Why France Is Taking a Lesson in Culture From Silicon Valley
The Station F start-up incubator in Paris. CreditRoberto Frankenberg for The New York Times
PARIS — One thousand start-ups in a refurbished train depot as long as the Eiffel Tower lying down. Rooms scattered with Legos and beanbag chairs. Elevated walkways bridging cargo-container offices and open-air desks. Graffitied railway cars transformed into cafes.
The vast project in the heart of Paris, Station F, is a symbol of France’s ambitions to be the start-up capital of Europe. Under an arc of glass and curved concrete, it aims to amass the largest group of entrepreneurs, venture capital firms, incubators and accelerators anywhere in the world.
The ambitious effort would seem an expensive, even quixotic undertaking for France, a country better known for a 35-hour workweek and rigid labor laws. And plenty of countries are trying to emulate Silicon Valley’s start-up ecosystem, with varying degrees of success.
While France needs to lure more international investors and further ease rules for entrepreneurs, the country, backed by government officials and tech leaders, has started to inject new energy into the start-up scene. France has already become one of Europe’s top destinations for start-up investment; venture capital and funding deals last year surpassed that activity in Germany, making it second only to Britain in Europe.
Silicon Valley has taken notice. Facebook and Amazon are backing Station F. Microsoft is basing its newest artificial intelligence start-up program there, and will be joined by French giants like the video game publisher Ubisoft and overseas players like Line, the Japanese messaging app. President Emmanuel Macron is expected to inaugurate the site on Thursday as part of France’s push to become what he calls “the leading country for hyper-innovation.”
The Talent Scouts
Station F is the brainchild of Xavier Niel, a technology billionaire bent on transforming the French start-up scene. He’s invested 250 million euros (about $280 million) of his own money and brought in a Silicon Valley up-and-comer, Roxanne Varza, to lead the effort.
“What’s important is that we create successes. The risk is that in a few years, that doesn’t happen. But that risk is really null.”
Often referred to as the Richard Branson of France, Mr. Niel, 49, is one if the country’s most successful tech entrepreneurs, worth around $8.1 billion. He shook up French telecoms by starting an ultra low-cost internet service and mobile operator, Free, which forced industry stalwarts to follow. An aggressive investor, he co-founded Kima Ventures, which focuses on early stage start-ups, and a coding school called 42, with no tuition, teachers or textbooks.
Mr. Niel sees Station F as a way to help France steal Britain’s crown as Europe’s premier start-up hub. Raised in a gritty suburb of Paris, he is also trying to empower would-be entrepreneurs, especially marginalized youths. And he wants to capitalize on France’s strength as a producer of math and engineering whizzes.
“When people talk about France, they don’t see it as a small-league player anymore.”
Born in Silicon Valley to Iranian parents, Ms. Varza, 32, founded Girls in Tech, a forum to improve gender equality in a male-dominated industry, and FailCon, a conference for start-up founders to learn from failure. After working at several young ventures, Ms. Varza, an avowed Francophile, moved to Paris in 2012 to oversee Microsoft’s start-up operations in France. Mr. Niel recruited her after seeing articles she had written critiquing the French tech scene.
Ms. Varza has been trying to lure to Station F the early-stage start-ups that have the potential to be the next disrupters in health, finance, education and even fashion. Britain’s decision to leave the European Union, she says, has been an opportunity to snap up talent.
An office in Station F that will be home to Daphni, a venture capital firm. Xavier Niel and Roxanne Varza. CreditRoberto Frankenberg for The New York Times
To get into Station F, start-ups had to have a business prototype and a path to growth. A group of 1,000 companies are expected to move into the space by early July. Here are three of them.
Shankar Arul co-founded this French-Indian start-up, which allows users to convert large amounts of data into graphics and offers data analysis online. With three employees and offices in Chennai and London, he counts Groupon among his clients.
This Paris-based online delicatessen, with 25 employees, delivers homemade dishes and produce to hundreds of clients. Its founders, Paul Lê and Alban Wienkoop, are betting on Station F as a platform to expand internationally. They plan to tap ShakeUpFactory, an accelerator that specializes in helping food start-ups, for contacts and funding.
Révèle develops high-tech shock-absorbing fabrics to protect women in heavy contact sports like rugby and boxing. The company, founded last year in Paris by Clémence Fabre and Laetitia Pingel, quickly expanded internationally, with half of its sales now coming from the United States and Britain.
Outside Station F, in the 13th Arrondissement of Paris. The so-called Creativity Room inside the incubator. About 1,000 companies are moving into the new space.
The Entrepreneurial Spirit
Tech leaders say France has significant potential. In 2016, French start-ups attracted record levels of investment from business angels, venture capital, growth equity funds and corporate investors — on par with Israel and in reach of Britain.
As the French start-up scene takes off, BlaBlaCar, a low-cost ride sharing service, is one of the early winners. Frédéric Mazzella got the idea after he couldn’t get to his family’s home in southern France for Christmas in 2003.
Back then, the French start-up culture was virtually nonexistent. There was no ecosystem of incubators and funding. He and his co-founders relied on money from family and friends for six years before venture capital funds stepped in.
Today, BlaBlaCar is one of four French “unicorns” (start-ups valued over $1 billion), with 45 million users in 22 countries and a global staff of 500.
In France, “entrepreneurs used to be seen as people with nothing left to lose,” said Mr. Mazzella, sitting in his company’s sleek new headquarters near the Paris Bourse, a couple of floors down from Facebook’s France operations. “Now it’s become acceptable, even desirable, to be a start-up.”
Failure is often stigmatized in French society — so much that the government started a campaign to persuade people that it’s O.K. to take risks. More than three quarters of workers hold so-called jobs for life, and unions protest when businesses demand workplace flexibility. Taxes are high to fund France’s social welfare system, and the 3,400-page labor code introduces new regulatory requirements on companies as they get larger.
It is a culture sometimes at odds with entrepreneurial drive.
Karim Oumnia, 49, the founder of Digitsole, which makes a temperature-controlled “smart shoe” that monitors health and automatically wraps around the wearer’s foot, is considering leaving France to propel his business.
Karim Oumnia in the headquarters of Digitsole.
Founded in 2014, Digitsole employs 20 people in the town of Nancy and has won numerous orders from European sports teams. Former President François Hollande cited Mr. Oumnia as an emblem of French entrepreneurship.
But Mr. Oumnia has struggled to scale up. When he wanted to offer stock options to lure and retain engineers and designers, the French rules were so complex that he dropped the plan. Social taxes pushed his employee costs to nearly twice what they would be in the United States.
The financial infrastructure isn’t fully developed, either. France has around 4,500 angels, investors who take risks on first-stage start-ups, compared with 18,000 in Britain. While more venture capital is flowing into France, the levels still lag Britain, Germany and Israel.
“France has plenty of talent to create start-ups,” Mr. Oumnia said. “The problem is to grow them to midsize companies that create jobs in a country where unemployment is high.”
“Regulations and taxes have still not evolved enough to allow start-ups to flourish once they get off the ground,” he said, adding that he hoped President Macron would change things. “So it’s fine to say, let’s create a thousand start-ups. The question is, ‘Are you creating the environment for them to become champions after?’”
“The answer is, ‘Not yet.’”
A Government Push
Mr. Macron has pledged to make the country more business friendly, with the government paying particular attention to entrepreneurs. Here is a look at France’s tech agenda.
INVESTING BILLIONS The government has created numerous state investment vehicles like the French Tech Acceleration Fund and the Large Venture Fund. Led by the French public investment bank, Bpifrance, with €42 billion under management, the state makes billions in loans and grants available to fund start-ups and accelerators at easy terms. Mr.Macron recently announced another €10 billion euro public fund to invest in start-ups. Such backing, critics say, can make it hard to discern whether French start-ups are competitive.
PROMOTING TECH In 2014, the government started French Tech, a sprawling program to burnish the country’s tech credentials. Thirteen French cities were designated high-tech hubs, including Bordeaux, better known for wine. The government also supports the growth of French start-ups in dozens of foreign cities, including New York and Shanghai, and promotes French entrepreneurs at big industry events like the Consumer Electronics Show in Las Vegas.
OFFERING INCENTIVES The government is trying to lure international tech talent to France by providing a fast-track work visa for entrepreneurs and their families, relocation grants and free office space.
EASING TAX LAWS France created a special tax status for “innovative new companies” and has granted over €1.17 billion in tax exemptions for 6,600 start-ups since 2004. Still, entrepreneurs say more needs to be done. In a bid to stoke more start-up investment, Mr. Macron has pledged to exempt ownership of company stakes from France’s wealth tax and introduce a flat capital-gains tax of 30 percent, down from as high as 50 percent now.
Caroline Matte of Facebook. CreditRoberto Frankenberg for The New York Times
The biggest vote of confidence in Station F is from Facebook.
A few years ago, the social media giant set up an artificial intelligence hub in Paris — its third after Silicon Valley and New York — to recruit from what it saw as a source of talented engineers at France’s elite universities, and from around Europe. The unit researches improvements to image and speech recognition, and other artificial intelligence applications.
The company is now anchoring an incubator program at Station F called Startup Garage, which will mentor 12 budding tech entrepreneurs every six months in health, education and other fields, and capitalize on their creative ideas. In exchange for coaching, Facebook will observe how the start-ups approach issues like privacy, and identify cutting-edge tech trends, said Caroline Matte, 26, Facebook’s French start-up program manager.
“France can definitely become a start-up nation,” said Ms. Matte, a French national. “The potential is there.”