Taxi Strike Redux: Is France Failing its Entrepreneurs?
It’s about more than Uber
By Nicolas Colin (TheFamily) & Yann Marteil (Via-ID)
When François Hollande visited Silicon Valley in February 2014, one of his goals was to kiss and make up with disgruntled French entrepreneurs. The declarations began: “France should recognise the dynamism of its entrepreneurs”, Hollande said, praising their “sense of initiative”. A few months later, Prime Minister Manuel Valls joined in: “I love business”, he said to City financiers in London. And recently Emmanuel Macron, the minister of economic affairs, has become the darling of the French entrepreneurial community as he vowed to fight corporatism and defend innovation. The sound bites seem to say that entrepreneurs in France have the full and unconditional support of the government.
But do they? France isn’t exactly known as an entrepreneurs’ paradise. Many foreign investors look skeptically at the country as labor laws, high taxes and unionized troublemakers supposedly make life harder for job creators. Macron has been making some serious efforts, but unfortunately, when the real battles arrived, he has not gotten the job done. Although he stresses French success stories like Blablacar, Criteo and Sigfox, these companies do not owe their achievements to any government action. And when real opportunities to change the game arise, Macron has failed to push back against other ministries that defend vested corporate interests.
Therein lies the truth: French politicians and CEOs love entrepreneurs only so long as they look like harmless children frolicking on the playground. But as they grow, entrepreneurs eventually become seen as a threat and are scolded accordingly, like those same children when they bring their roughhousing home and annoy the adults at the dinner table.
Urban transportation is a case in point. Next Tuesday (January 26, 2015), French taxi drivers will go on strike to protest the exponential development of private hire services powered by technology. As happened last June, they will paralyse the French capital and make life difficult for tourists. Some taxi drivers will commit blatant acts of violence on drivers from the competition. The government will turn a blind eye and in all likelihood the Ministry of the Interior will put forward corporatist measures that favor the interests of the taxi industry, forcing the Ministry of the Economy to fail French entrepreneurs again. France will send yet another deplorable signal to foreign investors, who will look for opportunities elsewhere and leave promising French startups without the funds needed for growth.
This transportation battle between the taxi industry and radical innovators is too often seen as pitting the mighty Uber against incumbent players. Many people miss an important part of the situation, namely that Uber is facing local tech competitors, such as Heetch and Mapool. And when the government retaliates against tech companies, they hurt local startups much more than they hurt Uber. No law defending the taxi industry in France will significantly slow Uber’s worldwide growth. But such a law can be a deadly threat to Uber’s local competitors who seek to serve local needs in a different way. Here the government isn’t defending local French players against Silicon Valley villains. It is instead stifling France’s own startups to the benefit of the dominant players: the G7 Group that operates as a quasi-monopoly on the Parisian taxi market and Uber, the dominant tech company.
This is also not simply a question of forcing entrepreneurs to comply with regulations. There are many other ways in which the government is failing to encourage innovation, some quite unbelievable in a country governed by the rule of law. For instance, for-hire professional drivers can only work if they possess a certain certificate delivered by the Ministry of Transportation. Yet strangely enough, no new certificate has been issued for many months, without any word from the authorities explaining why. Even worse, police officers in major cities continuously harass those who drive for entrepreneurial ventures such as Heetch, stopping their cars for deceptive reasons, confiscating their smartphones, even taking them to the police station and keeping them there for hours (all without the right to call a lawyer!).
These are intimidatory practices typical of a repressive government, and they’re occurring in France where no judge has ever decided that models such as Heetch’s are illegal under French law. The result is that France is completely missing the global battle pitting Uber against Didi Kuadi in China, Ola in India, and even Lyft in the United States. But even worse, it reveals just how far the French government is willing to go in embracing corporatism against entrepreneurship.
Maintaining order is an obligation of the state. But supporting growth and job creation is another. There are unmet needs in industries where powerful French companies have a great deal to lose. If France continues to prevent innovative startups from serving those needs, it will not only fail its entrepreneurs, it will also fail its citizens and its economy.
Nicolas Colin, Co-Founder & Partner, TheFamily, and Yann Marteil, General Partner, Via-ID (the venture capital investment arm of Mobivia Groupe). Via-ID and TheFamily are both shareholders of the French ride-sharing startup Heetch.
