What is it about the French? | Perspectives | CNET News.com

I don't know how Cooper missed the obvious reason why France, and many other European countries, don't feature more startups, job growth, and innovation in technology : tax policy and labor laws.

As a venture investor, the first thing you consider when looking at a startup based in France is how you are going to move it out of France.

Link: What is it about the French? | Perspectives | CNET News.com.

Why is it that only a handful of French companies are listed on the Nasdaq compared with more than 100 for Israel, a country with roughly one-tenth the population? The blunt truth is that France, a country with a $1.7 trillion economy, is still better known for its fromage than its technology.

I don't mean to pick on the French. Truth be told, I'm an unabashed Francophile. I love their food, adore their language and admire their culture. But when it comes to high-tech innovation, there's no escaping the fact that France does not punch its weight.

Comments

[Jeff Clavier]

With the recent introduction of tax breaks for startups producing innovation, and the additional flexibility around the 35 hour week, you can actually develop a startup up to 50 employees without all the problems that larger organizations have to deal with.

There are still issues surrounding the tax code for stock options, but there is hope to get them addressed eventually.

[Marc]

Tell me, why is Microsoft opening a joint lab in France with the local leading public software research center?
1- Teach them how to do the job?
2- Relocate some MS geeks fed up with Redmond's rain?
3- Preempt some cool technology at the source?

The true story about France is that there are 1000s of highly educated, very cheap, highly productive R&D people there, but not a single entrepreneur in sight. The local tax system & administrative burden imposed upon everybody simply drove away entrepreneurs and killed, not innovation, but the lever to create value on it.

And the recent California tour from the so-called "Invest in France Agency" is a miserable testimony of this desperate situation: instead of stimulating entrepreneurship from outside France (for example by giving foreign entrepreneurs a tax break on the future profit they may make by selling their French company), the French have created another public sector monster with 200 civil servants flying 1st class around the world to explain why you should come there to help them pay the bill.

[jeff]

SAP also has a research facility in Sophia Antipolis, for many of the reasons you listed.

It would appear that there is a real disconnect between the French people and the political class, a disconnect which came to a flash point last Sunday with the EU Constitution vote. This disconnect is not isolated to France either, Shroeder's SDP got a beating from German voters in their core state of Rhine-Westphalis, and the Dutch vote on the EU constitution just yesterday was a spectacular display of discontent.

France's problem is that the political elite is unwilling to fully accept that half a century of growing welfare state, declining population, and mismanaged economy have failed. The French working class is also to blame, unwilling to accept that the manufacturing economy is declining in favor of cheaper labor around the globe. The U.S. economy went through this period in the 1970's with the decline of automotive, steel, textile, and many other manufacturing sectors, and our government allowed the market to correct itself, painfully at times, in a shift to a services and technology economy, which is why the U.S. has continued to grow, real personal income has increased, and unemployment has settled around the 5% on average over the last 2 decades, versus double that for most European countries. Regardless of the causes, the solution is not to try to extend the French socialist model to the entire EU. The solution, ideologically, is also not to continue the model nanny state where the citizenry avoids self actualization as a means of personal growth and prosperity, the backbone of entrepreneurialism. In the words of the great Ronald Reagan, the role of government in business is to get out of the way of business.

France is fortunate to have a significant population of highly trained technology workers, who also happen to be highly productive when compared against other economies, but until the French government takes it's boot off the neck of the economy the French technology industry story will continue to one of unrealized potential.