Startup Nation? Entrepreneurs Still Toil in Macron's France
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What’s missing in France right now is an ecosystem of fast-growing mid-stage startups - series B and above. I think that’s caused by a combination of:
1) mindset (thinking globally from say one is easier said than done when nobody around you has done it before)
2) lack of late-stage funding. The seed money scene is not as bad as it used to be, and is in a virtuous cycle of early exits / successful entrepreneurs who want to give back. That is looking very good. However, the VCs still suck, with a few exceptions. They’re mostlt bankers, they’re risk-averse, ownership-greedy, and intrusive. Good luck growing a world-class business with them on your board and in your cap table.
3) The EU market is just weak conpared to US and China. So every european startup has to start outside their confort zone and attack foreign markets from day one... Which creates friction compared to growing at home for the first few years.
Here are factors that in my opinion are NOT to blame: taxes (comparable to California), salaries (yes they’re lower than in SV; that’s a good thing for startups), bureaucratic red tape (that’s what lawyers and accountabts are for, it’s not rocket science), lack of work ethic (in my experience French employees work very hard and are very loyal - although they do complain a lot), brain drain (sure French people leave the country. Plenty stay, or come back. It’s nothing like what third world countries have to deal with).
What I’m seeing more and more is French founders moving to SV, raising money there and keeping their engineers in France. Other international founders are doing the same. I think it’s the best available move at the moment.
Here's an article from a French engineer that is currently on the front page of HN: https://web.archive.org/web/20180925150228/https://florentcr...
tldr; he moved to SF because salaries are much, much higher than in France, even considering the social benefits that you get in France.
Other threads on HN have French engineers saying that they love living in France while working remotely for American companies.
I've lived in Paris, Berlin, NYC and California. I'll never understand how European founders can keep saying that 40k euro salaries for engineers is a benefit while they watch so many great engineers leave to American companies.
The whole point of low salaries, for smart companies, is to be the one increasing them! Obviously that makes it a temporary advantage, as salaries start to increase... But all great advantages are temporary.
The people you are talking to, who like low salaries because they want to enjoy lower costs in perpetuity... that’s just mediocre thinking by mediocre companies.
(I blame the switch from scheme to Python)
You forgot to mention that you can‘t fire them at will either... It‘s such laws and excessive taxation that makes many european countries unattractive for startups.
It's possible to fire people without justification and the company will be brought to court. There is a new law from Macron that caps the damages the employee can get to pretty much nothing when he only has a few years of tenure or less. You could provision for a few months of salary.
(I’ve hired and run large engineering offices in France and in the US).
This. I have tasted the fruit and I'm never going back. The social benefits feel largely like gimmicks compared to the standard of living + social recognition you get working as an engineer in the US or even Canada.
In general I just think it is a lot easier in, at least some, European countries to set yourself up for a good life. Day to day, year to year, to not endure a long commute or stressful work environment. Having time to spend with your kids while they are young, your parents before they get too old and your friends so you don't lose touch. Not having to worry about the future, managing your kids lives, the financial losses of getting sick or your career.
Once you start wanting to do things that aren't universal or the default in any country, and especially with other people in your life, you can end up paying a large premium to do so.
That's also common in the United States or at least in the Upper Midwest. Just here in Minnesota there are around 124,000 seasonal properties and the average household income for the owners of these properties is $58,000 which is not rich in the United States. It's also a similar story in Wisconsin next door and other Upper Midwest states like Michigan.
[1]: https://minnesota.cbslocal.com/2017/05/29/good-question-cabi...
Every SF salary range I see is significantly below what I made last year. I'm not even taking cost of living into consideration here. Just absolute terms. I interviewed at Amazon a few years ago when they were doing some game design stuff and didn't make the cut. I learned that I'm not ambitious enough to make less.
Because midwest tech, I have no debt. In fact, I can crunch for a month, take the money and go buy a few acres to shoot my .50 caliber anti material rifle. Few SF residents will know how expensive it is to buy match 750 grain ammo, or know the pain and suffering of putting a clean hole through an engine block you tore out of a mercury tracer from 1000m away on a tuesday at 11am. It's terrible.
The central limit theorem corroborates the fact that the 500,000 people in KC basically don't exist and it's just one big cornfield. The 800,000 people in San Francisco are burdened with the knowledge that everything east of them til' the coast is flyover country. I feel for them.
If you're in tech move west, definitely.
Making major capital investments in the property is actually something I would consider a reason to purchase rather than renting. Can you say more about your thought process there?
> If you're in tech move west, definitely.
...west? Did you mean east?
How does this encourage anything but complacency? Who wants to start anything when everything is a utopia with no consequences? I’m not even being facetious because that is basically what you’re describing. This is why Europe barely innovates: extreme comfort and security. These aren’t bad things. But it’s odd to me that people look for more complicated answers when this is plain as day.
Get back to us the first time you have a medical emergency putting you on the hook for 5 or 6 figures (after insurance); at least you're lucky enough to be able to flee the jurisdiction back to a home country.
Is that a thing? Obviously there are lots of people in the USA who don't have any good health insurance options. But as an engineer in San Francisco all the companies I've worked at or interviewed with have had gold-plated health insurance plans with maximum out-of-pocket expenses in the low 4 figures. And of course, most people won't hit those maximums most years, that's just an upper bound.
This is of course limited to my personal experience, but my impression is that good health insurance is table stakes for highly-paid engineering roles.
https://www.npr.org/sections/health-shots/2018/08/27/6408918...
HN Thread: https://news.ycombinator.com/item?id=17859897
> but my impression is that good health insurance is table stakes for highly-paid engineering roles.
Hit or miss. Definitely depends on the company.
However, I don't think we can learn much about the health insurance typically provided to engineers in San Francisco from the poor insurance plan available to a teacher in Houston. Those jobs have very different compensation profiles.
My firm is in financial services. Very nice plan. Even with my "nice plan", we've had the insurer renege on their coverage of services (thousands of dollars in services) after receiving approval and having it in writing prior to obtaining services. YMMV.
Ever notice how many companies change their health care provider every year?
Company health care premiums are going up at 20% to 30% per year, thus doubling every 3 to 4 years.
What do you think is going to happen to your co-pay in a couple of years?
Until they or their wives become pregnant. Then suddenly those immigrants feel the need to come back for some years.
So articles that say "you should go west" just applies to their authors, everybody has their own set of parameters to evaluate, and the answer isn't so obvious. I personally have kids and a wife that earns a lot of money. I've done the maths, it's a no brainer for me financially to stay in Europe...
That said, salaries are still much better in SV... Up until the point where you have kids.
Concerning mindset, I think there's an even bigger cultural trait that's holding back French entrepreneurship: a complete absence of a "culture of failure".
By and large, French culture is one of fixed mindset. Mistakes/errors/failures reveal one's limitations or flaws, and aren't perceived as an opportunity to learn and grow. This starts very early and is very much baked in to the structure of schooling.
On the flip-side, this seems to be slowly changing. At the very least, people are aware that the US does this differently, and there seems to be some interest in effecting change.
Agreed. At this point, I usually like to point out that hierarchical societies have their advantages. A huge asset for France is it's elite schools -- the "Grandes Écoles".
These schools are outstanding in a way that few Americans can even fathom, and their students are educated to a point that I didn't think possible until moving to Paris.
If you want the best engineers in the world, hire out of those schools. As a bonus, they aren't the sort to hop between jobs.
But I tink that’s really what it is. The best engineers I have seen didn’t care for ‘burning’ years of their life in half military schools or old institutions, they went directly to CS courses to get a diploma faster and go abroad or start their own project.
Put another way, people who don’t care about prestige and having a super broad education don’t go there, and in our field I tink a ton of super talented people fit that description.
But just like Americans go to ranked universities, as a student you learn how to play the game and go to the best (fit) one you can enter.
To be fair, so do I, and I think you make a good point. The profile you can expect from a GE is:
- Extremely well-learned. They know a lot of stuff.
- Solutions implemented by GE engineeres will be principled, rather than ad-hoc.
- Not self-starters. They very much have an employee mindset.
And to be faire, there are plenty of outstanding employees (not to mention freelancers or entrepreneurs) who haven't gone through a Grande École.
Let me put it another way: you may not need a GE-graduate to build the next iPod, but you certainly need them for the next EuroTunnel.
Because French engineers are also more educated on average than US engineers, and French school ratings more predictive of the IQ of their incoming crop than of their "leadership" or whatever the current US proxy for socioeconomic status is, having a minority of French engineers in a team to point out obvious points of failures can be a definite advantage.
Personally I prefer American managers though, I feel the can-do culture is just better for management. Plus French people tend to have a lot of respect for older people or people further up in the hierarchy so in a mixed hierarchy (with the Americans at the top) usually your French guys will move towards becoming self-starters in their bosses' images, whereas the reverse is not necessarily true and American underlings tend to perceive a French boss's nitpicking or challenging of their strategy as micromanagement and undermining.
I think this last part is one of the great remaining challenges of France as a nation of great enterprise. It is very, very difficult for non-French people to feel comfortable in a company born of French senior management and culture. They just don't get some of the tone and French management can be very backwards compared to the commonly accepted leadership forms today. Hopefully, French children today are seeing a very different picture of what it means to be in charge thanks to exchange programs, higher education and a greater involvement from the EU, and they will grow to be leaders who are not afraid of hiring whole teams from other countries and letting them have autonomy and who do not make their teams afraid of them.
In Europe, why would an entrepreneur work hard? There is strong safety net provided by the Welfare state, it's simply not worth the risk.
No risk of going homeless if you fail. It's easier to give up.
Remove safety net, remove free healthcare, increase wages, remove payroll taxes, remove immigration restriction, add property rights so that foreigners can buy land and see the startups blossom.
It is as simple as that.
But pretty sure, most European will not be voting for this.
Historically French startups were relatively insular, primarily focusing on the French market while largely ignoring the larger global market.
That's long gone - now you see French startups going after the global market from day one (indeed many run product/eng out of France while running sales from the US to be closer to their American customers).
You can tell the article author hasn't really spent time in the French ecosystem due to the lack of mention of SaaS which is where Paris has found it's sweet spot - SaaStr even ran their first conference outside of SF in Paris.
You can easily see the quality of SaaS startups emerging from the French YC alumni alone: Front, Algolia, Sqreen, Slite - each really building the category defining product in their space.
Also, "YouTube wannabe Dailymotion" was founded just one month after than YouTube. The fact that YouTube won the monopoly instead of Dailymotion is an illustration of the problem, but presenting them as a copycat because they're not as successful is unfair to them.
But Dailymotion was basically 5 years behind Youtube in removing that stuff. I was watching full movies and tv shows on Dailymotion even last year.
Not to mention, low salaries garantees that not much international talent will relocate in France
If you're senior, in France, you can get a fairly good salary as a developer. There is definitely no glass ceiling at 40k; you can get more than 50k easily, and above 70k if you have can find the right company with a good fit.
Comparison with SF is hard because it's such a weird place in terms of housing, US healthcare etc. So if you compare to Germany or UK, you still make less in France, but the gap is much smaller than 10 years ago and it's still contracting.
That started before Macron actually. You can find jobs in well-funded startups (instead of the starving startups of 10 years ago happy to raise a million), and more and more international companies (US and others) are now recruiting engineers in France.
Note that if you cross the sea to the UK, London. The salary is double and it's in British pound.
Country Ratio dev:avg
Netherlands 0.851031639465174
France 0.891326705519369
Canada 0.944941413632355
Finland 1.00083791080905
Australia 1.01779098644302
Germany 1.05075128717033
New Zealand 1.07384561596284
UK 1.18906064209275
Sweden 1.29738400207581
Norway 1.3082871202062
Switzerland 1.31657113498065
Denmark 1.34069094159251
USA 1.48617853958189
Israel 1.85359454758035No, it isn't, but I do think you're right in that I should have used the nominal wages. I found the original article and that does not appear to be purchasing-power adjusted:
https://www.daxx.com/article/it-salaries-software-developer-...
Using the nominal wages gives the below, with France now in the middle of the list:
Country Ratio dev:avg
Australia 0.81
Netherlands 0.85
Canada 0.90
New Zealand 0.92
Finland 0.92
France 0.92
Switzerland 0.93
Norway 1.02
Denmark 1.05
Germany 1.12
UK 1.15
Sweden 1.15
USA 1.49
Israel 1.53
The real problem for startups is the lack of American style VC funding. European startups need to get profitable much earlier than US startups.
Early funding for startups is OKish. You can grow from 0 to 10-50 million, but after that it's better to sell the business to some big international firm, because you really struggle getting smart money that the ability to take the big risk.
Apple has been very good at buying out European startups. They got bargain prices for sleep monitoring, eye tracking, and computer vision startups in the last year.
This is a common refrain, but the reality is that VC is both out of reach and not the right fit for the vast majority of US ventures. Likewise, knowing the number of firms that get VC but will collapse anyway, I often wonder if it is a benefit that in other countries there is a slower, more profit-driven path that would seem to build legitimate companies for the long run rather than vehicles that border on financial engineering in the name of short-term potential success.
It absolutely should not be. It makes no sense to provide high-risk big dollars to majority of anything.
The name "startup" means different things for different people.
Paul Graham definition for startup means salable hyper-growth. Platform economies like Google, Amazon, FB, Twitter, grow trough network effects. The reason why US leads in this new economy is because they have their eye in winning big.
One big hit justifies losing lots of money in 100 mediocre startups or low growth enterprises.
Let's start with a labour budget of $300,000 to hire a lead programmer or other critical person.
France: 41.35% of the gross salary is paid to the Government in payroll taxes, leaving $175,938 paid as income to the employee.
After income taxes, $90,167 is left for the employee to spend.
That employee then wants to spend their entire salary on flat-screen TVs? They have an effective spending power of $75,139 after 20% VAT.
Government taxes account for about 75% of this labour budget! As you can imagine, this creates a huge incentive for tax evasion.
The US, for the same original budget:
4.09% is paid as payroll taxes, leaving $287,717 as income.
After (Californian) income taxes, $178,773 is left for the employee to spend. 7.25% sales tax then gives $166,300 finally.
So, an extra $91,161 ends up with the American worker (much more if they are married to a zero-income spouse and move out of California). Sure, you have to pay things like property taxes, 401K contributions, health insurance in the US - but would those account for $91,161?
Europe needs to completely scrap its payroll taxes and replace them with income taxes. Employees should not have to pay anything merely for hiring an employee, as it places a disincentive on using labour. On a global level, it also makes France uncompetitive - American companies hiring globally will be much more attractive.
Sources: http://www.uhy.com/employers-now-pay-average-employment-cost... https://www.francetaxcalculator.com/?salary=149508
In France it's the same, but here's a major difference once you add kids to the equation:
Each kid of a couple counts the same as "0.5 zero-income spouse", up to 3 kids. After the 3rd kid (or if the kid has handicap), they count the same as "1 full zero-income spouse"
So for a couple with one spouse with a salary of X , one spouse without job, and 2 kids, the taxes would be calculated as if there was 3 persons making X/3 each, instead of 2 people making X/2 in the US. Given that the tax brackets are even more progressive than in the US, the impact seem huge.
And that's why income taxes revenue pale in comparison with payrol taxes. Presidential candidates can claim to lower those every time they want better polls because they know it is not where the money is coming from.
2017:
- income taxes = 78 billions
- business taxes = 60 billions
- VAT = 203 billions
- social security = 480 billions“We set up in France around the same time as our rivals were starting in the U.S., but quickly they were raising 100 times more from investors and selling across the country,” Sapet said. “Meanwhile we were stuck translating into 20 European languages.” - Christophe Sapet (French entrepreneur)
And the finance thing has nothing to do with Macron (or Merkel or May or any other European leader). European VCs don't speculate on potential unicorns like the US ones do. It's a different risk appetite, what are EU leaders supposed to do?
For public and almost-public organizations, there is a regulation: you can communicate in exactly one language (French) or at least three languages (usually these will be English and German).
On the other hand, trying to sell to the average French person will require a French translation, and the same is probably true for most other EU countries if you wish to improve your chances ("have a translation in that language" is likely in the top 5 of improvement suggestions for a new market). 300 million people sharing the same language is a boon, especially for B2C or B2SMB.
Since I mostly consume english, US-centric media, I wonder how high the marketing effect even outside the US is for services that launch in the US first.
In fact it's better to sell outside the EU as those customers don't have to pay VAT so you have better margins or can sell it cheaper.
The fallacy which is: That if you don't do business in the EU, you are missing out on 22%-25% GDP of the worlds economy.
That's such a bad excuse. There is nothing stopping them from executing in English, or in French in France in the first place. There are five major languages in Europe: English, Spanish, French, German and Italian. No startup starts doing business in >1 market, not even Uber/Google.
Looking at the list of largest tech companies globally, there are perhaps four dozen very large tech companies in the West. Based on their ages, one might get founded in the entire West in a given year on average during the modern transistor era.
Simply put, there aren't going to be 27 Ubers or Googles or Microsofts. There is one of each. So for France (or any given country) to produce these types of companies, they have to beat everyone else racing to produce that outcome. The odds are extraordinarily low, no matter what you do, once you start adding in all the hurdles, as time is of the essence since it's always winner take most.
What countries like France can do, is produce a lot of mid-size tech companies that can take advantage of local and regional opportunties better than large foreign firms. The long-tail opportunties, in other words, that require being down in the minutiae.
As an example, you'll never produce larger global retailers than Walmart or Amazon, no matter what you do, if you're a given country in the EU. That doesn't mean you can't occasionally beat them at their game on your turf however (as retailers routinely do around the globe). It heavily depends on the nature of the tech / segment in question. The reason that works that way, is similar to why Google, Microsoft, Apple, Uber, Intel, Cisco, et al. have done so well as global giants, whereas SAP hasn't been vanquished in the European market by the likes of Oracle and Salesforce. Local relationships are immensely important in some areas of tech. If you're Google, it's the ability to dominate the huge US market, derive immense profit from that base, and rather easily perpetually project outward at claiming pieces of market share all over the planet. That concept only fails if the US economy does, there's nothing France can do to compete with it, unless the EU wants to entirely integrate (they don't and never will, national sovereignty is too important). The real local competitive advantage for a France is in tech where there is friction that provides an advantage based on culture or location. They're not going to produce the next Google, ever, and they shouldn't be aiming for that.
What is missing is an ecosystem to sustain and nurture these companies. The capital in Europe is incredibly conservative and very old fashioned.
It takes a generation of entrepreneurs to start and have a success or two despite the conditions. Then unless they pull a lightbank they will reinvest in the next generation of entrepreneurs.
With my family, we are feeling that we're very much better off in a suburb (like Mountain View) with quick access to hike trail and some nature. On top of this, I also have 10min commute by bike. My friends in Paris commonly have 2h commute daily.
There are many cultural issues that will prevent France from ever becoming a startup nation.
One of them is the fact that there's this idea floating around where you have to have higher education (Bac +5, aka 5 years of uni) to do anything even remotely related to IT, as if it was some kind of rocket science (where a degree would actually help). In fact, the first thing many French people will ask me when they learn about my job is how do I do it and whether I went to uni. They are all shocked when I tell them no when everywhere else self-taught developers are a common occurrence.
You simply cannot get any IT job without that; even junior positions require it. This automatically disqualifies a lot of self-taught developers (like me) even if they have actual work experience, and I'm not sure if the ones that are left (those with the required education) are any better considering they never had the chance to work on a real project.
The salaries are also awful. As a senior engineer (with the required education) you're still only looking around at 40k euros. I was already making more than that as a junior in London! (not to mention the Euros vs British Pounds conversion). An engineer is also not that well placed on the social ladder, management (even something relatively simple like running a small shop/restaurant) is deemed much more prestigious than software engineering.
The relationship between employees and management is toxic. There is no concept of teamwork and where the "boss" is actually working with you towards the same goal as you. Instead, the boss is always seen as an enemy. There is no complicity what so ever between employees and management. This was actually a shock for me when I got my first job in the UK and realised that actually bosses are cool (<3 to my former managers, if you're reading this) and are there to support you. A meeting with the boss in France usually means you did something wrong, while everywhere else it's just a routine talk to go over any eventual issues, ask for advice (whether for the current job or about your career in general) and see if anything can be improved.
Finally bureaucracy and taxes are still awful. Even if you can theoretically get tax relief on new companies and so on, the bureaucracy involved is a tax itself, and often not worth it.
This comment thread (on an earlier post about this) sums it up pretty well: https://news.ycombinator.com/item?id=17169504
I looked at job boards the other day to see what kind of role somebody like me could get in France: As a senior dev, good luck getting more than 60K gross per year in Paris with the rents starting at 1k per month for a 1 bedroom apartment in a shitty district!
Every single French graduate has experience on real world projects. Graduation requires to have done at least 2 half year internships.
In my opinion, compared to UK graduates for example, French are much stronger. Longer studies, more theoretical and more practical experience.
Just an hypothesis, I don't know if it's true. But if it is true, it might be hard for European leaders to see, because they probably aren't aware of how often American startups break the law at first.
- A much less developed culture of failure
- Few(er) "real" startups. For reasons (see above), many startups in France are startups in name only. They operate under "incubators" that are internally-hosted by industry giants (e.g. AXA). This means it's harder to pivot since whatever you're working on has to serve the interests of your structure. In the AXA example, if you want to pivot from insure-tech to something else, good luck.
- A culture of "I'll work a normal job for 10 years to gain experience. Only then will I be legitimate as an entrepreneur." Again, see point 1. The effect is that most people never really get started.
- A culture that values job stability to an extreme that's difficult to grasp for Americans. In France, the idea that one should work his entire life in the same company is even built into the law in the form of stringent protections against layoffs.
This is slowly changing, but France is not the startup nation Marcon wants it to be.
All the French entrepreneurs (including yours truly, but then again I'm a French/US dual citizen...) are in London.
In the US, it's not unusual to be in a startup in your late 30's / 40's, and for founders (especially in the bay area) to have gray hair / beard. In France, if you are still a developer in your late 30's and haven't moved to a management, paper pushing, position, you're pretty much a loser.
To some extend, there is a general disgust in France for being down the food chain, even if you're a rock star.
note: I'm French now living on the west coast, making a figure I'd never do in France.