There’s a funny meme in Decentralized Finance (DeFi) that refers to France due to a small typo during an interview. Instead of referring to the future of finance and DeFi, the interviewee said “future of France”, hence the tag #FutureOfFrance we often see on crypto-twitter.
But I won’t be talking about DeFi today. I already did it here; I’ll talk about the real #FutureOfFrance.
Despite France having many benefits (among them food, art, literature, music, etc) and a relatively strong economy, France is mired in generalized pessimism. The purchasing power is declining, and prestigious companies like Alstom (now owned by General Electric), Alcatel (now owned by Nokia), Lafarge (owned by LafargeHolcim in Switzerland), and Peugeot (now owned by Stellantis NV) are being sold to foreign countries while innovation stagnates internally. The unemployment rate has increased since the last oil crisis in 1975, and Its strongest advantages are slowly degrading over time (health system, education system).
Inventor VS Innovator
So, where does the problem come from?
Many causes may lead to that situation, so I’ll focus on what I’m observing in the startup and entrepreneurial ecosystem at my humble scale.
One of the problems is that French wantrepreneurs overall lack ambition, and those who have ambition flee to other countries. They flee due to:
A lack of VC funding in France and Europe. French startups raised $9.2 billion in 2023 in France, while US startups raised $66 billion in the first quarter of 2024 alone. Some friends left France for the US because it’s easier to raise funds there, and VCs are less risk-averse.
As mentioned above, there’s an ambient pessimistic mood that some would like to evade.
Salaries can be less attractive. This is partly because of high taxes to pay for public health care and other public infrastructures (this has good consequences of course).
There are several reasons why French scientists and engineers are leaving the country. One of the main factors is the lack of funding for research and development. In recent years, the French government has reduced funding for scientific research, making it difficult for scientists to obtain the resources they need to conduct their research. Additionally, many French scientists are frustrated with the bureaucracy and slow pace of decision-making in France, which can hinder their progress and innovation.
And this lack of ambition may be traced back to a long time ago.
French people have been notoriously inventors, not innovators. Inventors are individuals who create or discover entirely new things. They are creative: they are scientists, researchers, thinkers, and philosophers, led by the willingness to find the truth and good explanations for the things we don't understand yet. They think, give birth, and discover but don’t distribute them or make them for production.
It stays on the shelves until someone else —the innovators— takes, improves, and sells it.
The innovators take these new ideas or products and make them available to the masses. They make new ideas famous to the crowd. They democratize the lab's discoveries and the desk’s thoughts.
Innovation is achieved when a product or idea eats the world.
Unfortunately, this is where most of the value (for product users, peddlers of the idea, or the inventor) is created. And this is where French people are bad at.
A few examples to illustrate:
The helicopter: Paul Cornu (French) built and flew the first successful primitive helicopter in 1907 but it’s Igor Sikorsky (Russian-American) who built modern helicopters.
The phonograph: Charles Cros (French) poet and inventor, developed the concept for the phonograph in 1877, but he did not build a working prototype. It’s Thomas Edison (American) that independently developed and patented the phonograph in the same year.
The submarine: The concept of the submarine had been developed by several French inventors in the 17th and 18th centuries, including Denis Papin and David Bushnell but it’s Robert Fulton (American) that has been credited with inventing the first practical submarine in 1800.
And the list goes on.
From Old to New
This trend continues today.
How many companies in the CAC40 have been created in the past 30 years? None. 0. Nada.
The youngest CAC40 company, Worldline, was created in 1967. 57 years ago. This is nice to have old companies that can survive over time. But it is even greater to have that, plus new, fresh flush joining the party.
By comparison, there are 33 companies in the US S&P500 that have less than 30 years.
Too few companies are created, which, of course, impacts job & wealth creation; meanwhile, the CNRS is facing €900 million in budget cuts.
This is especially problematic as we’ll face many challenges to solve in the coming decades:
Tech dependency
Energy production dependency
Climate change
Cloud dependency
Semiconductor dependency
The good news is that we have the necessary talent to handle it, thanks to the exceptional engineering and scientific schools in France. And that talent pool will be put to good use if it starts working on the right topics (these), right now (because speed matters) and in the right environment.
The bad news is that those schools while excelling in preparing engineers, scientists, and developers, are incredibly bad at creating entrepreneurs. They shape individuals to be valuable assets in big companies, not to create them.
Those disciplined engineers then go do consulting (like 20% of my promo), join GAFAM, or join very slow companies. They don’t go out to build startups.
I‘d like to see more students build their own stuff instead of trying to gain “experience in the field” before starting. The best way to acquire experience to start a company is… by starting a company.
I’d like to see Emmanuelle Charpentier or ****Yann LeCun scientist-like personalities leave the labs or quit GAFAM to build their own organization.
We have a few examples of companies trying to rival in ambition with US companies: Mistral AI, Ledger, H Company, Innovafeed, etc.
But this is not enough. We need more builders.
Shit, Sing & Cook
Many think France is the worst possible place to start a business because of hiring/firing constraints and taxes.
It’s true that it’s easier to hire/fire people in the US, but the global talent pool and stability of the country make it a very attractive place for companies: we’re especially great in engineering, math, AI, Quantum Physics, etc. This is why GAFAM has offices in Paris.
Additionally, there is much help from the state to remove tax burdens on small businesses or to relocate foreign businesses in France, making France a very good place to create a business.
We just need to put this idle knowledge to work.
We should look, open our minds, and see what’s happening elsewhere. We must cherry-pick the good things and keep our strongest assets and values. We should trade pessimism for optimism and ambition.
At Morpho, we chose to stay in France while everyone told us that, as a crypto company, it was impossible. Especially in Finance, an old, legacy and closed sector. But we did it while studying, without prior competency in that sector. We now have one of the strongest DeFi engineering teams in the world. The biggest hurdles we face are the ones we put upon ourselves, and this works for companies as well.
Frenchies must remove their chains and reconsider what is possible from what’s not.
Coluche once said that the cockerel was the French emblem because "it's the only bird that can sing with its feet deep in shit". To which Victor Hugo added: “It is the Gallic cock that awakens the world, and its cry can promise our deepest night, the dawn of the sun of Austerlitz.”
As French, we should not fear shit. We shouldn’t fear to sing and be optimistic.
France can awaken and inspire the world.
It’s on us to cook the #FutureOfFrance.
