The House of Ariadne: What We Know & What You Can Expect
Julie Meyer Tuesday, 23 December 2014.
Roughly every 7 years, there is another economic cycle. Where we were 7 years ago was that Northern Rock had happened, but Lehmans hadn't yet. The stock market cycle of bulls and bears however has very little correlation to 'the technology world' in which I've operated businesses since 1988. Whereas financial markets go up and down, technology has consistently driven growth in jobs, wealth, consumer utility and productivity since the 1980's when I was becoming an adult. In fact, if you think of technology as merely 'tools' – then, humans have been improving the ways that they do things for forever. At the time of Stonehenge, it was stones. In 1450 in German, it was Gutenberg and mechanical printing technology. In 1971 in Silicon Valley, it was the microprocessor.
But whereas there is little if any correlation between the financial markets and the technology world, both are service industries to industry. (The financial services forgot that it was a service industry to industry for a while and created massive damage as a result). The best businesses think of both as tools to accelerate their business models and market momentum.
I was fortunate to be exposed to Carlota Perez by my great good friend Richard Duvall, the founder of Egg and then Zopa, who tragically passed away in 2006, but not before we had spent many evenings discussing how to rebuild the Royal Society for the time in which we live. In many ways, Richard gave me the push to think about building EntrepreneurCountry – to think that it was not so fanciful a thought to build a new country.
So after you read my book, Welcome to EntrepreneurCountry, you must read Carlota's masterpiece. What she says is that the same thing happens roughly every 60 to 80 years. There is a big bang of disruptive technology – the Arkwright's mill opens in Cromford, the test of the rocket steam engine for the Liverpool-Manchester railway, the Carnegie Bessemer steal plant opens in Pittsburgh, the first Model-T comes out of the Ford plant in Michigan, and the Intel microprocessor is announced.
During that 70 year period that ensues, a new common sense emerges
The world moves from the moment of the big bang (for example the chip), through to derivative technologies (the computer, software, the internet). These are the first two phases according to her, and at the end of this first half of the 70 year cycle, the money which is so caught up with the profit potential of the new technology starts to make money out of money because it is getting ahead of itself. (Sound familiar?)
What follows is a turning point which we are pulled out of as the established companies – the incumbents and established order – embrace the new technologies and drag that new common sense across society. If society is having the right kind of dialogue with itself about how technology is affecting it, then prosperity is driven much more quickly across all of society due to the wealth-increasing elements of the new technologies. If society shirks from understanding or even trying to understand what is happening, then few people benefit.
Said another way, have a good debate and embrace the change, and all of society benefits. Wait late, and a couple of people become billionaires.
Why is this important?
Actually, I find it deeply reassuring to learn that the same thing happens all of the time. That I don't need to try to be smart enough to figure out the cosmos, but I do need to be humble enough to read history. And what I certainly know from working so closely with entrepreneurs for 15+ years is that you get better information if you spend time with them – much better than if you spend time with large corporates. Which is why if I had to choose between paying attention to the financial markets or technology entrepreneurs, I'll build my map of the future and my patchwork quilt of 'perfect information' from the latter not the former.
What can you expect from EntrepreneurCountry in 2015?
We will continue to discuss many of the themes from above and also from below – which form the basis of our investment approach as well:
- The world is moving towards radical transparency; we live in a 'trustless-trust' world.
- Individuals are being empowered; everyone may be becoming an Individual Capitalist. Does anyone under 30 think they work for anyone anymore?
- The division between public and private is disappearing; there is only the market. Pay to Caesar what is Caesar's, but if Citizen Joe can take care of Caesar's work better, then pay Citizen Joe
- Finance is becoming a layer not an industry just as technology has done
- The Digital Disruption is affecting us all, but the winning strategy is to engage with 'Digital Enablers'
- Innovation is always about Economics not Technology – otherwise we would all be flying the Concorde – we're not, we're stuffed into jumbo jets this Christmas.
We will continue to grow:
- We end 2014 with more than 160,000 citizens in EntrepreneurCountry
- With new Corporate Partners to EntrepreneurCountry across EMEA
- With Regional Partners building EntrepreneurCountry across Europe
If you would like to help us build, send me an email – firstname.lastname@example.org
Ariadne Capital ends 2014 with more Assets Under Management, a bigger portfolio across Europe, and 20 Ariadnites. We look forward to continuing to build the gold standard for the financing of entrepreneurship. Ariadne Capital was built on 6 key bets:
- That there is a deep inefficiency in how the European market works, and that we can make money building the efficiency ; EntrepreneurCountry today is building the Infrastructure of Entrepreneurship which has not been evenly distributed.
- That the macro-trend is that great entrepreneurs can come from anywhere – any corner of this 450 million continent; that you don't need to go to Palo Alto to be a great entrepreneur
- That those who have been in the burning building – otherwise known as a start-up – and made it through to the other side, have a lot to offer those who are considering going in; Ariadne Capital pioneered the 'Entrepreneurs Backing Entrepreneurs' model for the financing of entrepreneurship in Europe in 2000. No other investment firm had entrepreneurs as their founding shareholders who were there to back to the next generation coming through.
- You make money in the downturn; after I sold First Tuesday, I thought about going to sit on a beach for 8 seconds, and instead decided to set up Ariadne Capital. I'm so glad I did in December 2000, read our 15 year history at www.ariadnecapital.com , as by being in the market in 2001, 2002 and 2003 when no one else was backing European tech entrepreneurs, we caught big fish like Espotting, Kashya, Skype etc in those years. It's not a coincidence that some of the biggest exits of the past 12 months were founded in 2009 at the point of maximum pessimism for most of the world.
- That Capital Follows Ideas – always has, always will – not the other way around
- That Society Works Best When It's Organised Around the Entrepreneur as all of society benefits from the abnormal lives that they are willing to live to bring the future to the present and to create wealth – for themselves and society.
Good luck to you all in 2015, and my wish for us all in EntrepreneurCountry is that as we continue to issue the global invitation to others to join us that we can together build this new country which drives prosperity for all who are hard-working, brave and net-contributors.
Merry Christmas from all of us here at the House of Ariadne! Have an awesome New Year! And remember....David wins!
Other articles on EC by Julie