Recessions & Revolutions: France’s Balancing Act.

Jun 28, 2015
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uber_protests-13

Photo: Uber protests earlier this year in Madrid.

Once again I find myself face-to-face with a digital culture clash. It’s nearly impossible to imagine that Rude Baguette readers haven’t been following as images, videos, news reports, and responses concerning the taxi protest against Uber have reached a new peak. 18 months ago, I wrote about how taxi responses to Uber reached “guerrilla” proportions  – the bar has not only been raised, but the roof of what anyone thought was reasonable to expect (Uber included) has been shattered. Cinderblocks thrown off of bridges onto black cars, cars attacked with babies on board, celebrities calling out on Twitter for police intervention, comparing Paris to Baghdad.

Many have delved into the problems, potential solutions, and economic factors at play around the taxi problem – in France, and around the world. My stance is pretty solid: Taxi drivers knowingly purchased a license on a second market (licenses are given out for free in limited supply by the government, most of them going to taxi giants like G7 in France), and, just like any other asset class, these investments were bad ones. If I had a taxi license in France today, I’d sell ASAP.

But I don’t want to talk about the economics of taxi licenses, or whether Uber employees should receive employee benefits (they should, in some form or another) – because, let’s face it: no matter which side you’re on, it’s little guy against little guy. Many Uber drivers are former taxi drivers, and both sides have their fiscal fraud, satisfaction issues, and regulatory hurdles.

What I want to talk about is how France is sending mixed messages abroad.

Few were aware that, at the same time as Paris was making headlines worldwide for its anti-Uber offensive – some video shots recalled all too well the 2009 Paris suburb riots, only they were happening inside of Paris – a two-day conference  was going on in New York City to promote French technology abroad. Speakers and attendees were a mix of Americans and French, with speakers including Sunrise founders Pierre Valade & Jeremy Le Van (sold to Microsoft for $100 Million earlier this year), Lerer Hippeau Ventures’ managing partner Eric Hippeau, Parrot CEO Henri Seydoux & more. The event was sponsored by and took place at AXA’s New York City office, but was also heavily supported by the French government’s LaFrenchTech label, which, in addition to being a brand behind which cities, companies & accelerators run by French entrepreneurs (inside & outside of France) unite themselves, also contains grant money which provides hundreds of thousands of euros to events like LFTC to promote French Tech outside of France.

The FrenchTech label has coordinated some amazing initiatives to promote the French tech government abroad since its creation 18 months ago – they create a coordinated presence at major events like CES, SXSW & Mobile World Congress with attendance by Ministers, they’ve organized trips for US VCs to come to France and learn about the ecosystem (and have lunch with the President to discuss their grievances), they have created initiatives like the French Tech Ticket (which I’m an ambassador of), which gives money to foreign companies who set up an office in Paris – coupled with the Paris Landing Pack, it makes setting up shop in Paris as easy as in London, which makes it less surprising that companies like Facebook, Rakuten & Samsung have plans to open R&D centers in Paris.

Outside of la French Tech, BPIFrance, the public investment bank funded by the government, has really stepped up its activity, publishing reports in English about the investment ecosystem in France, organizing large events (or trying to) to get people excited about the startups in France. They’ve even hired Romain Sermon to get BPIFrance into Silicon Valley deals where French entrepreneurs are raising billions.

Even the Enternext, run by the European stock exchange Euronext, is making increased efforts to attract the fast-growing Paris startups to their stock exchange (Paris startups, like most, favor NASDAQ and NYSE). All this makes for a large appetite for innovation in France, the exact message that the government says it’s trying to send.

France has taken a bad beating when it comes to its reputation as a business destination – labor, taxes, regulation – and it has worked hard to shift the focus off of what people think of when they hear “French Business” to what they think of when they hear “French Engineer.”

It’s hard not to juxtapose the message France has been trying to send – “France is tech-friendly. Come set up shop!” – with the message sent by actions happening almost simultaneously: sneaking amendments into bills that will force Google to display links to its competitors, making it illegal for Amazon to provide free shipping for books in order to protect the sacrosanct bookstore, and now this: François Hollande calls for a European-wide action against Uber…. well, technically UberPop, but he doesn’t seem to know the difference. And not knowing the difference is exactly the problem.
France is rolling out the red carpet for business, but any potential carpet walkers look at the companies who already have a foot in the door and all they see is a guillotine looking to take its pound (.45 kilograms) of flesh. France is ripe with juxtapositions, contrasts between the understanding that the key to economic growth is digital, global, deregulation – but, at the same time, as soon as they see a potential to lose what they are arguably already losing, they pull up the drawbridge.
France has got one foot in the door to becoming an engaged, global economy – they’ve got globally dominant companies in the sectors of Industry (Airbus, Thales, Alstom), Finance (BNP Paribas), Luxury & Fashion (LVMH) & Digital (Gemalto, Ingenico, Criteo, Parrot), all of whom are passively spreading the good word that French businesses function well (and they do).

That other foot, though – that pesky other foot – is stuck in a pre-Internet era of government-controlled economy, where the government makes decisions about how the market functions.

Should there be competition in the Taxi Market? Ask the government!

Should there be 2,3,4, or 5 Internet & Telephony Service Providers in France? Ask the government!

Should Dailymotion sell to an American, a Chinese or a French company? Ask the government!

The guillotine is placed squarely in between those two doors, in the middle-zone where economies stagnate because they don’t invest enough into the infrastructure to support growth of their own businesses in order to help them export their goods, and they don’t open the doors enough to let foreign companies employ talent locally.

If France continue to wobble back and forth, it won’t affect French startups: entrepreneurs, like parents, will do whatever it takes to see their children grow up healthy. If that means moving to a different country, then so be it. They shouldn’t be ashamed, and they certainly shouldn’t be made to feel guilty about not returning to France once they have been successful abroad (an initiative called #ReviensLéon was launched this year with this exact goal).

French entrepreneurs have only one duty: to make sure that those who have invested into their venture – investors, founders, employees & clients alike – are adequately compensated for their investment. Perhaps if the French government started thinking about their country more as a venture and less as an empire, then they would start treating their citizens, companies (local & foreign), entrepreneurs & municipalities in a way that would compensate them for the investments in the country, instead of punishing them.