Bonjour, Entrepreneurs – Only you can prevent French-Bashing

Bonjour, Entrepreneurs – Only you can prevent French-Bashing
French-Startup

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Over the weekend, I read Liz Alderman’s “Au Revoir, Entrepreneurs” in the International New York Times, and my reaction was quite typical,

“Ugh, another French-bashing article. Confirmation bias, reiterated (untrue) stereotypes & affirmation of the audience’s pre-existing opinion.”

But as I sat coming through the inversely proportionate well-written, poorly researched piece (statistics on French exodus show that France is 5th in the European Union for expatriated citizens, while the United Kingdom, from which the author writes, is number 1, I couldn’t help but feel responsible. There are several easy-to-recite facts about the French tech ecosystem that could’ve entirely rebutted this argument:

  1. Funding for startups in France is on the rise since 2011 (nearly €1 Billion last year), and anyone who can’t get Kima Ventures to invest €150K in them through Kima15 really needs to reconsider their vision.
  2. Starting a company in France may be difficult, but there’s no reason why this should stop you from building a company in France. Open a Delaware Corp or a London-based company if paperwork if too tough (I hate paperwork and manage to run a company in France). I doubt investors want to hear “I’m based in the UK because filling in forms is hard
  3. There is no hard data to suggest any significant increase in entrepreneurs (or citizens in general) leaving France – only the confirmation bias that comes with the fact that those who leave tend to voice their opinions (in English) louder than those who stay.
  4. Most people who are building companies abroad aren’t abroad for their company, they’re abroad because they want to be, and they happen to want to build companies.

But these points are moot – the article has already been published, and it will likely do no more than to serve as ammunition for both foreign and local French entrepreneurs in the ongoing French-bashing debate. But here in France, entrepreneurs can’t speed up tax reform or employment law reform – however, the one thing they can do, they aren’t. And that’s educating the international tech community on easy-to-remember points:

  1. Remember your ABC’s: “Appsfire, Blablacar, Criteo, Dailymotion, dEEzer”, say it 10 times fast, and say it once every time someone asks “how can you build a global startup in France!?”
  2. France outpaces Germany in Investment: London may be #1 in Venture Capital (France is #2 in Europe)
  3. Apple’s original European Headquarters were in Paris: That’s because Steve Jobs loved French engineers & French designers.

The French tech community needs to own up to the fact that articles like this are a direct result of their not championing France everywhere they go.

Have you ever heard an Irish entrepreneur rag on the fact that Dublin has no direct flight to SFO? No.

Have you ever heard a German entrepreneur complain that the only thing that gets funded are knock-offs and mediocre twists on existing eCommerce ideas? No.

French entrepreneurs need to study up on their ecosystem, and take these facts wherever they go.

  • Someone throws a “but what about the high taxes?” at you – you respond with “I subsidize all of my R&D with Government grants (up to €100M/year), and my company has a JEI status which wipes out employment taxes on engineers.
  • Someone throws a “What about strict employment laws?” at you, and you better be ready with “All our employees start with a legal 6-month trial period which allows me to fire them at a moment’s notice, and most of France’s strict employment laws don’t kick in until you have 50 employees: that’s how many WhatsApp had when it was acquired for $19 BIllion.

Everyone in France knows that entrepreneurs who are building great businesses don’t have time to complain about their woes and hang out in Google-sponsored coworking spaces, but the Eric Carrell’s, Fred Mazzella’s, Daniel Marhely’s & Martin Mignot’s of the world go on stage enough times to talk about their own feats, that they can afford to slip in one of these tidbits.

The last lesson for this article is: A promotion a day keeps the bashing away.

22 Responses

  1. ABC

    Great article, thanks Liam.

  2. capital2blog

    good article Liam, although I suspect the truth of the matter lies somewhere in between. It IS difficult to scale up a business in France, however far from impossible. The real problem France has (and you touch on it in the article) is that on a macro level, their PR is abysmal. The image of France as a place to do business is vastly worse than the reality, but there needs to be more to be done to counter this at the state level.

    • Liam Boogar

      Sorry Sam, but I suspect you’ve missed the point. I’m not trying to point out a balanced view – Rude Baguette on a whole does that just fine – what I’m suggesting is that France’s PR is due to the fact that it’s own entrepreneurs are too quick to point out the “somewhere in between”, not realizing that this desire is creating and circulating a disingenuous image of France.

      Now try it with me: “France is awesome for startups – it’s a 70 million person beta-testing market protected by a language Barrier.”

      See how easy it is?

    • capital2blog

      I see – so the vociferous minority of “disgruntled” entrepreneurs are in fact perpetuating the myth. I think you’re right by the way, but hot air merchants like Montebourg who are mired in a heavy-industry type mindset don’t help at the state level either.

  3. Alain Mevellec

    Good read here. You absolutely right on incorporation. We just incorporated Sellsy in the US and I’m amazed by the complexity. When our advisors started talking about our nexus in NYC for our Delaware corp, I understood that this wouldn’t be easy at all. Same for employer labour taxes. Impossible to get a clear figure, this all depends on this or that…

    Maybe it’s me, but at first look, incorporating in the US seems, at the very minimum, very puzzling.

  4. La Française

    LOL. Give it up Liam!

    You can mention only 5 startup successes for a nation of ~70 million.
    Bureaucracy is still very ridiculous and taxes high.
    Straightforward businesses that have no R&D therefore get no relief and more dinged on taxes.
    You say France outpaces Germany in Investment – most of which go to non-startups, some are essentially transfer payments moved between subsidiaries/JV partners of global conglomerates.
    Most people who are building companies abroad actually ARE abroad for their company. Building is hard and if there were good enough incentives at home, who wouldn’t stay to take advantage, rather than struggling as a foreigner elsewhere?
    “anyone who can’t get Kima Ventures to invest €150K … really needs to reconsider their vision”. -That is not necessarily the best deal and even they cannot fund every good idea that comes their way. Plus its great to be where there are more choices of capital.

    Everybody knows you have to be fairly masochistic to start a business en France. So, embrace it if you want, but don’t try to paint a rosy picture that doesn’t exist.

  5. fellowshipofone

    How many tech startups are growing, in France, to a European or international level?

    I am French-born, in Sweden for a few years. Here in Stockholm, still very active this year (I won’t mention the Skypes, and others) there is Spotify, Klarna, iZettle, Wrapp, TicTail, TrueCaller and MyNewDesk; to name a few.

    The French “ABC” suggests that the number of successful startups in France have a ratio per capita 9-10x inferior to Sweden. Is there data showing this is not the case?

    I think startups are hard, and in France it is a bit harder for very little or no additional benefits, but I would love to be convinced otherwise 🙂

  6. David Oudiette

    I like the enthusiasm, and you do make some good points, but I can’t help but feel those rebuttals are a little weak. 3 (or 5) successful startups do not make an ecosystem. But the ecosystem is there, for sure. Growing slowly.

    P.S. Why does the link to HN lead to the article submission page?

  7. Jeremie Berrebi (@jberrebi)

    Your forgot to talk about Sparrow sold to Google, Leetchi/MangoPay, Pret d’Union, iAdvize, Lengow, Vente Privée, Iliad/Free, Meetic, Allocine, LaRucheQuiDitOui, Pixowl, FreshPlanet …All french.
    You can build awesome company in France if you are confident that you can build an awesome company in France!

    I’m living in Israel since 10 years and I haven’t left France because of entrepreneurship opportunities but for personal reasons. In Israel, you have A LOT of failures, lawyers are dealbreakers, managing relationship with banks is complicated…but one thing it’s sure, everyone is positive and is calling the country a Startup Nation…
    The “Startup Nation” book was telling awesome stories about companies launched in Israel…The main story was about BetterPlace….now liquidated after burning $800M of investments! It remains nothing of this company beside a few stickers on some laptops but Israel is still a Startup Nation like France can be a Startup Nation.

    One of the most famous french internet entrepreneurs left the country a few years ago to be more successful in the Silicon Valley with his startup..He raised a lot of money and failed. I failed too in Israel with my last company Zlio…

    I really think any country can become a Startup Nation… you just need a real big vision and a lot of optimism and understand that failures is part of the game.

    • Liam Boogar

      Exactly Jeremie. Agree that their are too many success stories in France to name. I’m sure I could do an entire Alphabet soup of successes – just wanted to give people quick 140 irrefutable bragging points.

  8. Emmanuel Straschnov

    That’s a great piece! I agree with most of it (though i’m based in NYC). There are some great things about starting a tech business in France: engineering talent, government incentive, rather low cost of living, social security, etc.

    However, when we’re talking about consumer tech, there is one thing that France doesn’t have. In fact, I would argue only the US and China have this one: the market. The issue with starting a business in Europe is that the immediate market is rather small, mainly because of geography and language difference. You mention Dailymotion as a great success story. It is, but Youtube is bigger. Imagine a company named Facebook in France, launched in 2004 at HEC, Sciences-Po, Polytechnique and ENS (Harvard-like places). I am not sure such a company would be as big as the real Facebook…

    Starting a business in the US comes with a lot of (but different) pain: cost of living, visa issues, health insurance, etc. Starting a business in the US is actually probably as hard as it is in France, but the upside is much bigger, as we’re talking about the US market, and by extension the world.

    The good news is that there is a great opportunity in more tech-driven businesses or e-commerce businesses, by definition more local. France can creaate amazing companies, like Criteo, because it’s based on technology more than a fast, solid user acquisition. It might not be a bad thing. Let’s keep promoting these!

  9. silopolis

    Thanks, helps me breathe after reading NYT for monday breakfast !

  10. Michael Whitley

    Excellent ariticle, Liam! To your list, we could add:

    – A rich network of intra-preneurs who have created $bn startups within many German and American multinationals.

    – Low corporate taxes without using tax havens.

  11. Jean

    I am such an entrepreneur, and I plan to leave by the end of the year. I am in the IT, I developed a product sold worldwide through the web. Not too bad for a single guy that worked in pajama 10 years ago and took all the risk to achieve its project.

    Nowadays I just feel literally persecuted, I underline this word **persecuted** because it is a strong word and it is the right one. For 100 benefit of my company, I get at best 30. And for that I need expensive fiscal lawyers that told me what to do. There is just a whole stack of taxes, IS 33%; CSG-CRDS 15.5%, RSI, 30%, IR 15%. And did you now that in France there are 8000 citizens paying more than 100% taxes? [1]

    I mentioned tax, did I mention the pain with administration? It is just thousands of papers asked per year. Administrations is made of a dozen of sub-administrations (URSSAF, RSI, Pole Emploin FAFIEC…) that each is asking tons of documents.

    Moreover it is well known that fiscal control are not made to see if you are honest or not. They are just made to stealth as much money as possible. Honest entrepreneurs just cannot sleep quietly, sooner or later, if they make money, a controller will come and will pretend to take it all ton scare you, to finally take a smaller portion.

    I should have employed for a long time but never did it. I always delegated what I needed to delegate abroad. If an employee gets paid 100, the company must spend 200, 100 for the salary, 100 for the multi-taxes around employment! Did I mention the multi-paper to fill for each employee? Did I mention that the Code du travail weights 4.000 pages and that, as an employers, you are supposed to know it all? Did I mention that employing is just like roulette russe, if the employee wants to put you to the Prud-Homme, the law will be with him?

    The unemployment rate is just bursting nowadays [2], and despite the liers in the government, nothing will stop this fatal disease, it is just hopeless for France for the next Hollande years. Because socialist elector hate their bosses, they just hate entrepreneurs, because entrepreneurs work hard to make money, and being rich is a crime for most of the French. Hollande said it explicitly: he doesn’t like the rich [3]

    I love France, I feel very sad for the new generation that find this country devastated by the socialism and the hundreds of wrong decisions taken every day. But I won’t fight anymore against this regime. My wife will give birth to my son this year, and a few months later we will leave, by the end of 2014, I don’t want my kid to grew up in this socialism hell.

    [1] http://www.lefigaro.fr/flash-eco/2013/05/18/97002-20130518FILWWW00314-8000-foyers-ont-paye-100-d-impots.php

    [2] http://www.lefigaro.fr/emploi/2014/03/26/09005-20140326ARTFIG00283-le-chomage-a-explose-en-fevrier-et-bat-un-nouveau-record.php

    [3] https://www.youtube.com/watch?v=Ui17eyLcJfk

  12. Jean

    I am such an entrepreneur, and I plan to leave by the end of the year. I am in the IT, I developed a product sold worldwide through the web. Not too bad for a single guy that worked in pajama 10 years ago and took all the risk to achieve its project.

    Nowadays I just feel literally persecuted, I underline this word **persecuted** because it is a strong word and it is the right one. For 100 benefit of my company, I get at best 30. And for that I need expensive fiscal lawyers that told me what to do. There is just a whole stack of taxes, IS 33%; CSG-CRDS 15.5%, RSI, 30%, IR 15%. And did you now that in France there are 8000 citizens paying more than 100% taxes? [1]

    I mentioned tax, did I mention the pain with administration? It is just thousands of papers asked per year. Administrations is made of a dozen of sub-administrations (URSSAF, RSI, Pole Emploin FAFIEC…) that each is asking tons of documents.

    Moreover it is well known that fiscal control are not made to see if you are honest or not. They are just made to stealth as much money as possible. Honest entrepreneurs just cannot sleep quietly, sooner or later, if they make money, a controller will come and will pretend to take it all ton scare you, to finally take a smaller portion.

    I should have employed for a long time but never did it. I always delegated what I needed to delegate abroad. If an employee gets paid 100, the company must spend 200, 100 for the salary, 100 for the multi-taxes around employment! Did I mention the multi-paper to fill for each employee? Did I mention that the Code du travail weights 4.000 pages and that, as an employers, you are supposed to know it all? Did I mention that employing is just like roulette russe, if the employee wants to put you to the Prud-Homme, the law will be with him?

    The unemployment rate is just bursting nowadays [2], and despite the liers in the government, nothing will stop this fatal disease, it is just hopeless for France for the next Hollande years. Because socialist elector hate their bosses, they just hate entrepreneurs, because entrepreneurs work hard to make money, and being rich is a crime for most of the French. Hollande said it explicitly: he doesn’t like the rich [3]

    I love France, I feel very sad for the new generation that find this country devastated by the socialism and the hundreds of wrong decisions taken every day. But I won’t fight anymore against this regime. My wife will give birth to my son this year, and a few months later we will leave, by the end of 2014, I don’t want my kid to grew up in this socialism hell.

  13. cvincey
    • Jean

      You wrote:

      >#4. “Pigeons” shitting on everything
      >I fulminate against those entrepreneurs screaming to death about a tax project they didn’t >even read. Their stupid squeak has sustainably hurt France’s image abroad. They gave to >foreign observers all the clichés they were craving for.

      I don’t belong to the the pigeon movement but my anger to this government is at least as high. How can you treat them as stupid? Their anger come from facts, not from ideology.

      There is a single law voted fall of 2012 that nobody talked about. Entrepreneur with an SARL just cannot benefit from dividende anymore. With a few 100K EUR of benefits a year you could expect get a 66%/70% overall taxes. With this law this jump higher than 80%. As everybody I transformed my SARL into a SAS with the help expensive lawyers. Is this really how entrepreneurs should be treated?? Spending their precious time playing a stupid cat and mouse game?? instead of spending their time on their projects creating employment and wealth??

      http://www.leblogpatrimoine.com/impot/gerant-majoritaire-et-dividendes-les-cotisations-sociales-rsi-sont-maintenant-dues.html

      Since this disgusting law my main project is to leave and as I explained below we are a few months away from. They wanted to take all my benefits, they won’t get anything else anymore from me!

    • cvincey

      Thanks Jean. I agree that there’s lot to say about the tax policy in France for entrepreneurs, but I just feel that the way we fought this tax project was just idiotic, and harmed once again the reputation of France for a long time.

    • Jean

      Yep the reputation of France concerning business was harmed, one more time, but don’t mess up the cause and the effect.

      The cause is that this government (and the ones before) don’t understand anything when it comes to entrepreneurship. Hence they believe that they can take even more taxes from us (70% to 80% to ???). This is the cause. Don’t forget that 8.000 persons pay more than 100% taxes in France. http://www.lefigaro.fr/flash-eco/2013/05/18/97002-20130518FILWWW00314-8000-foyers-ont-paye-100-d-impots.php

      The effect is that entrepreneur complains, and we complain so loudly, that they hear us abroad.

      Personally my trust and love in my country, France, reached its limit with the law voted (I mentioned above). Not only I’ll leave by the end of the year with my business and my wife and kid, but I discourage anybody to start a business in France. And I can say I already discouraged more than one person (I am a bit influent in my pro sphere, IT software dev). I feel persecuted and this is my way to get a revenge. France will have to get very very down before we can observe a change in mentality and this is gonna be long and painful.

      Sad :/

  14. neverbehave

    I think the real issue is a tax and ideology one, as nowadays the main stream moral is encouraging people to get extremely wealthy by all means. And this is never French value, but more Anglo Saxon or Asian value. France is losing its power for sure, whether or how to defend its core value “egalite” is a tough task.

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