Late-Cycle Investment Theory: Foundations for the Coming Decade | Nicolas Colin

0:00Demetri Kofinas:What's up, everybody? My name is Demetri Kofinas, and you're listening to Hidden Forces, a podcast that inspires investors, entrepreneurs, and everyday citizens to challenge consensus narratives and learn how to think critically about the systems of power shaping our world. My guest in this episode of Hidden Forces is Nicolas Collin, a former French official and the co-founder of a European startup accelerator whose work sits at the intersection of technology, markets, geopolitics, and global finance. Nicolas and I spend the first hour breaking down his late cycle investment theory and the framework behind it.

0:39Demetri Kofinas:We draw on Carlota Perez's model of technological revolutions and techno-economic paradigms, explore the role of speculative manias and market concentration, and examine why Nicolas thinks AI is less a brand new technological revolution than an intensification of the computing and network paradigm that has been unfolding for the last 50 years. We also compare the current moment to the 1970s as a historical analog, and discuss why he believes financial systems are often the last piece to be rebuilt after a major paradigm shift. In the second hour, we explore what this late cycle thesis means for investors, the public, and the geostrategic competition between the United States and China.

1:22Demetri Kofinas:We talk about how tokenization and programmable money could reshape the plumbing of the global financial system, and how today's Trump shock might be the opening move in a broader financial reset. We also discuss what financial fragmentation between two competing spheres, one led by China and one led by the US, may look like in practice. Why programmable grid infrastructure and a new scale of electrification may be the primary candidates for the next technological revolution. And what all of this means for public debt servicing, inflation, financial repression, and wealth redistribution, as proximity services replace the factory floor as the central battleground over which a new social contract will be formed.

2:04Demetri Kofinas:If you want access to all of this conversation, go to hiddenforces.io slash subscribe and join our premium feed, which you can listen to on your mobile device using your favorite podcast app, just like you're listening to this episode right now. If you want to join in on the conversation and become a member of the Hidden Forces Genius community, which includes Q &A calls with guests, discounted access to third-party research and analysis, and in-person events like our intimate dinners and weekend retreats, you can also do that on our subscriber page. And if you still have questions, feel free to send an email to info at hiddenforces.io and I or someone from our team will get right back to you.

2:48Demetri Kofinas:Lastly, because this conversation deals with investing, nothing we say on this podcast can or should be viewed as financial advice. All opinions expressed by me and my guests are solely our own opinions and should not be relied upon as the basis for financial decisions. And with that, please enjoy this immensely interesting and valuable conversation with my guest, Nicolas Collam.

3:17Demetri Kofinas:Nicolas Collin, welcome to Hidden Forces. Thank you. Very glad to be here. It's exciting to have you on, Nicolas. So, you were introduced to me by a mutual acquaintance who initially sent me a paper you published in the summer of 2025 titled Late Cycle Investment Theory, the Foundation for the Coming Decade. And that sent me down a rabbit hole of reading some of your additional work, which I quickly realized has so much in common with the subjects that we've covered, the perspectives that we've taken. You cite many of the guests that have been on this podcast. So I'm very excited to talk to you today.

3:53Demetri Kofinas:Before we do, just real quick, give me your background. I don't know much about you. What's your story? How did you get into writing about investment questions and related matters? So I was born in France, grew up in France. Studied engineering in the 1990s, never really practiced engineering because when I graduated from my engineering school, it was right after the dot-com crash. And so engineering became unattractive suddenly. So I switched to a different career, studied political science, public administration, joined the French government where I worked for a few years as a senior civil servant at the treasury and then I left because I got interested in tech again after a 10-year hiatus and had a brief entrepreneurial experience to try to found a startup in France faked miserably like many startup founders and then I co-founded a pan-European startup accelerator which grew from zero in 2013 to three offices in Europe, London, Paris, Berlin, a portfolio of about 100 companies.

5:06And we stopped investing in 2021. So today I'm managing that portfolio, which still exists and is still growing. I consult with investment firms, mostly on research, investment theses, markets, etc. And I write several newsletters actually on mostly macro and geopolitics.

5:27Demetri Kofinas:Fantastic. So you actually have a few different substacks. You have three from what I've seen, but your main one is driftsignals.com. Is that right? Yes, that's the main one. That's my personal newsletter where I cover the economy and how I see things. The second most important, I would say, is the one I'm writing with my colleague, Marie Flamand, who used to work for Circle, is a specialist in stable coins and everything crypto. And we have launched this newsletter called Currency of Power about the emergence of a new monetary order. So it looks like you started publishing almost nine years ago, to the day, actually, which is roughly as long as I've been hosting this podcast.

6:09Demetri Kofinas:What motivated you to begin writing for public consumption all the way back in 2017? Well, I guess I've always been into writing. Most of my work, including in government, was writing reports, memos, et cetera. Many, many good things have happened to me because of my writing, people reading my stuff and reaching out. And that's a good networking tool, I find. And it's also a good way to clarify your own ideas. It's like when you try and understand a situation or a topic, the best way to really go deep is to try and write about it or teach it if you are lucky enough to have students, which I don't have at the moment, but I used to teach quite a lot.

6:53So I launched my newsletter in 2017. The idea was to, well, I was interested in this idea of, you know, writing regularly for a growing audience. that is people who receive a newsletter in their mailbox like every week or every month or whatever. But I had been writing forever. I wrote several books before that in French and again, reports and stuff like that. So writing is my natural way of working and building a network, et cetera.

7:26Demetri Kofinas:Have you always been doing this or have you gone through phases where you write more and then go through phases where maybe you spend more time researching and thinking without actually putting pen to paper? Yeah, so you're right to ask that question because I find that writing and researching are to a certain extent mutually exclusive. Like when you write, you don't have that much time to read or have interactions with people. But no, mostly I prefer writing. Again, it's the best way for me to absorb knowledge and to get interested in new things. There were periods where I wrote quite a lot, like during COVID, like we were all stuck at home with the lockdown, etc.

8:05So I increased the pace of, you know, sending editions of my newsletter at the time. And then I stopped for a few years between 21 and 23 because I was busy with restructuring my firm and taking care of the portfolio, etc. And I resume mostly essentially earlier this year because I found myself with more time on my hands and realized like so many things are changing over the course of three years, like launch of Chad GPT in 2022, Russia's invasion of Ukraine, also 2022, re-election of Trump 2024. the world is so different from when it was like three years ago. I had to catch up and the best way to catch up, like understanding the world for me is to write.

8:51Demetri Kofinas:Who are you writing to? Who is your ideal reader? Well, my theory is that you mostly write for yourself, but it turns out when you write for yourself, you also address an audience that is people that are interested in what you think or see the world the same way as you and so I've grown this audience of people that are at the confluence of you know finance strategy geopolitics policy and what they like about my writing and which tends to provide a guideline for me in terms of deciding what to write about is precisely that mixing all those topics together and have a broad perspective on things like it's not narrow.

9:37I'm not like an equity analyst. I'm not a policy researcher. I can do all of those things together, which by the way, is a very French tradition. We have this tradition of being a generalist. A connaissance thinker. Yes.

9:52Demetri Kofinas:I'm working on my French accent since we turned on the microphones earlier. So what were the things that you were interested in writing about in 2017 and how have your interests evolved or your focus become better defined in the last decade? Yeah, so 2017 was the peak of our business as a startup accelerator. And we were right in the middle of a very interesting decade, which I would sum up as the decade of software eating the world to echo Marc-Andreessen's words. And so the challenges we were confronted as an investor backing early stage tech startups in Europe was that everyone knew what was coming, how the economy needed to be transformed, how new entrants were toppling incumbents and disrupting entire markets.

10:40But there was a lot of resistance because it's Europe. People are not like in all in front of tech companies. The markets are small. It's difficult to build businesses across borders in Europe. There are many different lines of fragmentation, like regulations, language, culture, many things. So it's still difficult, but it was difficult to grow tech companies in Europe. And so a lot of what I did as the policy guy in the startup world was advocating for startups and making the case that we should help startups instead of resisting them. And so most of my time was spent addressing audiences in the corporate world, in the policymaking world, the media, think tanks, everyone that was not either a founder or a venture capitalist.

11:30Those were addressed by colleagues of mine at the firm, but I was in charge. I was kind of like the foreign minister for the startup world. And so when I started writing this newsletter, it was really about that. why startups are important. What can we do in Europe to help them grow instead of curbing their growth and making sure we weren't missing that opportunity of embracing a new paradigm and growing our economy with it?

12:02Demetri Kofinas:So the way that I view the world, Nicola, is more often than not informed by a series of unanswered questions that continue need to resurface over and over again in my head. One of those questions that's relevant to today's discussion is, how do I protect myself, my friends, my family from a changing economic and political order so that we don't become the collateral damage of government policies resulting from some inexorable set of structural economic and social trends? Another would be, how do I help arm the public with the information needed to steer public policy in a direction that will prove more beneficial for everyone.

12:43Demetri Kofinas:And that could help us avert large scale catastrophes of our own making that will imperil all of us. What would you say are the corresponding questions that you find yourself asking over and over again that motivate your concerns and the things that you've been writing about in recent years? So I would say my main concern, I didn't use those words back in the days, but is economic development. I think as a European, I've been enjoying living, growing up and living in a country that was in a continent that is a very advanced economy. We have very high standards of living. We have safety. We have strong institutions.

13:28We have democracy, everything you can wish for. And for some reasons, which we can discuss, for about 20 years, it stopped working. And so the main question I've been interested in working with startups or working from a policy perspective has been what explains the slowdown in European development? What explains the acceleration, the spectacular acceleration in Chinese development? What explains the difficulties the US is going through at the moment? What are the promises if you look at the Middle East or Africa or South America or Southeast Asia? Where will those different countries or regions be 20 years from now?

14:18And what can we do to reverse the trends if we can spot them? that's really what I'm interested in and I think the business world has a critical contribution to make to you know winning or losing that game but also the policy making world and that's where my world view of you know embracing all of that finance policy business all together makes real sense so I'm kind of obsessed with that and I'm I'm in Europe I've been living in different European countries, so I know the differences, but I'm kind of vested. I have vested interests in Europe, catching up and not slowing too much in the current transition.

15:03Demetri Kofinas:So if I'm hearing you right, your focus is much more on how to strengthen our societies and make our economies work in the public interest, and less so in terms of how can you understand the current environment in order to increase the market capitalization of your portfolio? Well, I think both are correlated. I'm a big believer in, you would call them hidden forces, but key trends or long-term trends. Yeah, you can certainly do both. I'm not suggesting you can't. I mean, again, these are the two biggest concerns for me as well. I mean, the ones that those two, both how do I respond to this on a personal level?

15:41Demetri Kofinas:And then also what can I do to help inform people so that we can shift the vector at the earliest stage possible in order to have the biggest long-term effect, and also so that we don't end up way down the road having missed key opportunities where our economies are now stagnating for the long-term and there's little we can do to reverse the trend. I think that's the concern that we're facing today. So as I said, what brought us together initially was a paper that you published over the summer, the paper titled Late Cycle Investment Theory, in which you argued that today's markets show signs that we've entered the maturity phase of the computing and networks revolution.

16:16Demetri Kofinas:And the paper is your attempt to help people navigate this phase and help them spot opportunities that consensus thinking might be overlooking. Let's start first with a summation of the argument that you make in that paper, as well as what your inspiration for this late cycle investments thesis has been, and when you began to see confirming evidence of it in the world. Yeah. So as I mentioned earlier, when I resumed writing earlier this year, one of the big things that had changed in the meantime, when my writing was on hold, was the rise of artificial intelligence, the launch of ChatGPT and suddenly every tech company trying to become an AI company, etc.

17:01et cetera. The way I see what I call the age of computing and networks, that's our age, is that every year we add more of those, like more computing, more networks, and we combine them in ever more efficient ways. And sometimes it has a dramatic effect, like a transformative effect on certain industries or society as a whole, et cetera. And so when I see new things happening in tech, what I see usually is the continuity. It's like, oh, it's more computing and more networks, which makes my view very different from that of many venture capitalists who tend to see change in terms of waves. Like you have like open source and then cloud computing and then mobile and then social and then crypto and metaverse and now AI.

18:03And so what they tend to see is, oh, AI, it's a new wave. So the world is completely different and we need to restart from zero in terms of understanding what's going on. So what I see when I see AI is just the continuity of all of that. And what I see is something else that I think is very important is the fact that AI has been going so fast in terms of market adoption that it should tell you if it's going so fast, it's because people are understanding right away. And it's not radical innovation for that precise reason. If everyone understands it in an instant, it's not radical. It's more like the continuity, the deepening, the acceleration, of things that were already happening.

18:56And you could see that because when ChatGPT launched, everyone was impressed. Like you could test it and realize, oh, wow, that's absolutely amazing. Like it can write an entire article based on a prompt. But then three months later, maybe, there were already like similar models launched by all the big tech companies. Like Meta had its own thing. Google had its own thing. Everyone was catching up so fast, like, okay, that's not radical innovation. That's more like, okay, someone opened the door and everyone's rushing in to try and take positions. And so what I was looking for was a way to articulate this idea of everything that we're seeing, even though it looks like it's radically new, is in fact the continuity of everything that has been going on for decades, like more computing, more networks.

19:53And because I like to think in systems, that's another very French trait, I try to build this castle of a theory that puts all of that into perspective. And that explains, OK, we're in the same cycle. We're at the late stage of this cycle. What are the consequences for you as an investor, a founder, a financier, a corporate executive or a policymaker? And that's the birth of this concept of late cycle investment theory.

20:27Demetri Kofinas:So let's take a step back now and try to build a solid foundation for listeners who are following along. Because Carlota Perez's framework on technological revolutions and techno-economic paradigms has been a very important inspiration for your thinking. Walk me through her framework. And to the extent that differs from how you view things, please elaborate. but give us more detail into how the mental model that you're using to understand the innovation cycle. And I know also from having read some of your additional work that Bill Janeway has also been an inspiration. His book, Doing Capitalism in the Innovation Economy, was also a really influential book for me when I read it as a younger man, and he's been on the podcast as well.

21:07Demetri Kofinas:And in that sense, feel free to pepper in other inspiration. Just help us really build out, flesh out the mental model that you use to understand the world and the innovation cycle? Sure. So historically, I think I discovered Carlota through Bill's book. I don't really remember how I discovered Bill's book, Doing Capitalism, Innovation, Economy. I think it was in a TechCrunch article about Bill giving a talk at Andreessen Horowitz back in 2013 or something like that. I met him through Robert Johnson at INET. So people that don't know the Institute for New Economic Thinking. He's a founding member, yeah.

21:44Demetri Kofinas:Right. They did some really important work post-2008. I assume that they were founded after 2008. I don't remember. But that was the period where critical thinkers really had an opportunity to say, okay, here's what didn't work. Let's do the hard work of figuring out why it didn't work and how do we need to evolve our mental models in order to address the challenges that we're facing going forward? Yes. So Bill's book was very compelling for that reason, in that he was explaining the critical role of venture capital in funding innovation and in turn the critical role of innovation in shooting economic growth.

22:19And so I don't remember exactly, I probably sent him an email and by coincidence he was in Paris like a few days after that. So I probably was based in London at the time, but I was in Paris often. So we had lunch and became friends and he kind of became my mentor. Like he's the one I turn to when I want advice or ideas or discuss ideas related to venture capital and the economy in general. But in his book, he mentions Carlotta's work. And I connected with Carlotta, I think a bit later after watching an old video of hers where she was interviewed by Fred Wilson, a prominent venture capitalist, Union Square Ventures at WebExpo, an O 'Reilly conference in 2011.

23:06So you can find that video on YouTube. It's a great interview because they really go in depth into work, how model or framework helps understand the economy and innovation and technology in general. And so when I watched that video, I was blown away. This is so clear and so systemic. And I like the very systematic manner in which she explained the different stages of a technological revolution, etc. And so I bought the book, Technological Revolutions and Financial Capital, read it, was blown away. And I think I contacted her by introduction of Bill and then started to see her from time to time because she lives in Sussex.

23:50and so I would take the train in London and meet her for lunch or dinner and we would discuss a bit and exchange ideas etc so I would say I really absorbed her work and read a lot of what she wrote in addition to the book itself and it really became my mental model to explain what's going on because at the time I was doing a lot of work on institutions and you know social policy etc The push I was trying to make was how to convince European policymakers that tech can be good and is not necessarily bad. And one of my arguments is that tech contributes to creating value. But then on top of that, we need to build institutions so that that value is distributed more equally and contributes to shared prosperity at the society level.

24:47and the best way to explain that you know is to go back in history and explain how they did it the previous time so when automobiles were invented it triggered the previous technological revolution which led to what carlodach calls the age of oil automobiles and mass production and at first it was a mess like you could even say that it was so hard on society it created such inequalities and such tension especially in the relationship between you know employers and workers that it fueled the rise of fascism during both world wars and it's only after world war ii that western governments decided to do something about it okay we've seen how far it goes if we we let technology do its thing to society without safeguards and institutions to make sure that the value it creates is redistributed to everyone.

25:50So they basically set up the wealth estate, social insurance regimes, et cetera. And it opened that golden age of 30 years of uninterrupted growth across the western world and so when i started explaining that to people in europe like especially policymakers like look this is what they did the previous time this is what we need to do this time like the age of computing and networks will be an age of shared prosperity if we put in place the right institutions and at the time i saw the power of you know going back into the past and revisiting history and using historical precedents, that's how you really convince people that technology is important and should be supported as opposed to co-op.

26:39Demetri Kofinas:I have some clarifying questions. First of all, how many historical cycles does Carlotta draw upon? So each of these cycles has four stages or four waves. We have the recent one, the computing and networking revolution. We have the industrial revolution. Are those the two main ones? Is there a previous one that she looks at as well? She has five technological revolutions or great surges of development in her model. The first is the industrial revolution. It's basically the invention of labor productivity. You combine humans and machines and it creates that thing that didn't exist before, that is productivity.

27:20Then you have the second revolution, which is the age of steam and railways. So you deploy railways and it completely changes the geography of our economy. Then you have the revolution of electricity, steel, and heavy engineering. So that's the end of the 19th century. Then the revolution of oil, automobiles, and mass production. That's essentially the history of the 20th century. And then you have computing and networks. And the birth date of that is the invention of the microprocessor in 1971 at Intel.

27:57Demetri Kofinas:And there's overlap between these two phases. Yeah, yes. Because when you're in the maturity phase of the finishing revolution of the current revolution or great surge, you can already spot the signs of the inception of the next one. Obviously, if you're a very good investor, you can spot the signs really well. There are many false starts. Like at the time, if you ask people like, what's the next technological revolution? A lot of people will say it's AI. Others will have other ideas. I think it's a bit early, but in 10 years or 20 years, we'll revisit this period and we'll see the signs of whatever happens.