Trying to make the numbers work and getting it wrong 99% of the time

May 10

France’s Depression Pundits

Frédéric Filloux posted a gloomy article on his joint blog with Jean-Louis Gassée very aptly titled “François Hollande’s Start-Down Nation”. 

He basically says that the Presidential election did not carried any grand vision for the future of the country and especially not innovation as key driver of change. I have left aside his rants about the personality of the newly elected President as well as his ideas about how the economy will evolve until 2017. He is untitled to his own opinions, even though he is factually wrong on some points. 

Every person that took even a slight interest in the presidential race could not missed the fact that economic topics in general have been absurdly absent from the debate. There has been lots of discussions about Halal meat, immigration, swimming pool schedules and other key topics. Otherwise, both major candidates unconsciously agreed on limiting the economy to a simple proposal of adding growth stimulus to the recession-inducing austerity policy imposed to France by evil Germany, even though there is no such policy.

According to Frédéric, France will stall in the next 5 years because it will not innovate. And it will not innovate because our top education system is a disaster and because there is no decent start-up ecosystem in this country. To strengthen his last point, he compares France to the USA and Israel. 

Let’s deal with the later first. He argues that money invested per start-up per capita is $110 in Israel and a mere $16 in France. Israel has 7.4M people, including 5.9M jews. That is approximatively the size of half of the Parisian region. Let’s assume that Paris and its suburbs concentrate half of the start-ups and half of the money invested by VCs in France, then you have a very different picture: invested amount per capita jumps to $85. 

I’m not overlooking what Israel accomplished with its start-up ecosystem. Just that to compare, you have to do it on a common ground. Israel has a much greater military budget per capita than France, ensuring a constant flow of money towards public and private research in related fields. One can also argue that subsidies for start-ups are handled much more efficiently and less costly in Israel than in France. But all in all, the Israel start-up ecosystem is not an order of magnitude bigger than the French one.

UPDATE: Pando daily has an excellent piece about the decline of Israel Tech. Apparently, the 2 old French guys still think we’re in the 90’s.

The comparison with the USA is also biased, this time on a temporal scale. The innovation ecosystem in the USA started in the 50’s. It barely existed in France until the mid-80’s. Both ecosystem also have very different roots with more private innovation in the USA and more state-driven innovation in France. Their foundations are far stronger in the USA as testifies the drop in VC money in France last year. Comparing both ecosystem is self-deprecating: France is late and the USA are the worldwide unrivaled leader. So what?

Trashing France has become a platitude for French born people that are more or less living in foreign countries. It’s also highly unfair to the people that make the innovation ecosystem in France. There are wonderful entrepreneurs, great VCs and skilled advisors that work every day to fulfill their dreams and build amazing companies. They may not have the same favorable environment than in other countries; but they still push hard for success. And I’m sure that they don’t listen to Frédéric. 

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