Aug 17, 2024 · 2024 #27. Read the transcript grouped by speaker, inspect word-level timecodes, and optionally turn subtitles on for direct video playback
Edit labels for this show, save them in this browser, or download a JSON override for the production folder.
Transcript Playback
Is Europe Dying?
Human Transcript
Timed transcript
Blocks are grouped by speaker for readability. Expand a block to inspect word-level timing.
Speaker 3
Hello, everybody. It's the middle weekend of August, and we're back to tech. We haven't done a tech show with my friend keith tear the editor and author of that was the week the excellent uh tech uh newsletter uh he's been away in europe and so it's rather ironic keith that your latest newsletter is called is europe dying regulation and innovation i know you're in london and paris for the olympics you had a great time at the london theater so Is that compatible, you swanning off to Europe for a couple of weeks, having a great time with your kids, and then doing a newsletter about the death of Europe? Is it just a museum for wealthy tech tourists like yourself?
No, it was super interesting because at one level, the Paris Olympics were super impressive. It kind of European culture was brought to the forefront. The opening ceremony, I thought, was really good. I didn't agree with the criticisms of it. And I thought the French did a fantastic job of elevating humanity up to this level of we're all human and we're all competing and we can compete and love each other at the same time. I thought they did a great job. And so you felt pretty optimistic. Then you start reading about all the regulatory stuff around tech in Europe. and some of the comparisons to america in terms of innovation and successful innovation and it's really really hard to be optimistic about europe it it it seems as if the european parliament or the commission at least dominates decision making a level of innovation to the extent that entrepreneurs really don't have a free reign And so the editorial is really focused on that, despite the fact that I love Europe from a cultural point of view.
So you lead with an X from Bindu Reddy, I'm quoting. Europe is slowly dying because it's not innovating and the governments are stifling. The regulations don't make sense and they make it harder and harder for the free market to flourish. Other than Mistral, they don't even have any legit AI companies. Does it matter to Europe that they're not innovating? It's still a region. Maybe it's hard to generalize about whatever it is, 20, 25 countries where the quality of life is high, where people are reasonably happy. I mean, obviously there's a contrast between the Scandinavian countries, Northern European countries and the Southern countries, but does it matter in your, I mean, obviously Bindu cares, you care, tech people care. Do you think ordinary Europeans care?
Well, I think they're starting to care. I mean, the election results suggest that roughly a third of European voters are inherently alienated from the political class. And that, I don't think, is an accident. I think that instinct to want to control, which is what the regulatory regime is all about, what are essentially thought to be alien, often foreign,
innovations is in stark contrast to the history of Europe, which was all about incorporating, integrating, and benefiting from innovations. And so there is a kind of a malaise in the political class, which seems to be fear-driven and, you know, in a way, anti-civilization, because they don't like gains. They seem to want the gains to be controlled more than they want the gains. And self-driving cars is a good example. The regulations are way behind the United States there. So I do think there is, some things happen in Europe, which means that the dominant narrative is fear-driven control.
I'm just thinking out loud here. Do you think Europe ever recovered from being so far ahead on mobile technology? and then being so radically overtaken by the US. I never really quite understood why they lost their lead so quickly.
Yeah, it's super interesting. I remember when I, I don't know when you came to the US, but I came in 96 and I remember getting an AT&T account and being shocked at how primitive mobile was in the US and how non-existent, for example, SMS messaging was and also how primitive banking was. And what really happened is the US, just due to the internet, I think mainly, leapfrogged. By the way, it's not just the US. If you go to somewhere like South Africa, it also leapfrogged. So it's almost any place that innovated later. Europe was very advanced from the 80s. Remember, France had Minitel before the internet, which was the electronic Yellow Pages, basically. So Europe was super advanced, but that meant that when the true technical innovations broke out in the early to mid-90s, Europe had already invested, but America hadn't.
But in your generalization, you're saying Europe used to be innovative. You have a quote in this week's newsletter from Leon Blum, an early 20th century French socialist. He wrote, the essence of American capitalism is to allow the rapid emergence of new companies. The essence of European capitalism is to do everything so that old companies do not die. So it doesn't sound to me, I mean, he could have written that today. It doesn't sound as if anything much has changed over 100 years.
But what has changed is that that's a socialist saying that. Can you imagine a Democrat today championing allowing the emergence of new companies, in other words, being pro-innovation?
I mean, Lina Khan basically, I don't know, she probably would agree with this statement, but her method is to try to control, similar to the Europeans.
Yeah, you were out, I don't know if you saw this piece, it's not in the news there, but Hoffman, I think, got caught, but exposed, arguing that he was going to give money, I think, to the Harris campaign, but he was strongly against ambivalent about Khan and her role in a new administration. So there are many people, I don't know if they're on the left or progressive in Silicon Valley, but there's certainly no great friend of Lina Khan.
I think that's true, but I think the Democratic Party Gosh, this is showing my age, but I'm blanking on the name of the more senior female Democrat who promoted Khan. Well-known woman who almost... Nancy Pelosi, Hillary Clinton, Kamala Harris. No, none of those. Gosh, I'm shocked. I'm blanking on the name because she's super well-known. But the one who always focuses on the credit card companies?
Yeah. Can you remember her name? I can't remember if she's... They're both as bad as each other. Anyway, there is that block within the Democratic Party which takes... There's a theory which you'll be familiar with in sociology called state monopoly capitalism. It's basically the idea that the enemy of normal people is big companies. I think that that's a mistake uh but it runs through the ideology of that part of the democratic
in the uh in the newsletter this week is europe dying of course britain is part of europe but it's not part of the eu another uh piece in this week's newsletter is about the uk near bank revolut that's valued at $45 billion after its secondary market sale. I mean, London, I think, still leads on fintech. Would you include the UK? I know you've spent some time in London after the French Olympics. Would you include the death of the UK in terms of innovation with Europe? Do you include the UK within Europe in this?
Yeah, I think you have to dig a little bit deep into recent UK policy, both Conservative and Labour, to kind of answer that question. The shorter answer is yes, I would. However... it's significantly better than the rest of Europe in permitting innovation. For example, in the UK, the banks are forced to support a sandbox and APIs that allow uprising banks like Revolut to get into business. And the cable companies are forced to share their cable head ends with upstarts. So there is a kind of a pro-competitive startup bent, if you will, in the UK. That said, there's a massive, and that's one of the points in my editorial, a massive lack of finance for startups in the UK. UK is better than the rest of Europe there, but it's still the case that pension funds, for example, which are the dominant investor in venture capital here in the States, are not allowed to invest in venture capital in the UK due to regulations that don't allow them to pay 2% in fees. And the conservative government most recently has spent three years or more unraveling that so they could release pension fund money into venture capital. And I suspect that Keir Starmer will stop that. He won't be favorable to it. He'll believe that pensioners, largely trade unionists, that their money shouldn't be taking risk because it's their pension. that's a negative point of view, assuming failure. And the history of venture capital overall, if you can allocate to it as an asset class, is that it does produce a lot of wealth. So I think that's a mistake. That lack of risk, I think, is the main differentiation between America and China, actually, on the one hand, and Europe on the other. That lack of risk appetite, the fear that risk will end in a bad outcome.
so keith it's funny your editorial is entitled the newsletter this week is entitled is europe dying regulation and innovation and yet the editorial in many ways focuses on a small little American tech startup called Google, which you suggest is being unfairly treated by the US government. Before we get to the Google case, is Europe then in this sense, in your view, becoming more like, sorry, is the US becoming more like Europe?
I think it is. The political class, and by that I really mean the democratic establishment, because I think they do govern and will continue to govern. The political class is inherently focused on containing tech. Crypto is a great example. Google is another example. I think there's going to be antitrust cases all over the place. And that, usually in history, when the political class want to focus in on containing large companies, It's a sign of their own decline. Usually a political class that is not in decline is ambitious and optimistic about what comes next.
Are you beginning to sound at least a little Trumpian, Keith? I know Donald Trump spoke, I don't know, while you were away in the last few weeks at a crypto conference. He's been unambiguously pro-crypto, even Harris now. it seems a little more open on crypto. Does this suggest that you might vote for Trump over Harris, at least when it comes to innovation and the market and tech?
No, I'll definitely vote for Harris. And I would have voted for Biden, even in his belittled state, because ultimately... I don't think Trump has any kind of coherence at all. I don't really agree with a lot of what the Democrats stand for, but I strongly prefer them to the Republicans.
And what do you make? You've always been a big defender of Elon Musk. Um, what do you make of, you don't have any pieces on a mask in this newsletter, but we have an X of the week, which we'll come to. What do you make of masks increasingly over support for Trump this week? He had a, uh, a live interview on X that was a bit of a tech. Technical fiasco generated a lot of interest and millions of views.
Yeah, I think they overcame the technical stuff pretty quickly. I mean, it was impressive. They had more than a million people listening live once they fixed it. But look, Musk is in a difficult situation. His core belief is that you need to preserve free speech. That's his core belief. His ownership of Twitter is really a personal platform for free speech. And his own speech... An expensive one. How much did it cost him? $45 billion? I think it cost him nothing, actually, because he got more than that in his reward from Tesla. But let's assume it cost him $45 billion. But in his head, it probably cost him nothing. I think the platform for free speech, which he abuses... a lot. I'm using abuse there not in a negative sense, but he really leverages his ability to speak freely. That's his core. Now, if you look at that issue of free speech, the Republicans are far more favorable to it than the Democrats. The Democrats... at their core, embody what is often called cancel culture and consider that misinformation is a democratic word more than a republican word. Opinions they disagree with, and especially ones which are harmful or
But I'm giving him a pass because I think if you're him, that's the only thing you could do. You couldn't really support the Democrats with his point of view.
So, as I said, your editorial focuses on the Google case. You were away for a couple of weeks. You're unambiguously critical of the decision uh by a judge to um i don't know what the best way to describe it is to to accept that google find them guilty find them guilty of monopolistic practices i don't want to you and i have been talking about this the last couple of days i don't want to get into your own particular theory about google because i find it a little bit odd but um especially given that my wife is a senior lawyer at Google, so I know the inside story, which I obviously can't reveal. But what most troubles you about this decision on antitrust and Google? Is it innovation? Is it going to kill innovation? Kent Walker, who runs legal at Google, made it very clear that ultimately, in his view, this decision could
be bad for consumers well i think what worries me the most is google in my opinion and i think this is super hard to disagree with has been a force for good since its formation it has brought to us the ability to collect index search and retrieve information at a scale that boosts our ability as human beings compared to what was there before in a huge way. So Google, and think of things like Google Docs, their Excel, Word, and PowerPoint clones that are cloud-based. Think about Gmail. Google is overall a massive force for good. And if I was to criticize Google, I would want to look at what else it could be doing as a force for good, as opposed to saying it's too big. And I think there's an ideological imperative led by the FTC to say it's too big.
um in a way there's a division of labor between the doj and the ftc and this was a doj initiative you're right but they're they're kind of a tag team uh or a relay race if you will they they they they pick their fights and they come talk about it beforehand who should pick which fight this is a doj fight the the judge um had to shrink the terms of the prosecution as well, had to shrink the terms in order to even have a case. Initially, it was Google has a monopoly in search. Then it was Google has a monopoly in mobile search. And it ended up with Google has a monopoly in browser-based mobile search, which is Chrome and Safari-based. And therefore, the payment to Apple became a key point. So They had to redefine the meaning of the market to find a case. And then they found them guilty of having a monopoly in browser-based mobile search. Now, if you think about search on mobile and ask the question, how much of that goes through a browser? whatever we think the numbers are, they're declining as a percentage of the whole. The Amazon app, the Facebook app, and the TikTok app have a lot more searches than Safari or Chrome. And so this idea that search is owned by Google is at its core, I think, false.
So Keith, it's an interesting argument. Given that this case is going to take years to be resolved, at best three to five years, given the speed of technology, given AI, given the way in which AI is reshaping the nature of search with companies like Perplexity, as well as Google's own AI initiatives and OpenAI, will this decision, whatever happens, does it actually make any difference to anyone or anything?
I tend to think that Google's business is going to change almost as much as Microsoft has changed since the DOJ case against them due to market demands. Clearly, browser-based mobile search is in decline. Clearly, AI is on the rise. Gemini is Google's offering there, and it's extremely good. It's improved a lot, by the way, in the month we've been off. And the business is going to be transformed. Whether Google managed to retain a leading position is open to question, at the very least. With or without this decision?
Right, especially without the decision. So does the world need protecting from Google? I'm a no on that. I think Google... has got enough problems that it's going to become less and less relevant to the world anyway.
Yeah, I mean, I'm, as you know, much less critical of regulatory initiatives. But I do think that usually the government's so slow and archaic and the legal system enables so much backwards and forwards that they're always inevitably fighting yesterday's battle.
Yeah, I listened to the All In podcast yesterday where they discussed this. And the talking point was, what if they broke Google up and Android, Chrome, search and advertising were four different businesses? You know what is super interesting is three of those businesses would have no revenue. Search, Chrome and Android.
I don't want to get into the revenue issue because they still would have an advertising business. So of those four, if they got broken up, which group should I encourage my wife to work for?
Advertising, for sure. But for advertising to work, Google needs to be able to deliver ads. About 50% of Google ads, by the way, are driven via AdWords, which means that they're delivered not on Google's site through search, but on all the other sites that embed Google search. So so AdSense and AdWords is a network of which the Google website's about 50 percent.
And things are going to I think you're absolutely right. Things are going to dramatically change in the next five to 10 years. And I don't always like to acknowledge you're right, Keith, as you know, but I think you're right on one thing. I've always been slightly skeptical of. using AI as a replacement for search, but I was doing some stuff this week using Anthropic and Perplexity. And actually, I think increasingly, it's a better technology for search. And I think if it wins over more mainstream users like myself, we're probably not that far away from a product or an interface where AI replaces conventional search. I mean, what happened with Microsoft? What was the year, the moment, I know you know the whole Microsoft story very well, when it was clear that Microsoft or the traditional businesses of Microsoft were history?
Well, they used their power to catch up there. They destroyed Netscape. Internet Explorer, by the time I was doing my deals with Microsoft in 97, 98, Internet Explorer basically killed Netscape and had 98% global market share. So they were affected by missing on the internet, but they managed to catch up.
You also... In this week's New Gelato, you have a piece from Spyglass on what we can and can't learn from the Microsoft case, the antitrust case against Microsoft in the late 90s about the Google case. What do you think the takeaway is?
Well, the main takeaway is that the market is a far more efficient destroyer of old businesses than regulations. And that you can actually trust innovators who are highly incented by their personal wealth to do things that disrupt incumbents, just as new politicians are highly incented to replace incumbents. And so if you rely on the market, it will, in different periods of time, make it impossible, even for a monopolist, to be successful.
So what happens going back to where we started in Europe with that Leon Leon Bloom quote about American capitalism allowing the rapid emergence of new companies, whereas Europe doesn't. What happens in Europe? What will be the fate of Europe in the AI age? Will they just be a subsidiary of large American or Chinese tech?
A lot depends on politics. I mean, anything can change. But as long as the political elites in Europe feel disadvantaged vis-a-vis American big tech and try to control it as their primary effort and don't release capital to compete, which is all locked up in pension funds, it's going to be super hard for Europe to... It'll be more of the same.
I don't know what the numbers are. It's over 90% of Europeans use Google. I think there's a bigger monopoly in Europe, if that's the right word, than the US because Bing isn't as powerful there. So this will just be more of that. Europeans will want to use these AI products and they'll all be owned by American or Chinese companies.
I think, yeah, and I think one of the interesting things about the election, I don't want to talk politics too much here, but it's increasingly looking like a TikTok election. And of course, TikTok is not an American company. So finally, we have an American election being shaped, influenced by non-American tech. Maybe we'll talk about that.
One other piece before we get to Startup of the Week and X of the Week, interesting piece in Axios about independent journalists, the independent journalist era taking off. With references to Substack, that was an interesting piece. We talked about this endlessly about Substack replacing traditional journalism. What do you make of the Axios piece? And what do you make of media startups like Free Press that seem really now to have some scale? I mean, they're making millions of dollars a year.
Yeah, you know, firstly, it's notable that Axios is writing about Substack. Axios has often written about the New York Times. Writing about Substack is a weathervane for Substack's importance. And I think Substack has become a word for what used to be called a blog is now called a Substack. And if you don't have a Substack, you're probably not an independent publisher.
And this is going out on Substack, on your Substack, my Substack. Keith, you and I may have some Substack news when it comes to people who watch our show later in the month.
the owner of a Substack to post on Substack anymore. You can use their mobile app and make a Substack post before you've signed up to publish a regular newsletter. So it's becoming more like seeing these messages about Trump, by the way, it says from a LinkedIn user. So whoever you are, we don't know who you are, but we can see a message that Trump is on TikTok and he has about 10 million followers. So, yeah. Oh, Frederick Toublemont. Oh, man. So, thank you, Frederick. Yeah, so I do think that... What do you think, though, will be the fate of startups like Free Press?
Well, it's an interesting network. What Free Press is, is if you will, it's a walled garden inside Substack that is promoted by other publishers. either by referrals or by recommendations. And so what you have is tens of thousands of walled garden publications, brands, if you will, so I don't mean to say walled garden in a negative sense, that can self-promote each other and build readerships whilst retaining control. Steve Gilmore, by the way, in notes on Substack, published a great Substack that explains this in quite a lot of detail. I hadn't seen it before, so thanks, Steve. And I think that... There is a real network effect where independent publishers are helping each other to attract readers and revenue.
And anyone listening or watching, I hope you will join my Substack and Keith's Substack. Keith, let's move on to your startup of the week, a company called Balderton. And again, ironic given this is supposed to be about Europe dying, but it's a European company. Tell us about Balderton.
So Balderton is known in America as Benchmark. So if you go back into the history of Balderton, it was called Benchmark. And through various iterations, George Colo and Eric Archambault, who were two of the founders, left to run their own fund, and what is left changed its name to Balderton. Sounds like an estate agent. It does sound a bit like an estate agent. A good friend of mine, Daniel Waterhouse, is an investor there. He was an investor in Infarm. And they have just raised $1.3 billion. They're mainly an A, B round and onwards investor, although they do some seed. And I thought it was a bright spot because the thing missing in Europe is money. And they've managed to raise a large fund with money, a bit like Atomico, which is Niklas Zennström's vehicle, and Index, which is Danny Reimer's vehicle. So there is some bright lights in Europe trying to attract real risk.
Well, I'm an anti-racist. I'm pro-women's rights. I'm pro-gay rights. I don't think trans people should be forced to be not trans, although I don't agree completely. that I don't want to redefine biological sex, but I'm all for people...
Well, finally, X of the Week, and we started with Bindu Reddy. We'll end with her. Her point was... uh you call her an accomplished silicon valley technical founder and she was very pessimistic about europe she said europe is slowly dying and you end with a tweet from her an x from her about the llm and agi hype is so over the top that even data science teams are forgetting that llms cannot do tabular data ml so what does that mean translate that for ordinary people keep well um
Tabular data is basically like a spreadsheet is the simplest form of it. But a database is also tabular data. And tabular data tends to have numbers in it as well as, you know, classifications and other stuff. And an LLM is something that reads free text. And the point she's making is that if your data is organized into tables with logic, there's almost no chance that an LLM will be able to read, understand, interpret, forecast from and predict things from your data. That's certainly true at SignalRank. We do not use LLMs for our predictions because they wouldn't work. You can give the LLMs your predictions, have it talk about them. but it can't make the predictions. And so she is, and I should just acknowledge that many years ago in 2005, actually, when Mike Carrington and I collaborated on TechCrunch in a company called Egeo,
The competitor was Bindu Reddy's Google initiative called Structured Data. So she's a structured data person just like Egeo was. So she goes way back. She's a data nerd for sure. And she's now the CEO of an AI company offering services to
She calls it the world's first AI super assistant for enterprises and professionals. Right. I'm not sure it's the first. I think a lot of people try and do that, aren't they?
Well, she's successfully doing it. And data is a big part of what she wants to do. Same for me. So I like what she's doing. I like this post because it
in a world where AI has become this label for everything and LLMs are assumed to be good at everything, she's distinguishing between what it's good for and what it isn't, which I like.
Well, Keith, next weekend or in the next couple of weeks, it's a big event for you. We won't mention how old you are, but it's a significant birthday. We will talk again next week. I know you've got a a birthday party next weekend, which I will attend and have a great week. And we will talk next Friday. Thanks so much, Keith. And I'm not convinced that Europe's dying because you just came back from it, but maybe you're right. Thank you so much.