

The Pigeon Movement – A rallying cry for French startups - VSerge
http://www.rudebaguette.com/2012/10/01/the-pigeon-movement-frances-last-hope-for-startups/

======
jgrahamc
I used to live in France and work in technology. To be honest increasing
capital gains tax to 60% is not that significant. The entire structure of
taxation and social charges and the rights of employees means that French
entrepreneurs should simply abandon their country if they want to build a
startup as might be seen in the US or UK.

Between the inability to fire people who aren't working out, to the huge
amount of time off people can claim (on top of their vacation) because of all
sorts of rights, to the 35 hour employee work week, to the amount of tax and
social charges the employer contributes, France is unsuitable for startups.
Various governments have talked about different incentives for small
companies, but the on the ground situation has not really changed.

I have a good friend who runs a small company in France making medical
devices. The litany of employee problems that he has to face because he cannot
fire people is a nightmare and then there's the taxation. The reality is that
he is working to transfer the company's IP away from France and then leave. At
that point France starts getting 0 EUR in revenue from him and his firm.

Now, in case you think I 'hate France', here's the thing: I think it's a
wonderful country to live in, but it is not suited to startups.

~~~
babarock
I live in France, I work in the IT sector. I can completely agree with what
you say.

From my point of view here are the biggest problems entrepreneurs have to face
here:

\- French labor law gives much more power to the employee over the business
owner. 35 hours weeks may not be applicable for IT employees, but there are
high compensations. Where I work, a 50 hour week is considered "way too much".
We get 35 days of paid vacation per year, my manager gets 50, I'm not even
counting the myriad of public holidays. Everything from parenting leaves, to
medical leaves can last weeks and cost a ton to the employwer. Did I mention
that once the "trial" period (usually 3 months renewable once) is over, there
are no cheap ways to fire an employee unless she screws up big time? This may
all seem nice and righteous, but it's not very motivating to start your own
company.

\- Taxes are so high it's not even funny. For every euro I earn, my employer
has to pay a euro in social charges, and this isn't counting the exhorbitant
taxes you pay on top of it. It's true that startups do get a grace period of 3
years, but from experience (and talking to other entrepreneurs), this is
barely enough. The sickest part is that there's a market developed here where
expert accountants teach young entrepreneurs how to "game" the system to
minimize "tax-damage". I was shocked when I first discovered this. Until I
found out how high taxes are.

\- Finally, and this one is the most powerful and less obvious one, there's a
strong social taboo in France about being rich or even wanting to be. One
thing that drives most startups I've encountered, is the drive to become
insanely rich. In the US, or at least that's the impression I got there,
there's no shame related to wealth. In France it is completely different.
Having money, or desiring it, is bad. The rich are the "enemy" (look at recent
taxation laws by our government) and the rest of us would be content with very
little. Of course this is a bad generalization, but this point of view is
prevalent. And this is why, I believe, the proper environment for startups is
not a priority for most French people out there.

~~~
cdavid
the "wanting to be rich" thing is frankly a cliche. Lots of people like money
in France as much as everywhere else, and I don't see much difference between
France and UK. It is certainly more prevalent in the US, but I would say the
US are the exception. And if you want money, I am not sure startup is the
likely way of doing it. Certainly, for people with the right diploma, working
in the finance sector is much more rewarding financially speaking.

Regarding the taxes, I will say what I always say: yes they are higher than in
the UK, but you get more. So you need to compare what you're getting,
otherwise the comparison is meaningless. I am working in the UK, where I paid
around 35 % of taxes, so quite lower than France, where it would be closer to
50-55 % I think for my salary. But then, I get shitty health care and
essentially no pension. And if I have kids, I will have to pay a lots of money
to get them a decent school. I would love paying 15-20 points more taxes in
exchange for that in the UK.

IMO, the main issue in France is more the education system and how the
incentives are highly biased toward going to a big company. The whole society
is highly biased against failure, and the only path to a 'career' is through
'soft' areas. I am just over 30 and my parents don't understand why I am still
doing engineering instead of 'managing' people, for example. This is the main
reason why I have been leaving outside France for the last 8 years or so, not
taxes.

~~~
babarock
I agree with what you say, but it doesn't really contradict what I'm saying:

\- the "wanting to be rich" is a bit of a cliche, but it's still a major
social taboo. As a foreigner who came to France, that was a major culture
shock. True, people want to be rich, but politicians don't say it out loud.
From what I see, much more efforts are put into helping poor people become
middle class, than helping middle class become rich.

\- I agree with you on the taxes thing. After all, I'm living here by my own
will and I like these social securities. Nevertheless, while it may work out
well on the personal level, it doesn't encourage people to start companies.
It's great that my kids' schooling is afforded by the government, but these
high corporate taxes are still heavy on entrepreneurs.

\- I completely agree with the bias towards being a manager at a big company.
Point in case, I work for a major investment bank. It's also true that failure
is not easily accepted here. I know relatively few entrepreneurs (I'd say less
than 5% of my graduating class 2 years ago) and those who "failed" (whatever
that means) are having a hard time going back to the "regular" corporate path.

~~~
estebank
> From what I see, much more efforts are put into helping poor people become
> middle class, than helping middle class become rich.

I really don't see the problem with that.

~~~
babarock
And who says it's a problem? I only say it's, in my opinion, a subtle obstacle
to developing a truely startup-friendly environment.

Is society better off that way? probably. I actually like it here. But it's
also probably one of the reasons why HN spent all morning debating the state
of startup-land in France.

------
carlob
Regarding the soundbite in the article on the 60% tax rate: I find it
extremely misleading, bordering on bad faith.

1\. The baseline is not the money made selling, but the capital _gain_, that
is income, not revenue.

2\. Keeping those 15% social charges into account negates the fact that those
will accrue your retirement, invalidity, unemployment, what-have-you fund

3\. France has a 35 hour workweek. Companies who ask their employees to work
longer than that without compensating them in extra days of holiday are
breaking the law. So much for the quoted 70 hour workweek.

4\. The 10 years of uncertainty are not so uncertain in a country with such a
strong welfare state: in case of failure you would have several months of
unemployment checks which have a very high cap (as demonstrated by a recent
scandal with soccer players).

~~~
reitzensteinm
In response to the social taxes, _all_ taxes are like this; they end up in a
pool that (hopefully) provides services to the taxpayers.

In the case of significant capital gains, the taxpayer is unlikely to be a
welfare recipient, and is paying into the system without benefit.

I have no problem with this; it's the nature of taxation. But lumping it in
with general taxation is not misleading _at all_.

If it were a superannuation scheme, and you got the money back when you
retired, you might have a point - but it's not.

~~~
carlob
I don't agree. Taxes are not the same thing as social charges, here's why.

If you make 250k a year, you pay a lot in social charges, but not as much in
percentage (usually retirement charges are regressive) and in exchange you get
unemployment checks and retirement that are proportional to how much you've
put in. In short you get back what you've put in.

On the other hand income taxes are usually progressive (the richer you are the
larger the percentage you pay) and richer people benefit less from them, in
that they go to finance public transportation, education and hospital which
rich people tend to use as much if not less than commoners.

~~~
reitzensteinm
Except your lifetime worth of contributions is one policy shift away from
becoming worthless. Unlike a superannuation scheme, paying into it now
guarantees you _nothing_ in the future.

Nobody making moderate capital gains would pay these charges voluntarily, in
exchange for benefits it gives them. Thus it makes complete sense to lump it
in with the other capital gains taxes when discussing incentives.

From Wikipedia:

"The mandatory state pension is an unfunded contributory penison based on
redistribution of contributions from those working to those in retirement. The
scheme aims to provide up to a maximum of 50% of the retirees highest earning
years up to a limit of 35,000€ annually (in 2010)."

~~~
carlob
> Nobody making moderate capital gains would pay these charges voluntarily, in
> exchange for benefits it gives them.

Almost nobody who pays taxes would pay them voluntarily, especially the rich
who get no benefits from paying them. Yet we force them to, it's the
redistributive nature of taxes.

------
shin_lao
We don't need more help, we already have a lot of it. We're one of the most
generous country of the OECD in terms of help for R&D.

If you add more help, companies will stay in France as long as they can
benefit them an relocate the minute they expire.

I already know, that in order to grow our company, I will have to relocate it
in the forthcoming years.

The problem is cultural.

Big Companies don't work with small companies. The labor laws are extremely
rigid and employees care more about vacations than getting things done.
Failure will doom you forever. Taking risks is "bad". Everybody looks up the
government for help instead of getting things done, and this call for action
is another example "Please give us more money!".

We don't need more money, we need a cultural shift.

~~~
epsylon
>employees care more about vacations than getting things done

That's bullshit. If you consider this a problem, you should reconsider your
recruitment process.

~~~
shin_lao
What I'm saying is that it's difficult to find people.

------
conradfr
Like in "The Wire", problems are never simple and usually systemic.

France is rigid :

\- renting is hard which makes moving and adjusting to varying earnings hard.

\- banks are rigid : lots of companies need liquidity especially during the
crisis and banks give them a hard time, lending to unnecessary bankruptcies.

\- laws are rigid : labor laws tend to make bosses and employees assholes
"fighting" each other. Finance laws prevent more capital coming in.

On the other hand, Health and natality rate are one of the better of the world
and general quality of life remains very good.

------
kryptiskt
I see several comments saying that welfare is worth this tax rate, that is a
false dilemma. There are no shortage of countries in Europe with all the
welfare you could wish for with a capital gains tax rate around 30%. And with
the inner market there is no way for French authorities to stop companies from
these countries from targeting the French market.

So, welcome to Sweden!

~~~
subsystem
If welfare includes things like having somewhere to live and being able to get
around I wouldn't exactly choose Sweden as the poster boy. If I were to start
a more SV style startup I would move to Berlin like Soundcloud, Readmill,
Researchgate, Twago, Wooga etc.

------
troels
I don't know how it works in France, but in Denmark, we have a capital gains
tax of ~50%. However, that only applies if you pull the cash out directly. You
can do all sorts of things, such as moving the money into another company,
which you then use to make investments from or pull it into a pension fund,
both of which gives you a huge tax benefit. So I don't think that part is as
prohibitive as it is made out to, although it certainly has some impact. The
bigger problems are probably with labour law and general cultural issues.

------
Fjslfj
French entrepreneurs are upset because they can't get as rich in an exit as
they would like, so they protest? And you want the rest of the country to
support you in this? Okaaaaay.... This is the sort of greedy childishness that
we could do without in the tech business world. If you're in it for hacking
cool shit, you're not going to spend this much time thinking about your exit.
This is similar to people protesting the tax rate on lottery winnings --
absurd.

Go back to work, stop whining.

~~~
VSerge
Greedy childiness? We sweat our asses off trying to build a business and
overnight we're being told that in the rare case we do get an exit, it'll be
taxed at 60% as opposed to 30%. How is that either greed or childiness? Do you
even know what the live of a founder with little funding and no personal
income can be like?

And of course we love what we do, but bills don't pay themselves. And maybe
one day I want to have a family and a better income to support it, as opposed
to not paying myself for over a year now (goodbye savings from 5 years of
working before that), year during which I did pay my team btw.

We're not whining. We're fighting this.

~~~
digitalengineer
(Trolling here but) perhaps president Hollande can take an example from
another famous president and claim " If you’ve got a business. you didn’t
build that. Somebody else made that happen. The Internet didn’t get invented
on its own. Government research created the Internet so that all the companies
could make money off the Internet".

------
bdfh42
there is a solution for French entrepreneurs (particularly in the context of
software and services) - move across the channel to the UK and run your
business from there. Easy to pop home for the weekends and there is already a
very large French working community.

------
corford
I live in France and the feeling I get talking to small business owners and my
French friends who work in these environments is that everyone knows the
system is broken and simply accept that the only way things can work is
through liberal bending of the rules.

Business owners abuse CDD contracts, effectively running full time employees
on rolling short term contracts (making it easier to hire and fire). Lots of
employees work beyond 35 hours a week, with any hours over the 35 limit paid
cash in hand i.e. black. A lot of businesses that deal with cash (garages,
repair men, small bed and breakfasts, florists etc.) regularly declare much
less turnover than they should. Newsagents, butchers etc. usually use family
members to help out and pay them in cash (because they need staff but can't
afford the tax burden if they were to legitimately hire them).

It's not uncommon for pool installation or irrigation companies (i.e. the ones
who fit sprinkler systems in your garden) to offer to quote a job in two parts
in return for a discount on the overall job price. One part will be the
official invoice and the second part is paid in cash.

Without bending the current tax and labour laws, most small businesses in
France would simply cease to trade.

------
hbbio
This also means that there is an opportunity for US buyers (or others) to grab
high-quality French startups as founders might be willing to settle for less.

Selling their company twice the price in a few months will give them the same
return!

------
davidwg
The thing that people are missing here is that complaining about this is not
even anti-left. Current French civil servant's pensions (the govt. accounts
for the majority of the French economy at 55% GDP) are worth more than a
million euros and employees pay tax on this at 7% (average retirement under
age of 60 on 75% of your maximum salary)
<http://en.wikipedia.org/wiki/French_special_retirement_plan>

So in other words, a person who takes a 'blue collar' job gets to be a
guaranteed millionaire paying 7% tax whereas an entrepreneur taking the risk
of making nothing will pay 60% tax if he makes the same as a civil servant's
pension.

If people don't point this out it makes French people think that not giving
back tax is some kind of capitalist arrogance, when in fact the socialists pay
a tenth of what the capitalists do.

------
mgallezot
This article does not mention CIR. When you factor-in CIR the French tax
environment becomes extremely favorable for entrepreneurs, at least those who
hire developers.

------
subsystem
I not so sure that mixing business and politics is such a good idea and I'm
having somewhat of a hard time concluding what it is exactly that they want.
Times when things get thrown up in the air is generally a good for my "kind"
of entrepreneur, because even the established players have to work to stay
relevant.

~~~
VSerge
We think considering the risks we take as founders, being taxed 32.5% (the
current rate) is already quite enough. But more to the point, investors who
make do with this kind of taxes on their return will never accept an increase
to 60% and will by and large invest somewhere else, effectively killing off
funding for startups in France. That's the whole ecosystem we're trying to
protect here.

~~~
mempko
Maybe VC funding is not the best way to fund technology.. just throwing that
out there. Maybe France should figure out a different way to fund technology
than VC.

If France cannot figure out an alternative, I would say that killing existing
funding is bad...

------
mempko
I find it funny that the underlying assumption in all the arguments against
the 60% exit rate is that VC funding is the only way technology is funded.

Maybe the French as a society should figure out how to fund technology in a
different way.

It appears to me that Silicon Valley, which is supposed to be innovative, is
really only producing one kind of technology. Even in the USA, technology used
to be funded primarily in other ways. At some point the US government decided
to give all the technology funded by the public away to private interests.

Notice that we went from distributed systems like email, IRC, etc to
centralized systems like facebook, twitter.

This is no accident and it is because the funding system changed.

------
Millennium
I'm trying to get the pigeon symbology. The article says it's essentially the
French word for what would be called a "sucker" in the US, so the people who
are using it are obviously calling themselves suckers. But is this a protest
of the French tax situation (i.e. French society is for suckers), or is a
statement in defiance of traditional capitalist attitudes toward this sort of
thing (i.e. perhaps we ARE suckers, but we don't care; we're still doing what
we were before)? I couldn't get a sense from the article.

~~~
epsylon
It's a protest of the french tax situation : the word pigeon is often used in
the context of a person being extorted money.

------
thibaut_barrere
"Funny" side-effect: "bootstrapped in France" may soon become a label of
perennity, given the complete counter-incentive to take outside funding...

We may see less "Sparrow effects" now.

------
VSerge
For the Frenchies reading this, if you feel like it would be a good thing for
us to show our faces and that we're just regular people trying to build
something, maybe we should just talk a few minutes on youtube and send it to
people we know to raise awareness. Here's my attempt (in french, sorry):
<https://www.youtube.com/watch?v=zvMxlTavMVU>

------
whatusername
To put the 43% approval rating in even more context - Julia Gillard's (PM of
Australia) rating hit 28% last year --
[http://www.essentialmedia.com.au/tag/approval-of-julia-
gilla...](http://www.essentialmedia.com.au/tag/approval-of-julia-gillard/)

43% does not seem all that low.

~~~
yannickmahe
It is somewhat low for a government that should still be in its honeymoon
period. They were only let into office this May.

------
RudeBaguette
Here's the Mailchimp-version of the article, if the site is down.

[http://us5.campaign-
archive1.com/?u=a2b057f584a796c058282094...](http://us5.campaign-
archive1.com/?u=a2b057f584a796c0582820944&id=0a93827421&e=)

~~~
digitalengineer
Thanks!

------
pefavre
You can follow the movement with the hashtag #geonpi alongside the handle
@DefensePigeons.

------
digitalengineer
Timed out, no Google cache (yet). Anyone got a summary?

~~~
masklinn
Guy whines because high taxes on exit.

------
abrown28
France is dead... they just don't know it yet.

