Au Revoir, Entrepreneurs

Guillaume Santacruz, an aspiring French entrepreneur, brushed the rain from his black sweater and skinny jeans and headed down to a cavernous basement inside Campus London, a seven-story hive run by Google in the city’s East End. It was late on a September morning, and the space was crowded with people hunched over laptops at wooden cafe tables or sprawled on low blue couches, working on plans to create the next Facebook or LinkedIn. The hiss of a milk steamer broke through the low buzz of conversation as a man in a red flannel shirt brewed cappuccino at a food bar. A year earlier, Mr. Santacruz, who has two degrees in finance, was living in Paris near the Place de la Madeleine, working in a boutique finance firm.

He had taken that job after his attempt to start a business in Marseille foundered under a pile of government regulations and a seemingly endless parade of taxes. The episode left him wary of starting any new projects in France. Yet he still hungered to be his own boss.

He decided that he would try again. Just not in his own country.

“A lot of people are like, ‘Why would you ever leave France?’ ” Mr. Santacruz said. “I’ll tell you. France has a lot of problems. There’s a feeling of gloom that seems to be growing deeper. The economy is not going well, and if you want to get ahead or run your own business, the environment is not good.”

In the Campus London basement, Mr. Santacruz, who is 29, squeezed into one of the few remaining seats. Within hours, he was to meet with an entrepreneur he identified only as Knut, to discuss an investment in the company that Mr. Santacruz was trying to build. He called it Zipcube, and was pitching it as a sort of Airbnb for renting office space online.

From 80 to 90 percent of all start-ups fail, “but that’s O.K.,” said Eze Vidra, the head of Google for Entrepreneurs Europe and of Campus London, a free work space in the city’s booming technology hub. In Britain and the United States, “it’s not considered bad if you have failed,” Mr. Vidra said. “You learn from failure in order to maximize success.”

That is the kind of thinking that drew Mr. Santacruz to London. “Things are different in France,” he said. “There is a fear of failure. If you fail, it’s like the ultimate shame. In London, there’s this can-do attitude, and a sense that anything’s possible. If you make an error, you can get up again.”

Mr. Santacruz had a hard time explaining to his parents his decision to leave France. “They think I’m crazy, maybe sick, taking all those risks,” he said. “But I don’t want to wait until I’m 60 to live my life.”

France has been losing talented citizens to other countries for decades, but the current exodus of entrepreneurs and young people is happening at a moment when France can ill afford it. The nation has had low-to-stagnant economic growth for the last five years and a generally climbing unemployment rate — now about 11 percent — and analysts warn that it risks sliding into economic sclerosis.

Some wealthy businesspeople have also been packing their bags. While entrepreneurs fret about the difficulties of getting a business off the ground, those who have succeeded in doing so say that society stigmatizes financial success. The election of President François Hollande, a member of the Socialist Party who once declared, “I don’t like the rich,” did little to contradict that impression.

After denying that there was a problem, Mr. Hollande is suddenly shifting gears. Since the beginning of the year, he has taken to the podium under the gilded eaves of the Élysée Palace several times with significant proposals to make France more alluring for entrepreneurs and business, while seeking to preserve the nation’s model of social protection.

His deputy finance minister for business innovation, Fleur Pellerin, a dynamic 40-year-old credited with schooling Mr. Hollande on the importance of the digital economy, has been busy pushing initiatives to turn Paris into a “tech capital” to rival the world’s most active start-up hubs.

Those initiatives, however, have not yet closed the spigot on the flow of French citizens to other countries. Hand-wringing articles in French newspapers — including a three-page spread in Le Monde, have examined the implications of “les exilés.” This month, the Chamber of Commerce and Industry of Paris, which represents 800,000 businesses, published a report saying that French executives were more worried than ever that “unemployment and moroseness are pushing young people to leave” the country, bleeding France of energetic workers. As the Pew Research Center put it last year, “no European country is becoming more dispirited and disillusioned faster than France.”

Next month, the National Assembly will convene a panel to examine the issue.

Today, around 1.6 million of France’s 63 million citizens live outside the country. That is not a huge share, but it is up 60 percent from 2000, according to the Ministry of Foreign Affairs. Thousands are heading to Hong Kong, Mexico City, New York, Shanghai and other cities. About 50,000 French nationals live in Silicon Valley alone.

But for the most part, they have fled across the English Channel, just a two-hour Eurostar ride from Paris. Around 350,000 French nationals are now rooted in Britain, about the same population as Nice, France’s fifth-largest city. So many French citizens are in London that locals have taken to calling it “Paris on the Thames.”


Axelle Lemaire, a lawmaker, says France should enhance competitiveness but not compromise its social model. Credit Andrew Testa for The New York Times

In the past, most of these people would have gone back to France after some adventure and experience. That may still be true of some in the French diaspora, but nearly 40 percent of French people abroad now say they plan to stay there for at least 10 years, according to the report by the Chamber of Commerce and Industry. Many are quietly saying that they may not return.

Taxes, Frustration, More Taxes

Mr. Santacruz grew up in his parents’ small, tidy home in a suburb of Aix-en-Provence in the south of France. During one of his summer breaks from college in Bordeaux, he visited a cousin who had become rich working in finance and lived in a sprawling residence in the Luberon Valley. When Mr. Santacruz drove up to the entrance, electronic gates opened to a vast garden.

“It was crazy,” he said. “I drove five minutes just to reach the house. That’s when I thought, ‘I want to make it like him.’ ”

“Making it” is almost never easy, but Mr. Santacruz found the French bureaucracy to be an unbridgeable moat around his ambitions. Having received his master’s in finance at the University of Nottingham in England, he returned to France to work with a friend’s father to open dental clinics in Marseille. “But the French administration turned it into a herculean effort,” he said.

A one-month wait for a license turned into three months, then six. They tried simplifying the corporate structure but were stymied by regulatory hurdles. Hiring was delayed, partly because of social taxes that companies pay on salaries. In France, the share of nonwage costs for employers to fund unemployment benefits, education, health care and pensions is more than 33 percent. In Britain, it is around 20 percent.

“Every week, more tax letters would come,” Mr. Santacruz recalled.

The government has since simplified procedures and reduced the social costs for start-ups. But those changes came too late for Mr. Santacruz, whose venture folded before it could get off the ground.


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commented 2014-03-25 11:14:52 -0400 · Flag
Beauforde writes:

Read Below: Another Elite Limousine Collectivist-Statist tastes reality…‏I predict 2014 will bring what Euro-peons call “Far Right” parties breathtaking political gains, and the EU elections will destroy the Brussels dream of a United States of Europe. Neil Farage will be Man Of The Year in Europe. There is NO WAY that Europe can go on like this indefinitely…as Chris mentioned, it is not (only) the periphery that is collapsing…the core is imploding in slow motion! With (especially under-30) unemployment at these Depression-Era levels and the Nanny State firmly entrenched the way out of the conundrum will be either radical change or certain collapse…and there is still no one in the world that can explain to me any rational reason why the Toilet-Paper-Dollar is at 1.38 to the Cheese-Cloth-Euro… New blow for French leader; will he stay course?

PARIS (AP) — France’s unpopular president faces a moment of truth after his Socialist Party suffered a drubbing at the polls and the far-right made advances across the country.
Will his package of spending cuts and reforms wither and die like so many previous efforts to reform France’s economy, following the setback suffered by his party in the first round of municipal elections on Sunday?
France, Europe’s number 2 economy, has been generating a lot of negative headlines and Francois Hollande thinks it needs to move with the times to boost growth and bring down sky-high levels of unemployment.
His new approach, outlined earlier this year, is not what he promised voters in the presidential election of 2012. His stump speech then defended the country’s welfare and labor benefits and a tax squeeze on the rich.
In anticipation of a setback in the elections in towns and cities, Hollande appeared determined to stick the course, telling journalists that France had to lower its labor costs and boost its competiveness. He also promised decisions on spending cuts by the end of April.
More clarity may well emerge after the second round of voting next weekend — in France, there’s another round of voting if no one party gained a majority. Hollande is widely expected to reshuffle his government even though the municipal elections don’t directly affect his ability to govern and push through policies.
At the start of this year, Hollande laid out his new approach, promising a 30 billion-euro ($41 billion) payroll tax cut by 2017, in exchange for more investment and hiring by companies. In addition, he announced 50 billion euros in cuts in government spending.
His blueprint has gone down well among many officials in the European Union who have worried that France’s indebted economy could hobble the region’s economic recovery. France’s recovery has been fairly anemic: It has an unemployment rate of more than 10 percent; its debt burden is running at over 90 percent of its national income and foreign direct investment dropped 77 percent in 2013, according to the UN.
Amid that backdrop, the Socialists faltered in Sunday’s elections with the conservative UMP party doing best in results described by commentators as a “slap in the face” of the French president. Perhaps most dramatically, the Socialists came third in Marseille, France’s second-biggest city behind the UMP and the far-right National Front.
Samia Ghali, a Socialist candidate in Marseille, told BFM television that there’s an impression that “the government is on one planet and France on another. I think they have to come back to earth and take account of the situation of the French.”
Economists, such as Marc Touati, president of French business consulting group ACDEFI, said France must do the reforms that so many others, particularly in the 18-country eurozone, have pushed through over the past few crisis-afflicted years.
France, said Touati, “must take draconian measures to restore confidence and growth— which means: cut taxes, and in order to do that, you must cut public spending.” And Hall Gardner, a professor of politics at the American University of Paris, indicated that he’s going to find it tough even if he pushes through with his plans to make France more dynamic.
“Hollande has created a kind of bureaucratic vacuum, nothing seems to be moving in a very dynamic way,” he said.
commented 2014-03-25 11:13:04 -0400 · Flag
Thomas writes:

welcome to ONE World Centrally Planned Government, thought you’d realize by now this is nothing BUT 21st century Global Serfdom, with i-phones, back-yard swimming pools and Audi A6’s in the driveway.

As for the Euro, I share your disbelief, BUT let me assure you it is just a slightly better staged theatrical production in the United States of America – with out exaggeration this country is in serious, lasting economic contraction (depression) the Only difference is because imbeciles can LEASE (rent) an Audi, BMW, Range Rover, and take there hag wife and brats out to dinner and indulge in the occasional purchase of yet another mindless
electronic device, to distract them from Reality, that All believe is well.

This freak show could easily go on for another 10 –15 years, now go play with your electronic device and eat your porridge.

and as far as the IMF’s new grand design to extract more blood from the stone, The Mansion Tax, in Europe we’ve had it in place in this country for the past 30 years, with outrageous property taxes to fund what replaced capitalism/industrialization in America – Municipal Government employee’s the New Blue Collar jobs / workforce circa: 1984.

Europe was last remaining continent where private property MEANT Private Property,
so they are now going to introduce the joint private/public partnership approach to Private Property that we’ve been living with for the past 30 years, it has actually been going on for far longer that is what Proposition 13 in California was all about in 1975.

It is the Truman Show, I can assure you, enjoy the freak show.
commented 2014-03-25 11:10:38 -0400 · Flag
A.R. writes:

The great mystery to me is how the Euro stays at its hallucinogenic levels. Europe is going through a historic (and massively, criminally under-reported) economic Depression. There is no way one can view unemployment in countries like Spain, Italy, Portugal, Greece, and France – where “youth”-unemployment (comically described as anyone under 30) ranges from 25 to 55% (!!!) and even delude oneself into thinking that the common currency is worth any more than (perhaps) parity to the Toilet-paper-Dollar. Demographically, morally, militarily, and artistically exhausted, Europe is a grab-bag of declining crypto-Socialist Nanny Nation-States with a direful future.

I am waiting for the dominoes to start collapsing…
commented 2014-03-25 11:09:35 -0400 · Flag
Jc writes:

“bread, work and a roof for all”
commented 2014-03-25 11:08:55 -0400 · Flag
Chris writes:

i don’t care what any economic illiterate, ahistorical post-modern zombie nanny-statist wants to believe…the e.u. is a moribund entity which will implode of its on statist entropy. everyone thinks of the e.u. periphery as the trouble zone, but i think the core is every bit the patient zero as well. the fed can keep this legerdemain up with its endless fiat fx-swaps to the e.c.b., but it’s only increasing the pent-up energy (i.e. populist fury) which will ultimately bring down this sham of a multi-state collective. and it’s going to blow within our investment lifetimes. i am convinced.