8 ms·

Bonjour, Entrepreneurs – Only you can prevent French-Bashing

92 points by liam_boogar 13y ago

bluedevil2k 13y ago
Ugh, seeing this quote from the article - "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." - is everything going to be measured by WhatsApp now? This week on HN I've seen WhatsApp used for valuations on car companies, the duration from $0 to a $1B+ sale, the price of a user, and now this, using them for...I'm not even entirely sure. Is he saying that a French startup can easily be a $19B company while still being exempt from the employment laws? Is that incredible wishful thinking on his part? It'd be like a Silicon Valley startup saying "we don't worry about Obamacare costs at all, we'll have a $10B valuation before we hit 50 employees".
- stefan_kendall3 13y ago
  I literally just read "You should design for android because they delayed monetization and sold for $19B." If you're WhatsApp, I doubt it matters how onerous the regulation and taxation is where you operate your business.
- eloisant 13y ago
  It's just to say a startup can do great things before reaching 50 employees. Even if you ignore the crazy amount WhatsApp was sold for, you can still see that they got a pretty successful product and a huge user base with that number of employees.
  - 6cxs2hd6 13y ago
    Yes, 50 is actually a lot of employees for a startup. It's a weird size where you're already feeling some of the drawbacks of a larger organization, but without most of the benefits. I'd almost go so far as to say that 50-100 employees is a kind of gauntlet you need to squeeze through fairly quickly. It's not good to get stuck at that size for too long. If you can't grow past it, then rethink and retreat back to a smaller startup size.
- astrobe_ 13y ago
  > is everything going to be measured by WhatsApp now? Since when are we responsible for other's misuse of an example or metaphor? Whatsapp was less than 50 employees when it was bought, restrictive french laws kick in when you reach 50 employees. This means that does those constrains actually don't affect you when your business is taking off. It looks like a valid remark to me. > Is he saying that a French startup can easily be a $19B company while still being exempt from the employment laws? It looks like it. Whatsapp wasn't making $19B, it was sold $19B. Besides, when you reach 50 employees I don't think you can be considered a startup anymore. The interesting question with regard to this french bashing is: why do You even care? Are they threatening You in some way?
  - mikeash 13y ago
    "Whatsapp was less than 50 employees when it was bought, restrictive french laws kick in when you reach 50 employees. This means that does those constrains actually don't affect you when your business is taking off. It looks like a valid remark to me." No, all it means is that those constraints wouldn't have affected WhatsApp when their business is taking off. To extrapolate it beyond WhatsApp you have to assume that WhatsApp was somehow representative, when it was clearly a gigantic outlier.
bowlofpetunias 13y ago
Or alternatively, you can simply ignore all this Euro-bashing (France is just the flavor of the month) under the heading "they do things differently, so they must be wrong". Because we've been hearing this "the old continent with its big government and socialist laws is dying" crap for generations, and so far the only major fuck-ups have been in the ideologically driven attempts to be more like the US. Just a thought: maybe there are multiple roads that lead to success, and we should distinguish between real practical concerns and ideological prejudices. This goes both ways, because next up will be an article about how much better France (or any other Euro country) is in terms of working conditions for employees.
- gadders 13y ago
  I think the biggest fuck up would have been trying to force divergent economies to share the same currency.
  - ekianjo 13y ago
    Not just about the currency, but the fact that you have/had a single interest rate that was basically calculated on the best performing country (Germany) while Italy and Greece and similar countries had rates at 17-19% prior to the Eurozone membership. Basically they indulged themselves in cheap credit as soon as they joined, and made their respective economies blow up in a bubble. Until they realized it was not sustainable.
    - gadders 13y ago
      Agreed, but same currency implies same interest rate.
      - fennecfoxen 13y ago
        Free trade implies same interest rate... at least the same real interest rate. The difference in rates between your USD credit card debt, EUR Greek bonds, GBP savings accounts, and anything else just boils down to overhead, inflation expectations, and risk. The actual time value of money part costs the same. It's the Law of One Price in action, and currency is pretty mobile and fungible. Heck, you'd see the same for BTC-based loans if the risk factor was low enough for sane people to consider offering them. (Of course, when you've got crazy government-imposed capital controls, like China or something, it's another story.)
patrickaljord 13y ago
French here and I agree with the NYC article. Strict employment laws and extreme taxation as well as constant IRS harassment makes it a living hell for small and medium entrepreneurs here. Systematically labeling any critic as "French bashing" is not the way to solve these issues and yet it's the only thing I read from my fellow French anytime there's a critic of our system in the news. Not encouraging.
- bsaul 13y ago
  Same here. Remember that whenever you want to hire an engineer here, you'll pay him 70k€ and he'll get 35k€ ( then pay income tax on that). You can have JEI that would help you a bit, but that's a lot of paperwork ( most companies i know outsource paperwork for that matter). That pretty much settle the discussion. I hire interns then pay them freelancing after that. Never would I dare hiring them.
  - fab13n 13y ago
    > you'll pay him 70k€ and he'll get 35k€ That's true (although it's a pretty junior salary). However, thanks to the stuff funded by the €35k he didn't receive directly: * he has no student loan; * his kids' school is free or very cheap; * he has top-level health insurance, and he knows there's a 0% chance he'll ever lose it; he hasn't got a clue what "preexisting condition" might even mean; * he lives in a place safe enough that there's no sense in paying to live in a gated community; he probably doesn't know what a "gated community" is actually; * he's got decent unemployment insurance (even if his qualifications are his best employment insurance, it still allows him to get bank loans more easily); * his retirement is funded; * his wife will be able to take years off to raise his babies under financially interesting conditions (legally he can, too, but culturally he usually won't want to). * he gets massive tax breaks if he employs a nanny, a maid, etc. So all-in-all, I'm not sure you're better off with $100K in the US than with €35K in France.
    - punee 13y ago
      Well, isn't that the whole point? You're not sure because you _can't_ be sure. Because there's no competitive offer to help price discovery.
aragot 13y ago
French entrepreneur here. It's called "communication channel overflow": When I used normal channels like talking to my "deputee for French people living abroad", I got rejected based on the tone. I feel like other channels would be the same: We don't get heard, never, unless we strike or do mass demonstrations. So I overflow my criticism to HN. When they have enough negative feedback, a report will land on Hollande's desk and they'll decide what to fix. That said, I still think the "autoentrepreneur" status in France is unbeatable to start a business. Edit: reworded.
- ekianjo 13y ago
  > But I still think the "autoentrepreneur" status in France is unbeatable to start a business. TO start a business a single owner, yes, but once it grows, you need to leave, basically, or face tax-death.
  - aragot 13y ago
    Right, I once calculated the tax and social payments (incl. retirement, health care and tax agent) for a 75k€ business without employee, and it was ~53k€. You can't get rich in France. We hate rich people anyway, you'd be subjected to all kinds of verbal violence.
    - ekianjo 13y ago
      Oh I know, I am French myself and decided to live abroad long ago because of that particular attitude towards "les patrons" . It's like a reminiscent lutte des classes from Communist Russia or something. No wonder so many young people leave the country.
    - kybernetyk 13y ago
      For comparison I just calculated the same for Germany and Poland (1 person business, income tax, "gewerbe" tax for Germany, health care, no tax agent, no retirement for Germany): In Germany on 75,000 EUR profits you have to pay ~30,400 EUR and get to keep ~44,600 EUR. Total taxation rate at this level is ~40.5%. At 1,000,000 EUR profits you get taxed ~49.5% and have to pay ~494,000 EUR taxes. If you moved a few hundred km to the east to Poland which has an opt-in 19% flat tax rate you would pay only ~15,000 EUR on 75,000 EUR profits and ~192,000 EUR on 1,000,000 EUR profits. So France seems to be "worse" than Germany tax-wise. Something I wouldn't have expected.
pja 13y ago
Pet peeve: It's moot point, not mute point :) http://en.wiktionary.org/wiki/moot_point http://en.wiktionary.org/wiki/moot_point
- mavhc 13y ago
  As moot point original meant the opposite of what people use it for today, it would be better to use "mute point" and return "moot point" to its original meaning
  - Dylan16807 13y ago
    Do you have a source on that? I mean I saw a cracked article claim that but it was severely misrepresenting the various uses of moot and I could not find any references to 'mute point' being a real phrase.
    - pessimizer 13y ago
      I think that mavhc is suggesting that 'mute point' should be a new thing, and 'moot point' should refer to a point that has been mooted.
fab13n 13y ago
I overall agree, except for one important caveat: one of the main incentives for high-tech investment in France is the "crédit d'impôt recherche", "tax break for research". It's very effective, as it pays ~ 50% of salaries + charges for employees performing R&D duty. But the fiscal services systematically target those who take this tax break, and it's pretty random whether they'll cancel it retroactively, up to 3 years after you received it. For startups, which often spend most of their money on R&D salaries, such a recall is often fatal. And qualifying for it makes or breaks many business plans. So it adds a considerable risk to an activity that's more than risky enough, in a country that already suffers from risk averseness. Unfortunately, the department of taxes & finances a.k.a. "Bercy" is where the best graduates from ÉNA [http://en.wikipedia.org/wiki/%C3%89cole_nationale_d%27administration http://en.wikipedia.org/wiki/%C3%89cole_nationale_d%27admini...] go, and ÉNA is also the alma mater of most French politicians: finance civil administrators often control politicians more than the other way around, so the latter don't seem capable to control the formers' destructive power.
- fidotron 13y ago
  I think this is the killer point. Quebec suffers from a similar problem, with the result being a disproportionate amount of time is spent working out how to claim the credits, and less focus on the actual work at hand. This overhead also means subsidiaries of foreign companies get the bulk of the credits too, with very little going to start ups in practice. It would be easier and better all round to have lower bureaucracy and business tax, and scrap the R&D credits, which would allow the market to actually function, but cynically I came to believe the whole scheme exists just to employ a load of accountants and government bureaucrats, not to actually achieve anything.
- alain94040 13y ago
  True, but even without Credit Impot Recherche, the salary of a French engineer is so much lower than in Silicon Valley, it's mind boggling. Labor is cheap in France. Now, if only the locals would get the culture of optimism that pervades Silicon Valley, they'd be going somewhere. There was a story on HN just the other day from a high-frequency trader moving to Silicon Valley. Lesson #1: everyone collaborates and is helpful. Not making fun of you and telling you that you are going to fail.
euphemize 13y ago
Perhaps related, but I've been seeing more and more French entrepreneurs setup shop here in Montréal in the last few years. There are similar problems in regards to the bureaucracy and red tape (and language laws, which can be a huge pain), but many I work with mention A) the state of the economy being better here B) the social climate and cultural similarities to France C) the proximity to the US and Silicon Valley, for funding.
rmason 13y ago
Just had a conversation with a friend this week who spends a couple of months a year in London. She told me that I wouldn't believe how amped up the startup scene is there. After reading the NYT article now I understand why. The French supporters of Francois Hollande can put all the spin they want on it. But when the fifth largest city in your country is London then you've got a problem.

92 points by liam_boogar 13y ago

Ugh, seeing this quote from the article - "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." - is everything going to be measured by WhatsApp now? This week on HN I've seen WhatsApp used for valuations on car companies, the duration from $0 to a $1B+ sale, the price of a user, and now this, using them for...I'm not even entirely sure. Is he saying that a French startup can easily be a $19B company while still being exempt from the employment laws? Is that incredible wishful thinking on his part? It'd be like a Silicon Valley startup saying "we don't worry about Obamacare costs at all, we'll have a $10B valuation before we hit 50 employees".

stefan_kendall3 13y ago
I literally just read "You should design for android because they delayed monetization and sold for $19B." If you're WhatsApp, I doubt it matters how onerous the regulation and taxation is where you operate your business.
eloisant 13y ago
It's just to say a startup can do great things before reaching 50 employees. Even if you ignore the crazy amount WhatsApp was sold for, you can still see that they got a pretty successful product and a huge user base with that number of employees.
- 6cxs2hd6 13y ago
  Yes, 50 is actually a lot of employees for a startup. It's a weird size where you're already feeling some of the drawbacks of a larger organization, but without most of the benefits. I'd almost go so far as to say that 50-100 employees is a kind of gauntlet you need to squeeze through fairly quickly. It's not good to get stuck at that size for too long. If you can't grow past it, then rethink and retreat back to a smaller startup size.
astrobe_ 13y ago
> is everything going to be measured by WhatsApp now? Since when are we responsible for other's misuse of an example or metaphor? Whatsapp was less than 50 employees when it was bought, restrictive french laws kick in when you reach 50 employees. This means that does those constrains actually don't affect you when your business is taking off. It looks like a valid remark to me. > Is he saying that a French startup can easily be a $19B company while still being exempt from the employment laws? It looks like it. Whatsapp wasn't making $19B, it was sold $19B. Besides, when you reach 50 employees I don't think you can be considered a startup anymore. The interesting question with regard to this french bashing is: why do You even care? Are they threatening You in some way?
- mikeash 13y ago
  "Whatsapp was less than 50 employees when it was bought, restrictive french laws kick in when you reach 50 employees. This means that does those constrains actually don't affect you when your business is taking off. It looks like a valid remark to me." No, all it means is that those constraints wouldn't have affected WhatsApp when their business is taking off. To extrapolate it beyond WhatsApp you have to assume that WhatsApp was somehow representative, when it was clearly a gigantic outlier.

bowlofpetunias 13y ago

Or alternatively, you can simply ignore all this Euro-bashing (France is just the flavor of the month) under the heading "they do things differently, so they must be wrong". Because we've been hearing this "the old continent with its big government and socialist laws is dying" crap for generations, and so far the only major fuck-ups have been in the ideologically driven attempts to be more like the US. Just a thought: maybe there are multiple roads that lead to success, and we should distinguish between real practical concerns and ideological prejudices. This goes both ways, because next up will be an article about how much better France (or any other Euro country) is in terms of working conditions for employees.

gadders 13y ago
I think the biggest fuck up would have been trying to force divergent economies to share the same currency.
- ekianjo 13y ago
  Not just about the currency, but the fact that you have/had a single interest rate that was basically calculated on the best performing country (Germany) while Italy and Greece and similar countries had rates at 17-19% prior to the Eurozone membership. Basically they indulged themselves in cheap credit as soon as they joined, and made their respective economies blow up in a bubble. Until they realized it was not sustainable.
  - gadders 13y ago
    Agreed, but same currency implies same interest rate.
    - fennecfoxen 13y ago
      Free trade implies same interest rate... at least the same real interest rate. The difference in rates between your USD credit card debt, EUR Greek bonds, GBP savings accounts, and anything else just boils down to overhead, inflation expectations, and risk. The actual time value of money part costs the same. It's the Law of One Price in action, and currency is pretty mobile and fungible. Heck, you'd see the same for BTC-based loans if the risk factor was low enough for sane people to consider offering them. (Of course, when you've got crazy government-imposed capital controls, like China or something, it's another story.)

patrickaljord 13y ago

French here and I agree with the NYC article. Strict employment laws and extreme taxation as well as constant IRS harassment makes it a living hell for small and medium entrepreneurs here. Systematically labeling any critic as "French bashing" is not the way to solve these issues and yet it's the only thing I read from my fellow French anytime there's a critic of our system in the news. Not encouraging.

bsaul 13y ago
Same here. Remember that whenever you want to hire an engineer here, you'll pay him 70k€ and he'll get 35k€ ( then pay income tax on that). You can have JEI that would help you a bit, but that's a lot of paperwork ( most companies i know outsource paperwork for that matter). That pretty much settle the discussion. I hire interns then pay them freelancing after that. Never would I dare hiring them.
- fab13n 13y ago
  > you'll pay him 70k€ and he'll get 35k€ That's true (although it's a pretty junior salary). However, thanks to the stuff funded by the €35k he didn't receive directly: * he has no student loan; * his kids' school is free or very cheap; * he has top-level health insurance, and he knows there's a 0% chance he'll ever lose it; he hasn't got a clue what "preexisting condition" might even mean; * he lives in a place safe enough that there's no sense in paying to live in a gated community; he probably doesn't know what a "gated community" is actually; * he's got decent unemployment insurance (even if his qualifications are his best employment insurance, it still allows him to get bank loans more easily); * his retirement is funded; * his wife will be able to take years off to raise his babies under financially interesting conditions (legally he can, too, but culturally he usually won't want to). * he gets massive tax breaks if he employs a nanny, a maid, etc. So all-in-all, I'm not sure you're better off with $100K in the US than with €35K in France.
  - punee 13y ago
    Well, isn't that the whole point? You're not sure because you _can't_ be sure. Because there's no competitive offer to help price discovery.

aragot 13y ago

French entrepreneur here. It's called "communication channel overflow": When I used normal channels like talking to my "deputee for French people living abroad", I got rejected based on the tone. I feel like other channels would be the same: We don't get heard, never, unless we strike or do mass demonstrations. So I overflow my criticism to HN. When they have enough negative feedback, a report will land on Hollande's desk and they'll decide what to fix. That said, I still think the "autoentrepreneur" status in France is unbeatable to start a business. Edit: reworded.

ekianjo 13y ago
> But I still think the "autoentrepreneur" status in France is unbeatable to start a business. TO start a business a single owner, yes, but once it grows, you need to leave, basically, or face tax-death.
- aragot 13y ago
  Right, I once calculated the tax and social payments (incl. retirement, health care and tax agent) for a 75k€ business without employee, and it was ~53k€. You can't get rich in France. We hate rich people anyway, you'd be subjected to all kinds of verbal violence.
  - ekianjo 13y ago
    Oh I know, I am French myself and decided to live abroad long ago because of that particular attitude towards "les patrons" . It's like a reminiscent lutte des classes from Communist Russia or something. No wonder so many young people leave the country.
  - kybernetyk 13y ago
    For comparison I just calculated the same for Germany and Poland (1 person business, income tax, "gewerbe" tax for Germany, health care, no tax agent, no retirement for Germany): In Germany on 75,000 EUR profits you have to pay ~30,400 EUR and get to keep ~44,600 EUR. Total taxation rate at this level is ~40.5%. At 1,000,000 EUR profits you get taxed ~49.5% and have to pay ~494,000 EUR taxes. If you moved a few hundred km to the east to Poland which has an opt-in 19% flat tax rate you would pay only ~15,000 EUR on 75,000 EUR profits and ~192,000 EUR on 1,000,000 EUR profits. So France seems to be "worse" than Germany tax-wise. Something I wouldn't have expected.

pja 13y ago

Pet peeve: It's moot point, not mute point :) http://en.wiktionary.org/wiki/moot_point http://en.wiktionary.org/wiki/moot_point

mavhc 13y ago
As moot point original meant the opposite of what people use it for today, it would be better to use "mute point" and return "moot point" to its original meaning
- Dylan16807 13y ago
  Do you have a source on that? I mean I saw a cracked article claim that but it was severely misrepresenting the various uses of moot and I could not find any references to 'mute point' being a real phrase.
  - pessimizer 13y ago
    I think that mavhc is suggesting that 'mute point' should be a new thing, and 'moot point' should refer to a point that has been mooted.

fab13n 13y ago

I overall agree, except for one important caveat: one of the main incentives for high-tech investment in France is the "crédit d'impôt recherche", "tax break for research". It's very effective, as it pays ~ 50% of salaries + charges for employees performing R&D duty. But the fiscal services systematically target those who take this tax break, and it's pretty random whether they'll cancel it retroactively, up to 3 years after you received it. For startups, which often spend most of their money on R&D salaries, such a recall is often fatal. And qualifying for it makes or breaks many business plans. So it adds a considerable risk to an activity that's more than risky enough, in a country that already suffers from risk averseness. Unfortunately, the department of taxes & finances a.k.a. "Bercy" is where the best graduates from ÉNA [http://en.wikipedia.org/wiki/%C3%89cole_nationale_d%27administration http://en.wikipedia.org/wiki/%C3%89cole_nationale_d%27admini...] go, and ÉNA is also the alma mater of most French politicians: finance civil administrators often control politicians more than the other way around, so the latter don't seem capable to control the formers' destructive power.

fidotron 13y ago
I think this is the killer point. Quebec suffers from a similar problem, with the result being a disproportionate amount of time is spent working out how to claim the credits, and less focus on the actual work at hand. This overhead also means subsidiaries of foreign companies get the bulk of the credits too, with very little going to start ups in practice. It would be easier and better all round to have lower bureaucracy and business tax, and scrap the R&D credits, which would allow the market to actually function, but cynically I came to believe the whole scheme exists just to employ a load of accountants and government bureaucrats, not to actually achieve anything.
alain94040 13y ago
True, but even without Credit Impot Recherche, the salary of a French engineer is so much lower than in Silicon Valley, it's mind boggling. Labor is cheap in France. Now, if only the locals would get the culture of optimism that pervades Silicon Valley, they'd be going somewhere. There was a story on HN just the other day from a high-frequency trader moving to Silicon Valley. Lesson #1: everyone collaborates and is helpful. Not making fun of you and telling you that you are going to fail.

euphemize 13y ago

Perhaps related, but I've been seeing more and more French entrepreneurs setup shop here in Montréal in the last few years. There are similar problems in regards to the bureaucracy and red tape (and language laws, which can be a huge pain), but many I work with mention A) the state of the economy being better here B) the social climate and cultural similarities to France C) the proximity to the US and Silicon Valley, for funding.

rmason 13y ago

Just had a conversation with a friend this week who spends a couple of months a year in London. She told me that I wouldn't believe how amped up the startup scene is there. After reading the NYT article now I understand why. The French supporters of Francois Hollande can put all the spin they want on it. But when the fifth largest city in your country is London then you've got a problem.