N01 - Volkswagen, Tesla and Twitter

A short intro into this newsletter Nr 1

My team and I often brief customers on current developments in tech, mostly with European focus. Also, we keep track of relevant developments for ourselves and discuss them. So, the idea came up, why not to share some parts of this digestion in form of a public Iceventure newsletter? This is an experiment, so format and frequency are undefined and subject to experiments. Maybe it will turn paid, maybe not. Let’s try. Content in this edition:

Volkswagen vs. Tesla - in the end it is cars and how established industries end
Twitter, Elon Musk and thoughts about Europe 
Graph - 
Readings

Observations

Volkswagen vs. Tesla

Volkswagen just published its Q1/2022 earnings announcement.

Due to financial positions (hedges for material) earnings are about € 8,5 billion, despite a 30% down of delivered cares due to the war and supply chain issues like chip shortages. Electric cars delivered are up to 99.100, a plus of 65% to last year and this segment shows a good order book.
This is about 1/3 of Teslas unit number in Q4/2021, but earnings are triple (leave aside the detail that a major share came from hedging (€3,5bn) , but hey Tesla sells carbon credits).
More interesting, when you read all the reasons (hedging for e mobilty) and operational issues (supply chain, chip shortage), this is a good reminder that in the end Tesla is a car company in the car industry (well-defined industrial context). Hedging raw materials, chip shortage etc., all similar problems Tesla also faces, are normally not on the list of tech investors aka highly valued software companies.
On the higher macro level, this reminds me of a client’s brief how disruption happens in mature industries. Key lesson, it might be different than you think as economics of capital concentration work out. To pick up one of the interesting thoughts of Hugh Hendry during the Euro crisis (we think he was onto something, and we expanded it with regard to inflation), the car industry is the proxy of a social model deeply entrenched in the social system and also the financial one. Maybe it disrupts when needs change or when less ordinary people have the means to buy a car (see the uprise of vespa sharing models). Beware, revenue in disrupted industries can also go fully away. Stay tuned as this part of the story will be for sure covered in more depth in the future.

Elon Musk, Twitter and a European news company

Speaking about Tesla, Elon Musk, the CEO is just about to enter another adventure – Twitter. In a nutshell, he offered about $ 43bn (in cash, though). While German/European carmakers CEOs might cheer for this distraction of Musk, Twitters board is not as happy discussing a poison pill.
Why Twitter? Musk says it is about freedom of speech. This is an interesting argument, and its debate might have some percussion in European tech.
Well not as one might think (for sure someone will come up and claim that we now need a European social network, while reality is that the major infrastructure web layer inventions are US/international) – do you remember the search engine Quaero
The arguments by some users about improving Twitter (aka why Elon might fail)  or any other social network are worth a read. Seems nothing changed since the first time when forums came up, which meant for me explaining to CEOs and owners what running a forum might really mean in terms of overhead and involvement vs. just a great marketing move come back into my mind.
On the other side, the debate is timely. Not only in the US also in Europe many people on both sides of the political spectrum are unhappy with Twitter, Facebook, or YouTube about content decisions. So many things did go wrong during Covid.

Three thoughts related to the debate:
The ongoing debate about free speech and platforms – now around Twitter  -  and their role in general, justified/unjustified censorship, freedom of speech, influencing, hate for clicks will cause sooner or later a reaction by politicians. EU politicians have been thinking since years how to deal with the reality of a natural, tech base monopolies and this could be a dent into it. But this is tech … and regulation is against innovation … it is not Facebook and they banned Trump (exactly for this). This brings up another lesson learned in time. From time to time, issues become political issues simply because they are chosen to be.
Second, a lot of the argumentation around the Twitter offer is about how much better web 3.0 with crypto and decentralization will be in regard to this. But none of the content issues will fade away with the same tweets in a decentralized app.
Third, this could be the time for a new media tech company in Europe.
I wrote many are unhappy with the platforms, but they are even more unhappy with mainstream media. So far one can observe single journalist or groups to split and open their own media presence which means website and content distributed on YouTube, FB, Twitter, but also Odysee. Yes, media is not easy and there have been a lot of failed approaches to pay beyond ads. The question 

Chart

 Potential Ukrain Energy reserve

 

Readings:

1 - Chris Dixon's old piece on platforms – a nice piece of all what goes wrong with platforms during their lifetime (aka startups becoming corporates) or simply the description of economic realities web 3 needs to beat.
2 - 100K IT experts are leaving Russia – what does this mean in terms of tech entrepreneurship and talents coming to the market
3 - Why building a “compound startup” might be the next, great, non-obvious SaaS play – a nice read and a topic I debated some time ago with Northzone. Read it in combination with this piece about
4- Zapier, it makes even more sense
5 - a German food scandal caused by a company not controlled since 2 years; timely flashlight on some of Iceventures’s thoughts around traceability. Also blockchain needs ground control

A. Eggerz is entrepreneur and managing director of Iceventure.

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