Monday Note

by Jean-Louis Gassée

Foie gras, crême fraîche, butter, red wine — and lots of it! All these excesses leading to a higher life expectancy, to say nothing of the joys of sinning. That’s the legendary now official French Paradox. Scientists strain to explain the phenomenon: ‘It’s the phenolic compounds in the red wine’, they say. Me, I look at eating habits in my adopted country: restaurant chains like the Cheesecake Factory, “family-style” servings,  food everywhere, everyday, at all times in offices like Google’s.
Methinks there is no paradox just quantity, 360 degrees and 24/7 availability, as the recent but unmistakable widening of French bottoms attests.

No doubt, these must be Thanksgiving hangover-induced thoughts. Let’s turn away from arteries-clogging food and contemplate another set of incongruities.

Silicon Valley VCs (like me) are subsidized by the French taxpayer. Yes, bear with me, no fancy science, no magic involved.
It goes like this: a young kid performs well in high school, s/he is “tagged”, put on the higher education track, prep classes, “grandes écoles”, top-level business, government and engineering schools such as Polytechnique, HEC or ENA and their many local siblings. Such education is essentially free, that is paid by French taxpayers.
The young graduate starts working at one of the big French companies, Thales, France Telecom or Airbus. Soon, an alumnus calls: I’m at Google, or Apple, or Cisco, or this little Silicon Valley VC-funded start-up, come and join the fun. Indeed, graduates from prestigious French higher-education institutions are everywhere in the Valley. VCs have learned long ago to look beyond the “35 hours” and “5 weeks paid holidays” reputation. Actually, we know the “locals” got a little lazy over time, like New York Jewish families wondering why their sons and daughters now lose the Math Prizes to the children of Chines immigrants. First generation immigrants are naturally hungrier than the more prosperous third generation families. The famed Silicon Valley work ethic is too often a pose; new immigrants, in general, and French ones, in particular, are viewed as harder-working than some of the too-cunningly-adapted natives.
Paradoxically, that word again, the constraints, the obstacles of a highly state-regulated culture tend to sharpen creative skills — highly valued ones in our entrepreneurial Valley. In  France, defeating regulations is a national sport, a point of manhood.

The bottom line is we VCs like those French graduates and we know why: they’re “fundable”, meaning it’s worth investing in projects they’re involved in, we’ll make money together. As for the French taxpayer who provided what we sometimes call seed money, well, how do you put a price on pride?
Is this a brain drain issue? Not really. You can’t and you shouldn’t close borders. People carry viruses. And they also carry ideas, culture, reputations, technology. If France wants to export its technology, its culture, these viruses need carriers. Actually, in Western Europe, France is the country whose citizens emigrate the least. Further, people, ideas, technology, culture don’t leave, they circulate, they leave and they come back to enrich the soil they come from.

We’re not done: there is another “unfairness”.

Picture Khufu, Inc. This is a tiny (fictional) company from Mountain View, right next to Google. Khufu, as befits its name, sells civil engineering modeling software. They fly to France and knock on doors at Bouygues, Bertin, Areva and other large French engineering companies. They’re seen and, when their product fits a need, they have no trouble doing business, no one questions their credentials: they’re from Silicon Valley, you see.

Turn the thought experiment around. A bunch of polytechniciens and normaliens left the CNET, near Lannion, in Brittany. At CNET, a world-class telecom research lab, they got an idea for a multi-platform network security agent; as a result, they started a company, Uzec, S.A. The product is good, Uzec gets glowing French customer references. Now, they fly to Silicon Valley and pitch their product to the likes of Oracle, HP, Google, Cisco and Apple. ‘Great stuff, interesting, we love what you do!‘ The French entrepreneurs come home thrilled: ‘Look at all the business cards, we met the Business Development VPs of all these great companies, we’re going to score. And big!’
Predictably, nothing happens. Follow-up emails aren’t replied to, same for voice-mail messages.
The reasons are simple: ‘This is great’ or ‘interesting’ means nothing. This is California-speak, the West Coast equivalent of the Japanese ‘Hai!’
How do you know we’re actually interested? Only when we argue about price.
The second reason is more serious: Uzec founders think they’ll be treated like Thales and Bertin treated Khufu. Wrong. The Valley is rather parochial, we buy from people we know. Where is Lannion? Who are these Uzec guys?

Now, there is a solution: when the Uzec management team moves to Milpitas, in cheap offices, everything changes. Speaking English fluently isn’t a requirement, look or, rather, listen to the accents from around the world. But being, becoming local is a must. And, by being local we don’t mean the proverbial, expensive and ultimately doomed to failure sales office. The locals know the joke and won’t fall for it: the company, its founders aren’t committed to Silicon Valley. Have a nice day.
This doesn’t mean Uzec must pull up stakes and move everyone to Milpitas, au contraire. Today, engineering projects are run by geographically dispersed teams. With salary and lodging inflation, engineers in France are now less expensive than their Valley counterparts. But the management team must be local. Then and only then, it will be accepted and allowed to do business among peers.

‘I don’t make the rules, here, Honey!’ That’s how a bookstore employee once stopped my recriminations as she declined to cash a traveler’s check. We don’t make Silicon Valley rules, we deal with them creatively.

In next week’s Monday Note I’ll discuss what we’d like to do to take better care of French taxpayers and to better deal with the “being local” requirement. —JLG@mondaynote.com

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