Comment by germainb | Hacker News Reader

Comment by germainb | Hacker News Reader

Parent Full thread

France does have regulation, but so does the US - industrial nations are generally over-regulated today. France also does not have a legal system that is as costly as the US, so litigation risk is less important.

Taxes don't really play on this --> many startups don't make a profit ;-) . Social Security might, but a talented engineer in France still costs less overall than the same one in the Bay Area and employee loyalty is higher.

One issue is uncertainty over government intervention, there is a bad history of the French government weighing-in on M&A activity. But the real issue is raising funds - while Seed rounds are generally covered by, among other things, government loans/subsidies, the ecosystem is lacking funds financing Series A and B. Here the government tries to provide incentives but pension funds are not the right level of financing for these rounds...the VC ecosystem needs to grow and that is a challenge because of a risk-averse culture.

If I were a VC in the US, I would see France as an opportunity.

> France does have regulation, but so does the US

It isn't about the presence of some regulation. It is about the burdens and costs associated with it.

French regulations are very cumbersome and costly, especially when it comes to labour market. For example, every company with 50 or more employees needs to establish a works council (Comité d’Entreprise). This costs money and time. It is also one of many examples of regulation that brings about the culture of hostility between employees and employers.

> For example, every company with 50 or more employees needs to establish a works council (Comité d’Entreprise). This costs money and time.

Actually, not that much. You have one year to install it, and it mainly consists of an election you have to organize. If you can't organize that kind of stuff once every two year or so, I don't understand how you can face other business challenges.

> It is also one of many examples of regulation that brings about the culture of hostility between employees and employers.

In most of the companies, it only consists of giving money to employees and managers picked charities and giving perks like theaters tickets.

All of this is really manageable for startups with more than 50 employees, and most of the time, it is already done by them to attract employees.

It is more burdenful than costly though - compared to the costs of hiring and keeping employees in the US, I think the costs are competitive.

It actually brings them closer together. I don't see how it fosters hostility. Care to elaborate on that point?

How does this bring about a culture of hostility? Industrial relations in the USA is far more violent than in the EU.

I remember one organizer saying that a good matured dispute in the USA was one with no gunfire and that they had to carry for self protection.

This is essentially equivalent to what every startup does in the US with perks and team building. I don't see how this creates more trouble for a French company.

"industrial nations are generally over-regulated today"

That very much depends on your political ideology.

no, it doesn't. i'm not saying we should do away with the essence of regulation...i'm saying we have too much regulation. Think NASA vs Space X. If Switzerland Labor laws hold in a 100 page book, why do France's take volumes ? Surely we can trim them and still maintain their principles. If you keep all the same principles (essential protection of people, equality, freedom of expression, redistribution...) and start from scratch...how many pages of law could you save and achieve the same result?

"Taxes don't really play on this --> many startups don't make a profit ;-) "

I don't know how you can say taxes don't play into this. I started my company 5 years ago and if I had to pay 50%+ in tax back then, I would have failed. Instead, I used that money to grow the company.

"If I were a VC in the US, I would see France as an opportunity."

Why? More of your money will go toward taxes and the regulations will restrict your ability to grow your money. VC want a return on investment (as do most investors).

Firing someone in a company over 10 people is a court case. There have been many cases where the company loses the court case and a person that should have been fired just sits and does nothing and is forced, by law, to be paid by the company.

This has become such a problem that many companies in France don't want to hire students..because it's too much of a risk.

France has had 10%+ unemployment for over a decade. You would think they would have changed something by now.

I'm not saying taxes don't play, I'm saying startups don't pay taxes because they make losses...so the tax rate doesn't affect startups. 50% tax ? Corporate tax rate in USA = 36% in France = 33.33% VC question = lower valuations in France; when investment markets become inflated (US) the key to making a return is buying low (France). Return is also about opportunity cost. Firing someone : I fired 7 people, some paper work, no court cases. Yes there are/can be court cases, but they mostly end in some small (1 month salary) arbitrage. If you're not a jerk about it, things usually work out. Also, remember French legal system is MUCH less costly than the US's. "You would think they would have changed something by now." -- This I can only agree with but I think it also applies to the US.

Reply on news.ycombinator.com