The Pigeon Movement – A rallying cry for French startups

http://www.rudebaguette.com/2012/10/01/the-pigeon-movement-frances-last-hope-for-startups/

by VSerge • 14 years ago

74 106 14 years ago

pefavre• 14 years ago

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

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...

43% does not seem all that low.

yannickmahe• 14 years ago

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

digitalengineer12• 14 years ago

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

louhike• 14 years ago

I made a copy of the article on Framapad in case it happens again: https://framapad.org/yiHBXpdYN6

masklinn• 14 years ago

Guy whines because high taxes on exit.

carlob6• 14 years ago

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).

bdfh422• 14 years ago

Phew - some "straw men" there don't you think?

It is the entrepreneurs who do the 70 hour weeks (no 35 hour limits for the boss/owner).

Start a company with €100 and grow it to be worth €500,000 on exit - that is an almost total capital gain (if you get to put something in a pension fund at the same time then you would be very lucky).

And all the while paying the very high social charges that accrue in France

carlob6• 14 years ago

Well you don't need to put money in a pension fund if you pay social charges.

mercurial3• 14 years ago

Regarding your points 3 and 4, he is talking about founders, not regular employees.

digitalengineer12• 14 years ago

It says "60% Capital Gains tax - the real innovation killer" in a big bold font. We're talking about startups in France here. You can be in 3 other (more tax-friendly) country's in a few hours drive. Also founders are not employees. You can easily work 70 hours (and still fail, that's why people looking to sell their company will hate the 60% capital gains tax). And again: As founders are not employees they do not receive the same benefits when they fail / get sick / whatnot.

carlob6• 14 years ago

Yes they do if they pay their social charges.

madflo• 14 years ago

The 35 hour workweek is not as simple as "only working 35 hours". It is the case for blue-collar workers (ouvriers) but things are less rigid for white-collar workers and management (cadres).

"Ouvriers" are paid by the hour and "Cadres" per day. All engineers working in IT should have a "cadre" contract, so they do not really count their hours.

Boss or staff, in the French startups with whom I did have the pleasure to work, the 35 hours are far away from the really worked hours.

carlob6• 14 years ago

I know engineers who get up to 8 weeks of paid holiday because they accrue JRTT (days of reduction of work time) when they work overtime.

reitzensteinm3• 14 years ago

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.

carlob6• 14 years ago

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.

RudeBaguette2• 14 years ago

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

http://us5.campaign-archive1.com/?u=a2b057f584a796c058282094...

digitalengineer12• 14 years ago

Thanks!

subsystem3• 14 years ago

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.

VSerge4• 14 years ago

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.

mempko4• 14 years ago

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...

bdfh422• 14 years ago

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.

Fjslfj• 14 years ago

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.

VSerge4• 14 years ago

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.

digitalengineer12• 14 years ago

(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".

justincormack• 14 years ago

Or go to Belgium just next door where there is no capital gains tax on exits at all.

digitalengineer12• 14 years ago

Who do you think provides jobs and economic growth? Your government or new businesses?

rguillebert9• 14 years ago

On the other hand, who paid for the education of your employees ? Who pays when they go to a hospital ? Who built the roads they use to get to work ? Who is going to give them money when they get old ? Who pays the policemen who protect your office from robberies...

mseebach9• 14 years ago

Ah, so there's the taboo against wanting to be rich babarock was referring to. As a francophile european, I am grateful for your volunteering to be poor so my vacations will be cheaper. Keep up the good work!

subsystem3• 14 years ago

Not fixing the deficit is surly a superior way to "volunteering to be poor".

l0nk• 14 years ago

I agree.

Please stop whining :)

hbbio• 14 years ago

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!

jgrahamc3• 14 years ago

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.

RudeBaguette2• 14 years ago

I rebut everything you just said with one article: http://www.rudebaguette.com/2012/02/07/six-lies/

draggnar• 14 years ago

could you maybe summarize your refutations here?

jgrahamc3• 14 years ago

No, you didn't. My major points were: high taxation and employee laws.

Your rebuttal on taxation is: "In addition, these high taxes are the same high taxes that allow entrepreneurs in France to live off of a 70% unemployment salary for 18 months after they are let go from their company. What goes around comes around."

And? That's fine, but that's not what a startup cares about. Sure, it's what a person cares about, but it does nothing to address my fundamental point about the tax/social charge burden. And your other point about there being an 18 month delay in the first tax return is pointless: the taxes still have to be paid.

On employee mobility, you say: "well, unless of course, you have a periode d’essai (“trial period”) written into the contract (which is the case ~100% of the time), which allows you to let go of an employee with little to no notice for the first three months. Oh, and you can also request to renew the trial period for an additional three months, legally – but you know, if you suddenly hate your employee after six months, well then, buddy, you’re S.O.L."

And? After 6 months you hit all the problems of an employee who is very, very hard to fire.

reitzensteinm3• 14 years ago

Wait, your rebuttal to "France is not a country where they really promote entrepreneurship" is that the French president gave a speech admitting that the country was risk averse and needed to become more entrepreneurial?

If that's the caliber of argument you're bringing to the table, I would soften your tone a bit.

flyinRyan2• 14 years ago

Have you actually been to france? You most certainly can "fire people who aren't working out". The car companies put thousands of people on the streets when the economy tanked. France also tends to have long "probation" periods to ensure they can do exactly that: fire people who aren't working out. What you can't do in France as easily is screw people the way you can in places that aren't as interested in worker's rights (e.g. Zynga and the "google cook").

> to the 35 hour employee work week

Again, if you'd actually worked in France you'd know this doesn't apply to everyone. IT workers work long hours in France just like anywhere else. But it seems you also have a misconception about how human productivity works if you think 60 hours a week (you didn't say this, I'm just guessing based on your tone) will give you a more productive year than 35 or 40 hours.

jgrahamc3• 14 years ago

Did you actually read the first line of my comment?

"But it seems you also have a misconception about how human productivity works if you think 60 hours a week (you didn't say this, I'm just guessing based on your tone) will give you a more productive year than 35 or 40 hours."

No, I didn't say that and you shouldn't read that into what I was saying. I was specifically comparing the situation for startups that I've seen having worked in them in the UK, US and France.

And I am specifically NOT wishing to comment on the moral or political motivations for the work environment in those countries. Each country has developed its own history and culture which I do not seek to criticize. My original point was that I do not believe France is a good place for startups. That is all.

shin_lao4• 14 years ago

Hi, I run a business for a couple of years in France now and you're factually wrong and mixing things up.

There's a difference between a lay off for economical reasons by a big company (which can afford it) and a small company trying to get rid of an inappropriate person (extremely hard).

Even getting rid of someone during probation can be cancelled in trial and become very expensive.

I'm not saying employment at will is the solution, but the system we have in France doesn't work.

babarock3• 14 years ago

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.

cdavid5• 14 years ago

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.

huhtenberg• 14 years ago

Interesting, but what I don't understand is why businesses aren't adapting and working around this sort of issues.

Look at Canada - you can't discriminate based on gender, age or race, but you can hire beautiful young girls as models that also happen to wait tables in Cactus Club and Earls. If full-timers are such a pain to deal with in France, why not hire more contractors? In fact, why not skip full-timers altogether. Seems perfectly doable, especially in startups context, no?

mempko4• 14 years ago

It appears the rich are the enemy if what you say is correct. The rich want to pay people less, have them work more, and in the end they also want the system to help them do this.

How are the rich not the enemy here? Maybe VC funding and the startup culture is really not the best way to build technology, despite what Americans may have you believe.

VSerge4• 14 years ago

What you say is right, but we also have advantages, like the quality of our engineers, etc. The point is, it might not be optimal but we can deal with it. This 60% exit tax, we won't be able to, and this is why I think it is significant.

sigil• 14 years ago

The litany of employee problems that he has to face because he cannot fire people is a nightmare...

The workaround for that in France: don't hire people.

I worked for a French startup. The founder rented all his employees from a consulting agency that assumed the risks and costs of providing fulltime employment. The end result was something that resembled American at-will employment, but with a higher cost of labor.

thibaut_barrere• 14 years ago

"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.

troels• 14 years ago

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.

shin_lao4• 14 years ago

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.

epsylon2• 14 years ago

>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_lao4• 14 years ago

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

conradfr• 14 years ago

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• 14 years ago

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!

subsystem3• 14 years ago

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.

Millennium• 14 years ago

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.

epsylon2• 14 years ago

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

mercurial3• 14 years ago

It's a form of "You treat us as if we were suckers? We'll call ourselves that to show the world we are being exploited!"

VSerge4• 14 years ago

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

mgallezot• 14 years ago

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.

corford• 14 years ago

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.

mempko4• 14 years ago

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.

davidwg• 14 years ago

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.

abrown28• 14 years ago

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

The Pigeon Movement – A rallying cry for French startups

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