s quite interesting. It has profiles of Larry Page, Sergey Brin, the two founders of Google, John Doerr (Kleiner Perkins) and Michael Moritz (Sequoia). All four lean toward the center-left or left of center, but in a rather discreet way.

More recently, a long analysis of the region showed that it is rather progressive and Democrat, except on one point, that of regulation: The vast majority of tech entrepreneurs are Democrats — but a different kind of Democratt.

I really liked Hillbilly Elegy by JD Vance. I knew he was a Republican, but I thought he was a moderate and anti-Trump. What a disappointment, not to say what a sad character. So bravo to Jennifer Aniston for her recent review: Jennifer Aniston criticizes JD Vance for ‘childless cat ladies’ remarks: ‘I pray that your daughter is fortunate enough to bear children’. There are also the (too?) well-known positions of Peter Thiel or Elon Musk, but again, I don’t know if they represent a majority opinion in tech. Do we know that well that Jeff Skoll, founder of eBay, has become a producer of particularly interesting, not to say brilliant, movies?

Politics should belong as much to those who speak and act quietly as to those who speak so loudly that we end up believing they represent the opinion of the majority…

The Cockroach’s strategy according to Serge Kinkingnéhun

Leave a reply

I regularly follow the publications of Serge Kinkingnéhun, whose strong statements are such as “I apply the properties of the cockroach to startups to make them invulnerable” so I read with delight his recent book La stratégie du cafard (The Cockroach’s strategy), which subtitle is also strong: “Cockroach perhaps, but I create profitable startups”

So why such a love for cockroaches (rather than unicorns)? The author refers to an article by Catarina Fake dating from September 2015: The Age of the Cockroach from which I take a brief extract: A Plague is coming to kill off the Unicorns. Inflated and unsustainable valuations, a shaky stock market, a weak China, and the aftermath of excessive enthusiasm are all pointing to the inevitable. Who will survive? As always, the less glamorous, but very hardy Cockroaches.

He could have cited Paul Graham who wrote on his blog in 2008: Fortunately the way to make a startup recession-proof is to do exactly what you should do anyway: run it as cheaply as possible. For years I’ve been telling founders that the surest route to success is to be the cockroaches of the corporate world. The immediate cause of death in a startup is always running out of money. So the cheaper your company is to operate, the harder it is to kill. And fortunately it has gotten very cheap to run a startup. A recession will if anything make it cheaper still. And related to the topict, the founder of AirBnB was proud to be treated as such by the founder of YCombinator: Surprisingly, Paul [graham] said, “If you can convince people to pay $40 for a $4 box of cereal, maybe you can get strangers to stay in other strangers’ homes.” He also liked that we were resilient, calling us “cockroaches.” In the midst of an investment nuclear winter, he believed only the cockroaches would survive, and apparently, we were one of them. More here.

Serge Kinkingnéhun dedicates his book to all entrepreneurs who want to remain free! adding Live Free or Die. Does he want to indicate that being a cockroach is a way of being happy because it is invulnerable? The author pertinently recalls a certain number of fundamentals of entrepreneurship. Its chapter 2 is entitled A startup is first and foremost a business [Page 20]. However, this is not exactly what Steve Blank explains here. Whether a startup is a business or a business in the making, there is a consensus on the necessary survival of the organization and that its main fuel is money, the use of which must be optimal.

Serge Kinkingnéhun gives a multitude of excellent advice such as the answer to the title of chapter three When to start your startup? [Page 103]: as late as possible, that is to say when cash flow requires the creation of a bank account. He explains How to sell without a product or service (Page 27]. He also explains How to find non-dilutive financing [Page 129] And he has numerous examples such as KFC, Free by Xavier Niel, MailChimp, CoolMiniOrNot (CMON) for what is the crowdfunding strategy of the latter.

I must not give the impression of an excessive fascination with cockroaches. Indeed ! The book remains very focused on a particular and very French situation; namely that the state through subsidies (multiple grants) and favorable taxation (the Research Tax Credit for example) allows businesses to survive. I’m not sure it promotes growth, even slow growth. Furthermore, the examples given are always fascinating but not necessarily exemplary. Cmon, Mailchimp, Free seem to have been possible because the founders had (had) an entrepreneurial activity which facilitated the launch of the new one. The world of food and/or mass distribution shows a very large proportion of unlisted companies as indicated on Wikipedia, companies which in their own way undoubtedly started like Serge Kinkingnéhun’s cockroaches without ever external funding but bank loans.

In reality, entrepreneurs are often cockroaches. In high-tech, there was more than just MailChimp. There was GoDaddy, Navision, or even more famous Oracle or Microsoft, companies which were able to grow their revenues without using (or very little) fundraising. There is no doubt that this is the strongest way to grow. I am not convinced that all of the world’s technology could have reached this stage without the particular model of venture capital, the limits of which the author clearly shows. Investors are impatient, sometimes incompetent. It is therefore better to know who you are dealing with and how.

But I remain cautious about the fact that inventiveness and frugality would be exclusive alternatives as promising as what venture capital has brought to the world of technology over the past fifty years. VC has a history and a reason for existing. It has excesses too. But I still think its existence stems from a need to find a way to launch a business before customer revenue is a possibility. Intel, Apple, Google were undoubtedly born from this constraint. Inventiveness and creativity have also been part of their history. I am therefore not convinced that we can systematically create quickly profitable startups (at least in high-tech).

(And on another sidenote which would deserve an article, I just like unicorns as little as I like cockcroaches, as they are the result of a deviation from the world of startup financing, by the arrival of exuberant actors who have forgotten or did not know the rules of financing of startups, based in fact on inventiveness and frugality… but that’s another subject. You can for example read How Venture Capitalists Are Deforming Capitalism)

Another important nuance: I am not an entrepreneur and Serge Kinkingnéhun is. There is probably neither a single typology of entrepreneurs as the author indicates. What is important is that the actions are in harmony with the personality, ambitions and intentions of the actors.

PS: In an article on LinkedIn, the excellent and funny Michael Jackson mentions the scarcity of IPOs in software in recent years.

The reasons for such scarcity have to do with startup funding and exit modes on markets such as Nasdaq. It would be interesting to check how many of them were cockroaches. I do not have the answer. More broadly, I noted that of the more than 900 startups whose capitalization table I recreated, only 6 had not raised funds from private investors.

What to expect from an investor?

Leave a reply

I am again taking advantage of the questions asked to me to write a post (after the one on the impact of the personality of founders on the success of startups). I could have titled this post “what do investors expect?”, I look here at both subjects.This time, I even copy a part of the message I received:

Context: Just to share with you the dynamics of investors (very early stage) who look at my project. I have received 10+ requests, sometimes from investors who want to make an initial contact call (to follow developments in typically 6 months). Some display their investment thesis upfront (sometimes stratospheric expectations). I try not to waste too much time with such requests, to focus on my product (and Product-Market-Fit – PMF, *the priority*!), but what do you think of this typology of investors? Very early, who favor the blank page vs. PMF but with enormous expectations (100x potential ROI).
(I know that several entrepreneurs are experiencing a bit of the same thing at the moment). I can’t imagine how a founder can calmly seek his or her PMF having onboarded this type of VC and under their pressure (100x and not 10 or 20x!)…
Questions :
1) Are they intrinsically better or worse than more “common” funders (5x-7x under ~5 years, or 10x under 7-10 years)? (I’m exaggerating on purpose, of course).
2) The less-pressing alternative would be a collection exclusively made up of BAs and/or BA-Networks, but does the absence of institutional SEED investors send a bad signal to VCs? A sign of too little ambition? A potential lack of initial attractiveness?
3) There is a strong trend towards “leaner startups” which give less and less equity in pre-seed / seed (including to YC). However, institutional investors often want a double-digit equity share. What is your vision/experience in European VCs? Is leaner (equity shared) better or less attractive? Many startups (even at YC) do not give more than 10% of total equity across the SEED round (+ the initial 7% from YC, or other more or less equivalent SAFEs).

I answered a little quickly like this and I’m going to add a little more, notably a new update: an update of my pdf of cap tables, which includes more than 900 companies now…

This is a true wrong question! But I’m not an entrepreneur, I’m a mentor!
The main thing is the added value of your investor in two dimensions:
– the amount invested,
– the quality of advice.
We could almost say that if one of the two dimensions is zero then the other must be very high, and we can therefore accept that one is weak.
You dream of having a renowned VC or BA (her name and her credibility), this undoubtedly has a price!
Then the lower the amount, the greater the expected multiple. If you put 10k you hope to make x1000, if you put 100K you hope to make x100 if you put 1M you hope to make x10.
In reality it’s more a question of stage, in series D, E, F, it’s probably 2x-3x, in A, B it’s 10x, in seed, it’s 100x, in pre-seed it’s 1000x
– Google had David Cheriton and Andy Bechtolsheim as BAs, they put in 100k, I think they made 400M…
– Sequoia and KP put in $12M and made $2B
(see page 47 of the pdf, $85/$0.06 and $85/$0.52 for the multiples at the IPO but they sold at least six months later and I think it was worth at least 3x or 4x more)
On the last point, it’s not easy either, but Stanford had around 2% of Google at the time of creation, which is unusually low and it is paradoxically their biggest grain, we can see the diversity of criteria.

So let me add a couple of points. I thought Paul Graham (YCombinator) would have provided answers on his blog paulgraham.com but did not find an answer. Howver he keeps on writing great things like:
– How to start Google (March 2024) https://paulgraham.com/google.html
– Superlinear returns (October 2023) https://paulgraham.com/superlinear.html

The two figures that follow illustrate the explanations above. The pdf therefore gives more than 900 cap tables which can illustrate the diversity of multiples (theoretical at the IPO).
Finally, it is still quite rare for an investor to contact an entrepreneur directly (even if it can also happen). The contact is rather established by a third party who knows both the entrepreneur and the institutional investor, for example the Business Angel or the mentor…

Finally, the percentage given in return for an investment is not linear either. It depends on the stage of development of the company of course but on the amount itself!
– for 100k, we typically give 5-15%,
– for 1M it’s more like 40%,
– for 10M and more we fall back to amounts of around 10%.
This may seem counterintuitive and it shows that the percentages are not the result of accounting but of negotiations.
I add two recent French startup cap tables, Mistral AI and H.ai which show that exceptional fundraising leads to exceptional valuations and therefore unusual percentages. These were built with assumptions given my media or data from company documents.

The BA, business angel, is a wealthy individual who invests his own money (generally at least 100k per startup). Below we are talking more about F&F – Friends & Family.
VC (venture capital) invests third party money (pension funds, companies, banks, insurance companies, very wealthy individuals) generally with a minimum of 1 million per startup.
PE, private equity, is an institutional investment firm which takes less risk (even if the companies are not listed but generally profitable or with stable turnover). They invest large amounts but do not expect returns on investment as high as the VC.

Equity_List-Herve_Lebret-June_2024

The Science of Startups: The Impact of Founder Personalities on Company Success

Leave a reply

When a young colleague of mine (thanks Amine!) mentioned a paper entitled The Science of Startups: The Impact of Founder Personalities on Company Success, I was intrigued not to say interested. You can find the version published on Nature here and the one on arXiv there.

When I look back on the 741 articles of this blog, 118 are tagged with founders, coming only second after Silicon Valley. Most of them deal with facts and figures but 38 mention the term personality. For example:
– Knowledge, skills and personality of entrepreneurs (dated March 2021) https://www.startup-book.com/2021/03/19/knowledge-skills-and-personality-of-entrepreneurs/ where it is claimed “There’s an entrepreneurial character.”
– The Founder’s Dilemmas – The Answer is “It depends!” (dated December 2013) https://www.startup-book.com/2013/12/12/the-founders-dilemmas-the-answer-is-it-depends/ where the claim is “There are no real pattern in becoming a founder (age, experience, childhood influences, personality, family status, economic status), however early influences and natural motivations seem to be important.”
– Larry Page and Peter Thiel – 2 (different?) Icons of Silicon Valley (date October 2021) https://www.startup-book.com/2021/10/30/larry-page-and-peter-thiel-2 -différentes-icônes-de-la-silicon-valley/
and I would advise anyone interested in the topic to read the book Founders at Work. I put my long notes about this great book at the end of this post.

This new article is long and a little complex. So I just took notes directly in the text and paste them here. But the article is worth reading if you have the time and interested.

Attention has increasingly considered internal factors relating to the firm’s founding team, including their previous experiences and failures, their centrality in a global network of other founders and investors as well as the team’s size. […] The effects of founders’ personalities on the success of new ventures are mainly unknown. […] Here we show that founder personality traits are a significant feature of a firm’s ultimate success.

[…]

Key personality facets that distinguish successful entrepreneurs include a preference for variety, novelty and starting new things (openness to adventure), like being the centre of attention (lower levels of modesty) and being exuberant (higher activity levels). However, we do not find one Founder-type personality; instead, six different personality types appear, with startups founded by a “Hipster, Hacker and Hustler” being twice as likely to succeed. Our results also demonstrate the benefits of larger, personality-diverse teams in startups.

[…]

In this article, we analyse a variety of firm-level, founder-level and founder-team-level determinants of the success of startups, which are by their very nature experimental, high risk and likely to fail.
Firstly, we examine a range of firm-level determinants of startup success, including location, industry and age of startup to explore to what extent these factors are associated with success. Then building on our previous occupation-personality fit research, we use a large collection of public data on startup companies from Crunchbase to examine the detailed personality profiles of founders.

[…]

Firm-Level Factors of Startup Success. On a country level, chances for success are highest in the US, Japan, West Europe, and Scandinavian countries. Firms from the payment and software industries have high chances of success. Chances of success are positively related to a firm’s maturity, with firms that are seven years or older having higher chances of success.

[…]

Does the combination of founders and their personalities play a role in startup success, and is there any evidence to support the commonly held view in the venture capital investment community that startups require three types of founders: a Hacker, a Hustler and a Hipster?

[…]

In technology, the categorical roles of Hackers (skillful computer programmers and developers) and Hustlers (entrepreneurial leaders able to win over customers and investors to new
products and ideas) have been around for decades, with […] oppositional tension. For example, when Steve Jobs announced he would take medical leave from Apple in January 2009, Mat “Wilto” Marquis described him as a hacker and a hustler in a well-wishing tweet. However, the first use of Hacker and Hustler in conjunction with Hipster in the context of the putative startup founder dream was coined by influential venture capitalist Elias Bizannes in 2011. It was then popularised in 2012 by an address at the influential technology conference South by Southwest by Rei Inamoto and in a subsequent Forbes article “The Dream Team: Hipster, Hacker, and Hustler”. Hipster is a broad term used to describe members of an urban subculture in many cities in the US and other countries who are design conscious and favour non-mainstream fashions, trendy foods and alternative music. Bizannes co-opted the term to reflect what he perceived was the increasing need for successful startups to have a founder with design-savvy, aesthetic imagination and insider knowledge (Hipster) in addition to the traditional roles of someone good at selling things (Hustler) and creating technology products (Hacker).

[…]

While recent research has demonstrated that many employees in the same occupations share similar personality traits, being a startup founder is not a conventional job. we inferred the personality traits across 30 dimensions (Big 5 facets) of a large global sample (n=4.4k) of successful startup founders.

[…]

Using two samples together: Successful Entrepreneurs and Successful Employees (unlikely to be founders), we trained and tested a machine learning random forest classifier to distinguish and classify entrepreneurs from employees and vice-versa using inferred personality vectors alone. As a result, we found we could correctly predict Entrepreneurs with 77% accuracy and Employees with 88% accuracy. Thus, based on personality information alone, we correctly predict all unseen new samples with 82.5% accuracy.

[…]

Adventurousness— the key feature

We explored in greater detail which personality features are the most important in distinguishing successful entrepreneurs from successful employees and found that the subdomain or facet of
Adventurousness within the Big 5 Domain of Openness was both significant and had the largest effect size. The facet of Modesty within the Big 5 Domain of Agreeableness and Activity Level within the Big 5 Domain of Extraversion was the subsequent most considerable effect. All thirty dimensions of the Big 5 facet were found to be significantly different in their distribution, with ten features having large effect sizes. […] Adventurousness in the Big 5 framework is defined as the preference for variety, novelty and starting new things

[…]

Six types of startup founders

Once we understood that startup founders have distinctive personality features that are different from regular employees, we explored whether there are distinct types of personalities among startup founders.

[…]

We discovered clear clustering tendencies in the data. Then, once we established the founder data clusters, we used agglomerative hierarchical clustering; a “bottom-up” clustering technique that initially treats each observation as an individual cluster and then merges them to create a hierarchy of possible cluster schemes with differing numbers of groups. And lastly, we identified the optimum number of clusters based on the outcome of four different clustering performance measurements. We found that the optimum number of clusters of startup founders based on their personality features is six (labelled #0 through to #5).

[…]

Together, these six different types of startup founders represent a framework we call the FOALED model of founder types—an acronym of Fighters, Operators, Accomplishers, Leaders, Engineers and Developers. Each founder Personality-Type has its distinct facet footprint. Also, we observe a central core of correlated features that are high for all types of entrepreneurs, including intellect, adventurousness and activity level.

[…]

By analysis of the six types of startup founders in our FOALED model within the broader Occupation-Personality landscape, we identify three types to be characterised as types of Hackers (Fighters, Operators and Developers) and two as Hustlers (Accomplishers and Leaders). The remaining type is different in personality to both Hackers and Hustlers. It is more of a subject matter expert whose insider field knowledge and problem-solving design strengths can be seen as a type of Hipster (Engineer). When we subsequently explored the combinations of personality types among founders and their relationship to the probability of the firm’s success, adjusted for a range of other factors in a multi-factorial analysis, we found significantly increased chances of startup success for Hipster, Hacker and Hustler foundation teams.

[…]

Our modelling shows firms with multiple founders are more likely to succeed, as illustrated in Fig. 3a), which shows firms with three or more founders are more than twice as likely to succeed as solo-founded. The benefits of larger and more personality-diverse foundation teams can be seen in the apparent differences between successful and unsuccessful firms based on their combined Big 5 personality team footprints, illustrated in Figure 3b). Here maximum values within each startup for each Big 5 trait for any of its cofounders are mapped, and the spread of these between sucessful firms — those who have IPOed, been acquired or acquired another firm and the other firms are shown. […] We found that ten combinations of founders with different personality types were significantly correlated with greater chances of startup success when accounting for other variables in the model. The coefficient of each of these factors is illustrated concerning other features that were also found to be significantly associated with success in Figure 3c.

[…]

We have learnt through this research that there is not one type of ideal “entrepreneurial” personality but six different types. Many successful startups have multiple co-founders with a combination of these different personality types. Startups are, to a large extent, a team sport; as such, diversity and complementarity of personalities matter in the foundation team. It has an outsized impact on the company’s likelihood of success. While all startups are high risk, the risk becomes lower with more founders, particularly if they have distinct personality traits. Our work demonstrates the benefits of diversity among the founding team of startups. Greater awareness of these benefits may help create more resilient startups capable of more significant innovation and impact.

More figures

Is there anything to conclude? Are the authors right or wrong? Can this be used for prediction? I do not know. The authors admit themselves there are biases in their research (it is based on the Twitter accounts of the founders…). I missed the element of the relationships between founders and I am a little skeptikal that more founders is better beginning with 3 or 4. My experience is that a team of 2 founders is ideal (you could chekc my long series of studies on startup data here. But who am I say this today ? What is certain is that the article is interesting and its ambtion to be praised !

Founders at Work - May08

The Chaos of the Internet : SBF, JKS and more

Leave a reply

Sometimes I see striking coincidences in things which have apparently no link. It helps me in writing (useless?) posts… here the chaos of the Internet became apparent again in a trial against a startup founder, in literature and in street art, three topics which are dear to me.

The trial against a startup founder is that of Sam Bankman-Fried (SBF). Of course there has been tons of papers about it including one of my favorite references, The New Yorker:
– Sept. 2023 : The Parent Trap. Inside Sam Bankman-Fried’s family bubble.
– Nov. 2023 : Will Sam Bankman-Fried’s Guilty Verdict Change Anything?
as well as CNN in March 2024 : Sam Bankman-Fried sentenced to 25 years in federal prison

And of course this follows the scandals of Elisabeth Holmes or of Adam Neumann. There were other stories, even if less famous, like Cadence vs. Avant! or Stanford vs. Cisco (more here). Technology including the Internet has brought debatable things including crooks and I believe it is just an enlarged illustration of human nature, but it does not excuse anything…

Literature brings me back to my current fascination Jón Kalman Stefánsson (JKS). In my latest reading I found the following (that I translated thanks to the usual tools):

Sex is the most popular content on the Internet, yet very few people admit to watching pornography.
Ah, damn the Internet! If I remember correctly, you are a poet – have people like you managed to describe the phenomenon, are there poems that succeed in capturing this monstrosity, this divinity? I think I could benefit from this kind of poetry. My little Gunna says that only poems allow us to identify what constitutes the human essence.
[…]
In any case, you put your finger on the problem just now. The Internet. Do You Know What It Is Gunna asked me a long time ago, back when the world was just beginning to get a glimpse of what this web was. No, I said, I have no idea. The Internet is chaos, she said. Ah, ah, disorder, you are probably right. No, it’s not disorder, she corrected before quoting an old Greek book she was reading at the time. She spends her time reading and she always tries to make me benefit from it, as if it serves any purpose. In any case, this book explains that it was at the dawn of time that Chaos was born, and this Chaos was a kind of god or character. I forgot the details.
[…]
What Gunna wanted to emphasize about the Internet was that there was something mythological about it, it was both emptiness and the beginning of everything. Which was later verified. Is not it ? The Net is a bit like a new sky above our heads – and there are new underground worlds there too.
[…]
I was talking about the Net, this new sky, these new underground worlds. This is a radical change. So radical that, for the first time, man does not need to die to know what hell is since hell has reached us and is invading digital reality. The devil knows how to exploit technology. It seems that his domain has excellent connectivity.
Dante wouldn’t have minded that.

By accident, I discovered that one of the street artist I like, Infinipi has another name, Kaotica and he chose that name when, as a computer scientist, he entered the world of the Internet. For French readers, you can listen (soon) to his podcast here. Street art is not very far from Technology. Invader got inspiration from video games and then created one of most innovative Internet applications I have seen in the last ten years

Chaos, it is…

Read Jón Kalman Stefánsson without any hesitation

Leave a reply

I have already written in a recent post all the happiness that the discovery of Jón Kalman Stefánsson and in particular his Romanesque Trilogy had brought me.

  • Himnaríki og helvíti (2007) / Heaven and Hell (MacLehose Press, 2010)
  • Harmur englanna (2009) / The Sorrow of Angels (MacLehose Press, 2013)
  • Hjarta mannsins (2011) / The Heart of Man (MacLehose Press, 2015)

I am lucky to have enjoyed the same happiness with the equally magnificent Family Chronicle:

It’s difficult for me to talk about literature. A friend recently asked me what “explaining” meant, and after some exchanges, we arrived at “giving to see”, “making luminous”, “giving a particular perspective”, and obviously there can be an infinity of perspectives. We were talking about science and mathematics. Literature, novels, poetry explain often and much better than the human or even exact sciences… Stefánsson does.

So here are two short extracts:

Why do you call me Pluto? And what will happen next?
I will win this game of small horses, then disappear into the moonlight, you will continue to live, you will be a planet surrounded by the darkness of the universe. Later, it will appear that it does not deserve the name of planet; and that we should rather say of you that you are a dwarf planet. You are devoid of orbit, you do not dare to dive deep enough within yourself, perhaps for fear of not being able to get up and lift the weight of your discoveries. You will eventually convince yourself that life is a horse that can be trained, then you will kiss someone and destiny will send a comet in your direction, the horse will get scared, you will no longer be able to control it, you will get lost in the middle of the journey that is your life.
And then, will I find my way back?

This reminds me of a beautiful and terrible quote by Wilhelm Reich in Listen Little Man. Then there is this feminine side of the author. Not only in his themes, but also in his way of writing. There is no better argument, no better response to this hatred against the woke movement or of the loss of the masculinist power. It is by loving what is not like us that we love better and that we can lose or abandon our part of darkness, by developing or seeing better what is luminous.

By the way, Þorkell announces, I am writing an article about a remarkable woman, Marie Curie, one of the greatest scientists of our time, if not all time. Oh good, Margrét replies in a neutral tone, as if out of simple politeness, then she turns slightly to look at him again. He nods, she has just died, he adds, she received the Nobel Prize twice, first in physics, then in chemistry. She is an immense scientist, a figure, and I would like to broaden the horizon of our lives a little; here in the East, talking about her. Is it a woman, Margrét is surprised. Yes, he confirms.
And maybe a mother?
She has two daughters.

And as I finished my other post with Cynthia Fleury, I will end this one with another discovery, that of the filmmaker Terence Davies, author among others Of Time and the City, Benediction and the very beautiful short film Passing Time.