I celebrated 18 Thanksgivings in the USA, then moved to Europe for 19 years and now I am back in the US celebrating Thanksgiving again. Thanksgiving is a US holiday, that as opposed to Halloween, can’t be exported. Because Thanksgiving is mainly about being American. But I have another take on Thanksgiving. Thanksgiving is the American holiday that is most about being with your family, which in a career driven society in which family is many times second priority to professional objectives, turns out to be quite uncommon. Thanksgiving is the weekend that makes up for Americans mostly not seeing their family the rest of the year. I don’t have stats on this, but most likely, Europeans, Latin Americans and Asians, see their families much more than Americans do. Therefore they don’t need a holiday whose main purpose is to see their family. Now because Americans see their families much less, my social media is full of stories, some actually very funny, about how awkward it is to see your family. Which makes sense. When you rarely see them, it does become awkward. I see posts that give tips on how to “put up” with loved ones. How to go through Thanksgiving without conflict, how to emerge from the holiday unhurt. But as funny as some of these stories are (and Americans make the best movies about awkward families), there is a real sadness to them. As a husband and father of 6, as someone who adores parenting, I would hope that when my family members see me, they don’t feel like the Thanksgiving stories on my newsfeed. I love to see my older kids , I love to be with Nina Varsavsky and the little ones. To me, family is the most important daily celebration. I sincerely hope there will never be anything awkward about us being together. I like Thanksgiving, but I like Thanksgiving every day.
Recently quite a few people have been using the term WWIII to speak about the new escalation of global terrorism. This is wrong. If the comparison relates the number of victims, we are not anywhere near WWIII. 80 million people died in WWII and the world had 2.5bn people then, if WWIII means something of similar magnitude, 240 million people would have to die in this war today, I think the chances of something like that are incredibly small. The world is safer than it’s ever been. The probability of any of us dying in an armed conflict or victims of terrorism is insignificant. Yes, there are and there will be global terrorists, before it was Al Qaeda, now ISIS, and yes they maybe will kill around 1000 people per year in the USA and EU during the next decade. I am not denying terrorism, nor saying that it will go away. But terrorist attack like Paris are not WWIII. There’s no way that 3% of the world’s population will be killed by a few people with Kalashnikovs and explosives. Now in the Middle East, there have been many more victims than in EU/USA from terrorism and regional wars. Over 1 million Muslims have died, mostly killed by other Muslims, in the Iran-Iraq war, the Lebanese civil war, the Algerian civil war, the Syrian civil war, the Afghanistan and Iraq wars, the Libyan civil war and the confrontations involving Muslims vs Christians in Africa. And this wars will probably go on, but these are local conflicts, not WWIII. It would be surprising to know that even in the Israeli Palestinian conflict over the last 30 less than 15,000 people have died while every day in the world around 150,000 people die of natural causes. So while we will have regional wars and conflicts, and we will have terrorism, the vast majority of humanity will wake up and go to sleep day after day without anything violent ever happening to them. And the proportion of violent deaths to total deaths keep shrinking decade after decade.
As I work on financing Prelude Fertility, the venture that will change the way people start families, a new company that lies in between a private equity investment and a VC investment, I am finding out that there is a real animosity between these two types of firms. For me they are just investors, but they see each other as rivals. And I understand why. PE firms would like for the world to stay the same. VCs invest in change. PE firms bet on the status quo. VCs invest in blowing it up. When PE firms buy a chain of restaurants, they want people to keep buying food the same way, they buy a chain of drug stores, they want people to buy drugs the same way, they buy a car part maker they want people to buy and drive cars the same way. PE firms just want a growing, predictable economy, but what they don’t want is what entrepreneurs and VCs are doing to them: changing the world as they know it. For every PE model there is a VC disruptor. For PE firms who own restaurants, there is Seamless, GrubHub and others delivering food without the real estate or companies like Soylent changing what we eat. For PE firms investing in the car industry there is now Uber/Lyft and driverless coming to disrupt car transportation. For PE firms who invest in hotels there is AirBnB, for PE firms who invest in media, there is Google and Facebook destroying their traditional revenue sources, for PE firms who invest in the banking industry there is now Square, Lending Club, Bitcoin VC backed ventures and others coming to desintermediate them. For PE firms investing in commercial real estate there is WeWork and all the other coworking start ups making a much more efficient use of office space and Amazon, Ebay and all e commerce destroying retail. And in this war the VC firms, like Sequoia, Andreessen Horowitz, Accel Partners, Index Ventures, Atomico are more likely to earn better returns in the end, because the world is changing, and is changing fast. In terms of investing it is becoming clear to me that the future belongs to VC firms who are large enough to do growth rounds or PE firms who are willing to invest in transformations.
The challenge with architecture is that it’s like fashion but frozen in time. Imagine you were walking around NYC and you saw people dressed exactly as they used to in the 20s, 60s, 70s, 80s. You would think you are time traveling. But architecture really is as if somebody had dressed up, say in the 80s, and just wore the same outfit forever. And as it happens with fashion, some outfits are very dated, think Cindy Lauper or its architectural equivalent in NYC, the Trump Tower, or the outfits of Audrey Hepburn, and their architectural equivalent, the Seagram’s building, one forever ugly, the other forever beautiful. Some buildings survive the test of time, most don’t. Maybe towers should be designed, permits submitted and then approved…20 years later.
I was a big fan of Android, but since I got the iPhone 6 plus with the latest iOS updates, I switched to Apple. Many have done the same. In the US, Android has been losing market share and is now tied with Apple. The reason for this market share loss is that Google is spreading itself too thin. On Android they are losing their grip. There are too many forks such as the Xiaomi, Amazon, Samsung versions that are not controlled by Google. This translates to stock value. If you see how stock analysts value Google and Apple stocks, around 90% of the value of Apple ($650bn) is due to iOS while around 8% of the value of Google ($450bn) is due to Android. And this is the case even though outside the US Android has 82% market share. But while Android has 81% smartphone market share Apple with less than 14% has over 80% of the global smartphone market profits. This happens because if you are a $650bn company focused on one product you are likely to beat a $450bn multiproduct company. And then there is the other vulnerability of Google which is ads. Search related ads are around 80% of the value of Google. Ads are to Google what iOS is to Apple. But in ads Google is under attack from another company: Facebook. Facebook is a $260bn ads only company that does not allow Google to crawl it. For Google everything that goes on at Facebook, Instagram, Whatsapp is a black hole. But Facebook has found another way to make ads work that is not search based but instead it is contextual to whatever you are doing on Facebook. And these ads are extremely well targeted. Facebook allows advertisers to use key demographics such as geography, gender, age, income, occupation, something that Google cannot do. Moreover Facebook is way ahead of Google in mobile advertising and the fight against ad blockers. A lot of Facebook revenues comes from promoting apps and other activities that are not tackled by Google. So Google is in a bind. On its core product it has a fast growing rival, Facebook, and on its popular yet not so money making product, Android it is going against a single minded $650bn company with the biggest pile of cash in the world. And on top of that Google is doing many other projects, loon, driverless cars, life sciences, building fiber optic networks, building wifi routers, building thermostats and smoke alarms, and the whole Alphabet. My worry about Google is that a company that tries to do everything, will lose out to highly focused rivals like Apple and Facebook. Here’s a list of some of the Google products and you will see that it’s huge even if it does not include hardware and many acquisitions. What Google should do is stop being a Jack of all trades and focus on at most two areas: the first one is search+ads+Android+chrome+maps+gmail+photos which are all one ad supported eco system and the driverless cars which has the biggest potential to revolutionize transportation. All the other projects Google should spin off, close or sell.
My friends have a hard time to believe it now, but when the Argentine military murdered David Varsavsky (yes little David honors him) we fled the country. We fled to the USA, who thanks to the intervention of Senator Patrick Moynahan, gave us political asylum. So I was a refugee. We were refugees. And I am forever thankful to the USA for saving us. I am saying this now because when I see people in Germany being so kind and accepting of those fleeing Islamic State and Bashar Al Assad and those in the USA so reluctant to take them, it saddens me. It is contradictory to see the nation that was so welcoming to us, ignoring their reality. That their lives are now in danger unarguably has something to do with the poorly handled US intervention in the region. Refugees deserve our help. Refugees are not economic migrants. They are not escaping poverty. They are running for their lives. As we were. And what’s most important, as we saw in the Balkans and Lebanon, most refugees return home, horrible fighting grounds soon become tourist destinations. As Croatia or Lebanon now are.
I am in favor of EU receiving war refugees from Syria, Iraq and Afghanistan. These people are victims of horrible wars and war crimes, some partly perpetrated by EU and USA. But with a small caveat. What I do want is that these refugees realize what religious extremism in the form of Islamic State and the Taliban and others has done to their native countries and embrace the secular culture of Europe. A Europe in which religion is a choice of some, separate from education, where atheists/agnostics make the majority of the population, where freedom of expression and gender equality are the norm and where sexual orientation is free for everyone to express. We can’t have refugees in Europe who are in favor of denying education to girls or would want to kill homosexuals, or want to kill a woman because she had sex before getting married, or because she had sex with another woman, or a man with a man, or kill somebody because she/he joked about religion, nor any type of honor killing, nor any type of domestic violence, we have to make a clear explanation of our values and laws, anyone who lives in Europe should be explained what is and is not legal over here. Moreover I hope that those who are antisemitic, leave their anti semitic views behind. I speak from experience, I was in Syria in 2004 and was detained on suspicion of being Jewish and had to lie my way out of detention denying I was Jewish something I was very ashamed to do, but had no choice. I think we could make refugees understand this in writing what Europe stands for. We should have them sign a commitment to the democratic values of Europe as part of their acceptance procedure. Europe is freedom, if you love freedom, you are welcome!
Science is used in high schools around the world to rank students. This is especially true in Europe and Asia. But most students score poorly in math, physics, chemistry, biology and as a result see their career choices erode. In my view, science should be taught pass or fail with many quizzes along the way to see if students learned, but not to define future paths. I believe if science was taught this way, if science was not used to curve students, many more people, as adults would like science. Scientists are surprised at how many adults believe in unproven theories such as previous lives, homeopathy, ghosts, vaccines causing autism, mobile phones causing cancer, genetically modified food killing us. For politicians funding science is less and less popular. Government funding for theoretical physics for example, is at an all time low. But if you think about it the general public mistrust of science makes sense. Why would people believe in science if science treated them like idiots. If science was used to block their opportunities. If science didn’t believe in them.
How can Germans be so generous vis a vis taking refugees in Europe? Germany will probably take around a million refugees, especially Syrians. Syrians, people who mostly speak no German, and whose culture is so different. People who have never lived in a democracy and who are absolutely destitute and desperate. Taking one million refugees is like taking one million unemployed people who are not educated in your country and whose skills most likely do not match those of your labor market. So what could make Germans want to take these refugees? Because from what I have seen it is not that anyone is putting tremendous pressure on them to take them. It is actually a popular measure in Germany to accept Syrian refugees. This while British and others are chasing them away and other than the Swedes, nobody else wants them. So here’s my theory.
I am not German but my qualifications are having a German family, many German friends and being on two German company boards, Axel Springer and Arago.
The Holocaust is a horrible trauma for the current generation of German leaders. Just like the current leadership of Israel is horrified by the fact that Jews did not violently fight their way out of the Holocaust and as a result are unreasonably violent as soon as they are attacked by Hamas or Hezbollah, the German leadership is also inspired by the Holocaust but in the exact opposite way. Germans react with extraordinary kindness. How could our parents and grandparents massively kill innocent people, mostly Jews, by the millions, they wonder. It is not only Jews, the victims, who are traumatized by the Holocaust, Germans are as well! For Germans today it is impossible to understand how their ancestors could have perpetrated the Holocaust. Given this situation, I think that in the German psyche, when they read about IS and their behavior they immediately relate IS to the Nazi party. And this is not far fetched, IS is so brutal, dictatorial, that it is like a Nazi version of Islam. So paradoxically for them, and forgetting how many Syrians feel about the Jews, (I know, I went to Syria and was arrested on suspicion of being Jewish and had to lie my way out of detention), for many in Germany, the Syrians are the “new Jews”. And they have more sympathy for their plight than other European nations. This time they will save them from their Holocaust. The current generation of Germans grew up sympathizing with victims, so with Syrian people they are given an opportunity to stop the massive killing of innocents and they are taking it. And while this decision will undoubtedly cause problems, because Germans are true romantics (I know I am married to one), they are going for this without thinking much about the pros and cons. They are driven by emotions more than by reason. Sort of how they took East Germany and gave them a 1 to 1 conversion, a move that depressed the German economy for a decade, and yet nobody regretted. Now paradoxically, the East Germans, who have benefited from West German generosity themselves, are the ones who are rejecting the refugees. It’s the “I am in, now close the door syndrome.” But some East Germans aside, I like to see a powerful nation that is sensitive to the sorrows of others. And while from a policy point of view it’s an invitation to tension, I still admire Germany for taking those refugees. And what’s more, I think that in the end, kindness will work. Germany has very low unemployment and an incredibly low birth rate. Education is free in Germany and young people can learn. I am optimistic that Germany will both help and in the end prosper as a result of their decision.
Spain’s economy goes from existential threat to existential threat. It all started in the 90s with the country betting its future on the construction sector and then running out of credit by 2008. This crisis left Spain with a quarter of its population trained to do something for which there was no more demand. The crisis was aggravated by the socialist party being in denial which led to runaway deficits of over 10% of GDP. This accelerated indebtedness was combined with poor quality bank balance sheets, the result of holding so many devalued real estate assets. Fortunately Spain avoided bankruptcy and default thanks to the EU bailout and the economy started to recover. But the economic disaster, the great Spanish recession, the 50% youth unemployment opened the door to two populist movements. One is Podemos, the Syriza style Spanish fantasy that says that we can spend much more, renegotiate our debt, and somehow get away with default. This movement was extremely successful and recently won the cities of Madrid and Barcelona. And together with this populism another flavor of blame others for your shortcoming movement emerged in force in Catalonia, the independence movement rose blaming all the economic ills of the region on Spain. This is absurd because Catalonia has been managed for generations by politicians who are as corrupt and as incompetent as the rest of Spain, went bankrupt borrowing more than any other region, and was actually saved by Spain. So when cornered, the Catalan leadership played the independence card, always a powerful way to draw attention away from you.
Spain first almost defaulted because of runaway deficits, then flirted again with financial disaster electing pro default Podemos, and now the newly gained still fragile stability is threatened by pro independence candidates in Catalonia. These leaders age that they will use the threat of not paying the 20% of debt corresponding to Catalonia as a means to gain independence.
What is the solution? A well designed independence referendum that clearly explains the consequences of independence and allows Catalans to decide on their future. The results would likely be the same as in the UK but if they aren’t nothing much will happen to Spain if Catalans become independent with their own regional debt plus their share of the national debt. But Rajoy’s hard line and the Catalans blame it all on Spain strategies are made for each other, and may result in chaos and indeed another possible near default.