Today in France only one voice really rings out when it comes to the growth and development of tech startups: that of unicorns and hypergrowth.
A new animal was recently added to the bestiary: decacorns (companies valued above 10 billion dollars).
It all really started two years ago, when President Emmanuel Macron, inaugurating StationF, announced France's metamorphosis into a Startup Nation.
Since then, every week, it's a race to the biggest fundraise. Ministers and secretaries of state turn into spokespeople and impresarios of an economy that keeps drifting closer to a star system.
This is the current Frenchtech policy. Push the future champions and super-champions of #tech. Among them OVH, Bla-Bla Car, Swile (formerly Lunchr), Doctolib.
Very few of us dare to criticise or question this consensus, at the risk of being pointed at like a communist under Hoover. Banished from the Frenchtech Olympus. Worse: accused of indulging in French bashing.
One must bless the startups, the unicorns, the VCs, the nine-figure rounds. That's how it goes in 2020.
I have always struggled with dogmas. I feel I'm missing something. I usually prefer the middle path. Simplistic reasoning, or no reasoning at all, and irrational adulation without explanation leave me uneasy.
So I'd like to pause for a moment on a few societal questions raised by this movement and this policy.
What are the consequences of this Frenchtech unicorn race? Who will benefit from the creation of tech super-champions in France?
Why hypergrowth?
Choosing hypergrowth is first of all deciding (or being in a sector that imposes it) to go fast, very fast, often to disrupt an industry and/or get ahead of incumbents.
It is also satisfying investors who expect very large financial returns at exit (resale or IPO). Be they investment funds like Kima, Partech, business angels (private investors) or institutional players, each one is looking for a more or less substantial ROI.
Building super-champions means preparing super-resales and other IPOs.
This high-speed train relies on heavy hiring during the scale-up phase and growing market share until reaching - ideally - a monopoly or quasi-monopoly position (see Peter Thiel's principle in Zero to One, the startuppers' bible). Competition is good; the absence of competition is even better…
The ultimate goal of hypergrowth is the resale of the company with a large capital gain for investors, or an IPO: the super-champion is born.
It may be a unicorn (a company valued above one billion dollars) or - more recent - a decacorn (more than 10 billion).
Many startups are created with the goal of being resold within five to seven years. It's a fairly classic tech model. Hence the very strong growth in a short time: hypergrowth.
Beneficial for whom?
Is this business and growth model beneficial for the end consumer? One is entitled to doubt it. Building super-champions aims to reduce (or annihilate) the number of competitors within a sector. Many examples show that less competition in a sector tends to be negative for the end consumer: price collusion, monopoly, slowing innovation, rising prices, etc.
Is hypergrowth beneficial for the employees of the companies that choose this path? I am rather sceptical. Hypergrowth means mass hiring, often heavy turnover because employees are under heavy pressure from the pace required to achieve that strong growth.
Having spoken with many employees of scale-up and hypergrowth companies, it is not uncommon to see staff who are very stressed, tired, exhausted, some on the brink of burnout.
Let's not erase, however, the real and sincere efforts these hypergrowth startups put in around QWL (quality of work life), the hiring of CHOs (Chief Happiness Officers), work on company culture and other initiatives to improve employees' lives.
Here too, it is a fact: it is much harder to have people thrive over the long term in a hypergrowth company than in one with less frantic growth.
And jobs?
To my detractors who will think I have become Amish, that progress and super-champions will create plenty of jobs anyway, that the jobs destroyed will be replaced: there is a substantial body of studies and books showing that this fourth industrial revolution is not of the same nature as the previous ones.
Many jobs destroyed by the super-champions of #tech, the uberisation of industries, the platforms, etc. will not be replaced one for one by new needs (see The End of Work by J. Rifkin, The War on Normal People by Andrew Yang).
How many millions of jobs has Amazon destroyed for instance? Entire sectors, the whole American mall ecosystem…
And if these super-champions did create jobs after all, what kind of jobs? Precarious, low-qualification, underpaid?
Who benefits?
Who are the stakeholders who will benefit from the birth of these unicorns and decacorns?
First, let's say it again: the shareholders of these startups. And that is fairly normal - they take the (often substantial) financial risks that come with the very nature of startups. The benefit is mostly financial. From the startupper who becomes a multimillionaire on the sale of their startup, to the investment funds doing x10, x30 or more on their initial investment, they are the first beneficiaries.
Next, politicians, who see in this "star-systemisation" a communication axis that is both easy and likely to win votes or public admiration. Big numbers turn heads, journalists pick up the frenzy. The hypnosis works well (see SnowflakeDB's recent Nasdaq listing, the largest IPO ever for a software company - no upside for France beyond glory and political appropriation of this made in France champion that… left for the US).
Hypergrowth is the climax of capitalism in its Red Bull version, on amphetamines.
Making as much money as possible in as little time as possible, with a company as the vehicle. This 21st-century lottery leaves the bystander mouth agape and full of admiration.
I see few, if any, axes on which the policy of hypergrowth, unicorns and super-champion creation is beneficial for society and the many. But I'd be happy to be contradicted on this point.
The forgotten long tail
I also see a negative side effect on the vast majority of tech startups that will never become super-champions. They are plunged into the shadow of the official communication and political spotlights, as if they were not part of the "game" of this startup nation.
Many founders of these startups don't recognise themselves in this "hyperTech".
French tech unicorns are only a tiny share of French startups. A small share too in terms of jobs and overall value (read: for the many) for our Frenchtech.
The vast majority of startups sit in the long tail (analogy to the long-tail economy, Chris Anderson, The Long Tail) - companies that raise little or nothing. Companies that achieve good growth but not hypergrowth. The ones VCs and investors are less interested in. The ones with no exit strategy from day one, that aren't created to be resold in the short term. The ones playing the long game.
These are perhaps the companies we should not forget, and treat with at least the same enthusiasm and political will. They generate as much, if not more, sustainable growth, durable jobs, sustainable development, and value for the economy and the territories as the very few super-champions.
The ideal entrepreneur?
Finally, is the ideal entrepreneur in France, and for society, necessarily the founder of a super-champion? Do we really want to hold up that type of entrepreneur as an example? As a reminder, in the US the ratio between a CEO's salary and that of an employee went from 1:20 in 1965 to 1:271 in 2016 (Economic Policy Institute, June 2017).
So why focus so much on these hyper-champions when other modes of growth might let everyone find their place over the long term, durably: consumers, employees, society, environment. A less risky kind of growth too.
Why reproduce a model of society and tech development copy-pasted from the United States, a country whose society we know to be sick, socially unjust and on the edge of chaos?
Wouldn't France - country of the Enlightenment, of Human Rights - and Europe more broadly, have been better off engaging in deeper reflection on other growth strategies, more aligned with our values, our social model, the environmental and societal stakes of the 21st century?
Other paths exist, including mission-driven companies, the social and solidarity economy, Tech for Good. All these other routes are too often relegated to the second tier of political action. They are also, by definition, diametrically opposed to the goals of hypergrowth and spotlit unicorns.
Because here it is the political apparatus that distorts the market, focusing its action mainly on one economic development model for the tech sector at the expense of all others. The same apparatus that unbalances Adam Smith's invisible hand and the market's ability to define itself.
We should all decide today whether tech and this fourth industrial revolution will indeed sound the end of work, generating ever more inequality to the point of becoming socially unbearable, or whether they will serve the common good and help guarantee the social and environmental pact.