Nicolas Colin

Head of Research at Vsquared Ventures | Macro & Markets Writer | Follow @DriftSignal_ & @CurrenPower | Views are my own.

[Nicolas Colin @Nicolas_Colin]

Never enough

[wuki 🌞 @Wuki]

LISTEN TO THE WISE WORDS OF @marcrebillet

[Anton Musil @BlkoJa]

Tohle je velmi zajímavá konceptualizace úpadku Německa, způsobeného primárně ne přeregulovaností, ale ekonomického modelu odrazujícího od investování v zemi.

A domácí kapitál, který nemá uplatnění v zemi se pak odlévá do zemí, kde ho má - USA

[Noah Smith 🐇🇺🇸🇺🇦🇹🇼 @Noahpinion]

In this long and excellent guest post, the great @ramez explains why he's skeptical about Recursive Self-Improvement:

https://t.co/Pi8frvGWww

[Nicolas Colin @Nicolas_Colin]

@BrianCVC 😅 This particular episode (“One of Us”) happens to be their best ever.

https://t.co/qZOJ8sSDNv

[Joao Matos @JMatzzzzz]

Um grande resumo. E a tragédia deles é também a nossa.

[Nicolas Colin @Nicolas_Colin]

@Suboptimus42 But Merz wasn't exactly rewarded for it—will this last?

[Nicolas Colin @Nicolas_Colin]

🇩🇪 I will keep making the case that there isn’t anything intrinsically anti-entrepreneurial in German culture, or in European culture for that matter:

• Germany is a surplus country specialized in manufacturing. It wants to export more goods than it imports.

• To do this means repressing wages and consumption to maintain competitiveness. The relatively weak euro, shared with indebted Southern European countries, helps to some extent, but much of the wage repression is the direct result of the 2004 Hartz reforms.

• This means there isn’t a compelling case for investing more in Germany. Because of wage repression, the domestic market is stagnant, with the situation made even worse by weak demographics, which means there is little need for additional investment to serve that market.

• This is compounded by two things. First, wage repression means that most savings end up trapped in corporate balance sheets and are therefore paid to shareholders, most of them US asset managers, rather than reinvested at home.

• Second, the government itself doesn’t invest because of its religious (and constitutional) commitment to balanced budgets. This helps explain the deplorable state of German infrastructure, which in turn makes the country even less investable. Why would you put money into a country where the trains are never on time?

• If you can’t invest domestic savings at home, those savings are invested abroad, notably in the US.

• And if the direction of capital flows is generally outward rather than inward, it means two things. First, whatever domestic capital is invested at home goes primarily into the safest assets, not VC or startups.

• Second, because Germany sends most of its own capital abroad, there isn’t a pull effect whereby foreign investors would be compelled to invest more in Germany. There is simply no relatively attractive yield, whether in VC or in any other asset class, and domestic capital is more than enough to cover what investment there is anyway. As a result, viewed from abroad, Germany is not even on the map as an investment destination, let alone as a place to allocate VC.

• Which is why a German version of Zuckerberg or Musk can’t scale their company at home: there simply isn’t enough capital, whether domestic or foreign, willing to fund the whole journey.

• The corollary is that those who really want to scale emigrate to the US and succeed because the US, being a deficit country, is the opposite of Germany: it is a magnet for capital! They then look back at Germany and say, in a condescending manner, “Oh, but it’s German culture and a lack of ambition.”

Germans want to build companies as much as any other people. The problem is that Germany has built an economy that sends the capital needed to build them elsewhere, betting the whole house on manufacturing and exports rather than startups.

And then China enters the room…

Cc @HMangesius @michaelxpettis @humanandtheloop @patrickc @SineadOS1 @lugaricano @robin_j_brooks @daveg @christianmiele @kofinas

[Linas Beliūnas @linasbeliunas]

Peter Thiel just said Europe fears success.

His argument: German founders treat a working company as something to sell, not something to scale into a Musk- or Zuckerberg-sized giant. The result is almost no large new firms built in decades.

Think missing follow-on jobs. No employee millionaires at scale. Rich lists full of heirs instead of builders.

When he compared the 50 wealthiest people in each country, Thiel laid out the numbers:

- Of the 50 richest Americans, 12 are Gen X or younger.
- 9 of those 12 made their own money.

> Of the 50 richest Germans, 20 are Gen X or younger. All 20 inherited it.
> “Not a single person did something new, made some new money, built a large, new scalable company.”

Then he added the cultural twist people usually miss:

“One of the things in Germany that people always talk about in this entrepreneurship context is there’s a fear of failure. A ‘no risk’ culture… Perhaps there’s also a fear of success.”

If something works, “you’re not going to scale it to this extreme degree like an Elon Musk or Mark Zuckerberg. At some point you’ll sell the company or exit.”

It seems that Germany’s (& Europe's) real entrepreneurship problem may not be starting companies.

It’s refusing to let the winners get too big.

[Nicolas Colin @Nicolas_Colin]

I just wanted to say that I don’t underestimate it, having had experience on the field.

But more generally I have experience incorporating, managing, and dissolving companies across many jurisdictions (the UK, France, Germany, Estonia, Luxembourg, the US, Hong Kong, and the Cayman Islands) and I can assure you: every jurisdiction makes it difficult and costly in their own way.

[Marieke @mariekeflament]

🎙️Everyone assumes China planned its open source dominance in AI. @kevinsxu argues it didn't.

As Kevin told @Nicolas_Colin and I in our latest @CurrenPower podcast “People give the Chinese government too much credit for strategic foresight."

Kevin has had an unusual career path. He worked on Obama's first campaign and in the White House, led international expansion strategy at GitHub, and now runs Interconnected Capital, a fund investing in the infrastructure of the AI economy.

His clarity of thoughts and articulation of complex and technical topics is exceptional. 

We got in touch with Kevin after reading his must read essay "Chinese Open Source: A Definitive History". His essay - a must read- tells the real story of Chinese open source: Linux arrived in China on floppy disks. Alibaba adopted open source to cut its software bills. Beijing held back for years and only embraced it once US export controls made it a matter of survival.

In our conversation, we cover:
> China's accidental embrace of open source. 
> Why open-weight models aren't really open source, and why they still matter for sovereignty
> The three camps of Chinese AI, and why ByteDance stayed closed
 > How big tech's AI build-out is now running on debt
 > China's real weakness: capital, not chips
 > Why clean power may matter as much as compute

Our takeaway: the AI race is shaped less by grand state strategy than by the same commercial logic everywhere. And the dollar still sits underneath it all.

https://t.co/DYZa51vK6l

[Josh Bersin @Josh_Bersin]

This is a riot.

[Nicolas Colin @Nicolas_Colin]

@josheidelson Beautiful picture

[Josh Constine 📶🔥 @JoshConstine]

This is the whole Instinct pitch deck btw

[D.Radka, #NAFO 🇨🇿🤝🇺🇦 @DakdaR22]

- Volodymyr Zelensky 🇺🇦:

"We are exercising our right to self-defense by striking Russian military targets and the part of the economy that serves the war effort. This is our defense.”

"Thank you to everyone who is developing Ukraine’s strength so that there will be no safe havens left in Russia for anything that supports the war.”
..........

After so many years of Russian aggression, this nation remains unbroken🫡🇺🇦

[vakibs @vakibs]

Perfect diagnosis of Europe’s problem. Germany is the centre of Europe and German economy needed to reorient towards domestic consumption just like China did after the 2008 crisis. Many years were lost. A reset is urgently needed or everything descends into a fascist dystopia.

[Sar Haribhakti @sarthakgh]

The gap between USA and China is comically large

[Nicolas Colin @Nicolas_Colin]

@Kartaphilus This would be crushed by a massive influx of capital, comparable to what the US has enjoyed for decades because it is a deficit country.

(And by the way, the US laments being a deficit country: Americans actually elected Trump to reverse that trend and reindustrialize!)

[khalid @phantom_khalid]

the real cultural pathology is whatever led germans to be so scared of public debt that they enshrined balanced budgets into their constitution

[Blue @blueshopping24]

👀👀👀

[Nicolas Colin @Nicolas_Colin]

@Bundescanclerin No. In addition to now working for a German VC firm, I spent 5 years in Germany with my family and have experience incorporating, managing, and dissolving two different GmbHs.

[Nicolas Colin @Nicolas_Colin]

@hexorer Higher wages and productive investment - cc @humanandtheloop

[Jamie Susskind @jamiesusskind]

If everything that’s going on in Israel is incomprehensible to you, watch episodes 7-8 of Fauda season 5, about 7 October 2023. It will haunt you. But it helps, just a bit, to understand the fanaticism, murder, terror, rape, and carnage that began the latest round of violence.