France's Tech Nation Takes Shape

The French have an expression “faire passer la mayone” or “make the mayonnaise happen” and it seems France is doing just that when it comes to tech innovation. Last week I was asked to co-host a Cognizant roundtable on Artificial Intelligence alongside our AI practice lead Bart Van Der Mark. An impressive roster of French clients and prospects turned out, keen to share stories and learn from one another and us about AI (i.e. where’s it happening; how fast; how to start etc.) What was particularly insightful for me was hearing about the bourgeoning French start-up scene and the appetite French investors are showing for it as new investment funds open up for big data, artificial intelligence and virtual reality (the new tech tricolour). The French economy is making some smart bets on its future.

The pace of start-up innovation in France is accelerating and the government has a hand in making it happen. Although many outside France bemoan its notorious labour inflexibility—and it is a problem—there are some strong currents running in the country’s favour. For one, the quality of its infrastructure is really world class—trains, planes, roads, high speed broadband—and its spread out evenly across the country, not concentrated on one region like London and the South East. Secondly, the dynamism of its STEM education system is world-class and the adaptability of the prestigious Grande Ecoles continue to turn out an impressive talent bank together with an ambitious, well-rounded leadership class. And one cannot discount the paternal French state which has moved swiftly to capture the opportunities from new technology that we’ve described many times.

Government policy has been ramped up in order to drive entrepreneurial energy into the economy and it seems to be working. Check out the funding initiatives like La French Tech where over the last thirty six months concerted attempts have been made to lower barriers to entry for French entrepreneurs. And many French cities like Montpellier, Toulouse, Grenoble or Lille are starting to morph into a French network of indigenous talent clusters that can boast their own local innovative eco-systems. The support that the government provides is a mix of marketing, financial support, regulatory reforms, and community-building that aims to deliver a shot of pastis to the nation’s start up economy and convince international investors to give France a fresh go. Budding start-ups are offered subsidised trips to the big tech events like CES in Las Vegas, or to Slush in Helsinki. Moreover, the French Tech Ticket has been designed to encourage international entrepreneurs to settle into the country and bring their IP, energy and innovative flair with them. This golden ticket offers a fast-track to residency, about €12K in cash as well as some free office space and discounted flights on Air France. There are new tax incentives alongside a significant reduction in the amount of red tape that entrepreneurs face when they launch a business. Moreover, the stain of bankruptcy has been somewhat restricted by only blacklisting for a single business failure. So fail fast but fail only once....

The ingredients for France’s tech future are clear. Good infrastructure, a highly educated workforce and a strong, top down commitment from the governing class to grow an entrepreneurial tech class across the country. It’s a no brainer when you think about it and it works at a company level too. But if you add to this recipe a dash je ne sais quoi from a certain fresh-faced mercurial president eager to reinvent France, and you can see the stirrings of a tech nation begin to form. Of course, there are still some structural issues that need to be resolved: One of the biggest is to do with growth and scale. If you grow a company larger than fifty people then any owner must jump through some onerous administrative/regulatory hoops to do with worker participation, worker councils etc. So any start-up hitting pay dirt works damn hard to restrict its scale beneath fifty people through complex subsidiary structures or outsourcing. It’s not a Gallic innovation killer but it came up a couple of times over conversation during our event and it will be fascinating to see if Macron can tackle it sooner rather than later. But I for one can’t wait to see how the French economy moves ahead.

PS. If we are going to talk about the French economy then we have to talk about French levels of productivity. Why? Well our British politicos love to beat us over the head with it. At the last count, the French are thirty percent more productive than their UK counterparts (thirty percent!) So for every hour of work the French do they get nearly a third more output? Put another way, the average French worker can stop work on Thursday lunch for le weekend and make the same amount of money as the Brits do toiling away until beer “o” clock on Friday. I am no economist but I did hear that these startling levels of French productivity signal the underlying issue of its labour inflexibility. The lowest productivity workers are not in the workforce while the high levels of investment taking place to replace expensive and unproductive workers with machines, computers and robots continues apace. So French productivity will look even better because take away the most unproductive workers and it’s easy to improve productivity; you don’t let them work. Not sure if that is the case...but suffice to say, that didn’t come up in the conversation in Paris.