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Paul Murphy founded a gaming company. But now, as a VC, he tries to avoid investing in the industry.
"The idea of being a specialist is kind of bullshit," he says. As far as he's concerned, people with deep expertise in an industry often don't know what's going to happen to it — and that outlook has shaped his work as a general partner at London-based VC firm Northzone.
Perhaps as a result, Murphy has contrarian views on … plenty of stuff, actually. At Northzone, he's making bets on messaging and micromobility, both of which he thinks have been misunderstood by many in tech. In a wide-ranging conversation with Protocol, Murphy explained what he sees happening in those sectors, how the Trump administration's immigration policy stands to benefit Europe, and why he's interested in companies building platforms on top of platforms.
This interview has been edited for clarity and length.
Given your background as founder of a gaming company, do you focus on gaming at Northzone?
No. Well — I've made a couple of gaming investments. My personal view on investing is that the idea of being a specialist is kind of bullshit. If you become a specialist in something, you're implying that you know so much about the past, current and future of a sector that you're going to predict what's going to happen, and that you're going to know all the nuances of what's wrong and broken.
I think that logic breaks down at some point, because you realize that, in my view, the whole [reason] that founders exist and create things that disrupt massive industries is because they're thinking about all the things that the industry is not thinking about. So the idea that you could take someone from industry and they would then know what's missing, I think is flawed. That's why the most disruptive car brand was started by someone that's totally outside of the auto industry; there's countless examples of this.
So for that very reason, when I joined I told the team, "I don't want to touch gaming." I know too much, I know all the problems. But then of course I made one gaming investment, initially, and then the second one was platforms, it's a bit different. But I'm actually trying not to do gaming stuff.
What I do like is, I think, from gaming you learn about how to create really good user funnels. You learn how to make awesome experiences in an app or a web product, you learn about marketing, you learn about monetization. I think that gaming companies … probably have the best average functional leaders for marketing, data science, engineering, because they have to deal with this really large, massive, fickle but monetizable audience, unlike any other category. So I'm really attracted to people from the gaming industry, and I'm looking for things that they're going to do after they leave the game studio.
If you're not using sector-specific knowledge to make investments, what are you thinking about and looking for?
There's five GPs at Northzone: Out of the five, I'm probably the one partner that's most comfortable going earliest. Some of my partners are really good at later-stage investing, but I like getting to know founders before they even launch their product. And that's, I think, because I have more of a product and tech background. So I spend the majority of my first and second conversations with founders talking about product.
And as we talk about product, I get to see how good of a product leader they are. They might be exceptional at sales and engineering or marketing, but if they're not a really good product leader or visionary, I tend to check out and lose interest. That's a common thread across every company, and I get to see that and focus on that. And that might lead me more down the path of looking at their traction if they've got a set of users that are already using the product; it might lead me down a path of looking at the underlying engineering tech, if it's really novel IP or something like that. But I always start with product.
Are there any spaces you have your eye on at the moment?
I do generally have an interest in how people spend their discretionary time. Coming from gaming, we were always going after their Netflix time or their Facebook time or other game time. That's the theme that I'm spending a lot of energy on.
We've obviously done a lot of music in the past, and so music is an area that we know well. We wouldn't want to invest in anything that was competitive with [Northzone portfolio company] Spotify, because they just won — there's no point doing that. I think there's a lot of really great businesses that can be built either on the back of that platform or in support of the platform. What you see right now is a lot of people are kind of hacking communities on top of Instagram and TikTok and others, with music at its core, and I am sort of thinking what kinds of app experiences can be out there that tap into some of what's happening on these horizontal platforms in a more focused way.
Are there things that you think people aren't paying enough attention to at the moment?
I think people missed the point of the micromobility evolution. I think there was so much focus on scooters, and so much focus on the specific companies, they lost sight of the fact that cities are fundamentally broken. You can't move. The traffic in London is worse than it was before COVID, because no one's on a bus. It's like this infrastructure is just melting before our eyes. And so I think that's a sector that has so much more to it than scooters. Tier is one of our investments — I'm pretty close to it, but I think there's a lot more, and people never looked beneath the surface of what was actually happening with those companies. So that's a little bit underappreciated.
The second thing is in messaging. I think everyone takes it for granted that WhatsApp has won; I absolutely don't think WhatsApp has won. I think that experience is pretty abysmal for consumers and for businesses, and yet we're doing so much business work on it. There was a period of time where Telegram seemed like that was going to overtake it, and then they got a massive fine. So I think there has to be something in the messaging space that comes. I'm looking for that.
Could that be Discord?
It could be. I have heard of lots of business teams outside of gaming [that] are using Discord now for company chat. I never thought of that use case. It doesn't strike me as an intuitive [interface]. I think mobile first is the intuitive interface for this, but I don't know. I think the problem with any of the big companies — Slack also has a pretty good mobile app, Microsoft has a pretty good one with Teams — but everyone's sort of got an agenda. That's why I like Telegram, because I think Telegram was really just trying to solve core messaging, making it secure, scalable, extendable. So if it's not them, I think there's still a gap.
Going back to micromobility — do you think more consolidation will happen?
Any consolidation that happens now is out of desperation. At the end of the day what you're buying are assets, which are the scooters. You're buying employees, but in most cases you already have all the employees you need. And then you're maybe buying a brand, but that's confusing because you don't want to have two brands in the market. You're buying the ability to take out one of your competitors, but unless you're taking out a really big competitor, it's not helping you all that much.
Tier has looked at a bunch of companies and just sort of felt like at least currently, there's no rationale to buy anyone. There will be more consolidation, I just don't think it's going to be firms coming from a position of strength.
I saw your tweets about the new immigration policy. From London, do you see American tech dominance starting to fade in the years ahead?
I think it's already happened. Silicon Valley lost its monopoly on the startup ecosystem probably 10 years ago. Obviously it's still core to our industry, and it will always be important. But I had conversations as a founder with investors, when I was starting Dots, about moving the company to Silicon Valley to build a credible sort of startup. We were in New York. The idea that someone would suggest that today would just be appalling.
I don't care if you're in Porto or Lisbon or Malaga — you can build a company anywhere. The last two investments I've made have been distributed teams, they're not even headquartered at any one location.
Unfortunately the stupidity of the Trump administration is just going to lead to an acceleration of the number of great entrepreneurs out of the United States. And it's going to be better for every other market in the world. I think Europe will benefit, London will benefit. Asia, I think, was already there. So I think there's no need to move to Silicon Valley if you were in China or India.