As I have crowed many times in this space before, Japan is demonstrating renewed energy and enthusiasm in the tech sector. Mobile gaming giants like Gree and DeNA, explosive social networks like Line, and e-commerce leaders like Rakuten, are inspiring success stories for France which recently began venturing abroad.

Now Japan’s overall economy seems to be following suit. This week’s Economist offers a fantastic assessment on Japan’s sudden rebound. Only The Economist could link references to Superman, Soapland, and a Scarlett Johansson / Bill Murray film in a macroeconomic report and keep a straight face.

With a cover of Prime Minister Abe in superhero flight, the series recounts Japan’s economic awakening since the last elections: a galloping stock market, GDP growth of 3.5%, $100 billion in stimulus, an export-boosting currency devaluation, adherence to the Trans-Pacific Partnership espousing free trade, and more.

Given the Bank of Japan’s deliberate policy toward inflation, it’s no wonder that the U.S. government complains about currency manipulation, nor that many investors like Mark Cuban have made a massive short bet on the yen.

For a variety of reasons, I have a strong personal affinity for Japan. Yet beyond personal attachments, I believe the country’s renewed tech sector offers a ton of inspiration for France.

Let’s start with mobile gaming. Platform companies Gree and DeNA have become household names in Japan and are increasingly looking internationally. Both firms have cracked the nut of freemium, with revenues of $422m and $567m respectively per quarter, profit margins exceeding 30%, and ARPU figures that put Zynga to shame, even at its peak (don’t miss Tom Limongello’s piece on the Japanese art of monetization).

Meanwhile, GungHo, the developer of the jawdroppingly successful mobile game Puzzles & Dragons, generated $113m in April alone and now boasts a market cap that exceeds Gree, DeNA, and Zynga combined (surpassing Nintendo even).

Take a related topic which I submit poses tremendous potential: HTML5. Japan’s Docomo embraces this new standard, throwing its weight behind new O/S Tizen and Buongiorno’s efforts here. KDDI Mugen Labo, the tech incubator by Japan’s second largest telco, has set up a special application category for HTML5-engineering startups.

With an eye toward building a global leader in e-commerce, in 2010 Rakuten CEO Hiroshi Mikitani embarked on a program of global m&a (including among several the acquisition of PriceMinister). And one day Mikitani unleashed an edict of “Englishnization”, suddenly requiring all company business to be conducted in English.

And it’s not just the proven success stories that are looking abroad. Many seed-stage firms in Japan exhibit global ambition from the start (this great post from SD Japan zooms in on five of them).

More generally, take design. The same simplicity principles of wabasabi that so inspire Jack Dorsey lend themselves to the design of user interfaces on some of France’s best consumer tech: mobile apps like Bankin, or hardware like Invoxia’s voip console. There still exist too few examples like this in France, though I am encouraged by the upcoming generation of French entrepreneurs with global aspirations and audaciousness in mind at inception. Hopefully both the government and financing sector will catch up.

A word of caution, of course: Japan’s growth trajectory will probably not be full-ahead, full-time, and witness a 70% stock market rise every 6 months. There will likely be some throttling. The weakening yen may dampen the lofty valuations of foreign acquisitions. Already Gree is retrenching a bit from its international adventures in China. What matters is the long-term trend. And right now, the fundamentals look positive.

In an interconnected world, insularity leads to economic ruin, wrote Mikitani in his new book.

Yeah, I’d say France could draw a lesson or two from Japan.

Exactly ten days ago the yearly ritual of ‘Woodstock for Capitalists’ took place. Also known as the annual shareholders meeting of Berkshire Hathaway, this may well represent the only public company’s shareholders meeting whose promise of attendance can be the sole reason for investors to purchase a share of its stock. Of course, another reason is the unparalleled financial performance of the company led by arguably the greatest investors of all time: Charlie Munger and Warren Buffet.

I enjoy reading Buffet’s yearly letter to shareholders in introduction of BRK’s annual report. And while I’m still sifting through some of the euphoria of the shareholder meeting for his customary pearls of wisdom, one gem struck me as particularly relevant for stakeholders in the current state of France’s VC market, to paraphrase Buffet:

If consumers try to invest in every product pitched to them, they will do very well for their money manager and not very well for themselves.

French taxpayers tempted to blindly plow their savings into tax-optimization products, I’m thinking of you. Undoubtedly due to a burdensome fiscal environment, France boasts one of the largest and most developed industries of tax advisory intermediaries in Europe. For anyone owing income or wealth tax in France, a panoply of financial products exists to help them reduce the tax bill: charities, support for the arts, overseas territory investments, real estate schemes, and even tech VC funds. I’ve already written extensively about this last option – so-called retail VC funds – so I won’t rehash all the gory details.

However, I believe that we have entered a phase where many of these retail funds have become Zombie VCs. Danielle Morill wrote a trenchant piece on Zombie VC funds, complete with warnings for startups and even a list of candidates for the zombie status. I also recommend Fred Destin’s follow-up to this piece with his handy guidelines for entrepreneurs to spot an active VC firm.

Beyond the relevance for startups raising money, in France a wariness of zombie VCs is also relevant for taxpayers considering investing in such a fund.

Danielle and Fred explain it eloquently (and these recent pieces in The Economist and the FT add some additional color, or should I say pallor?). But in a nutshell, a zombie VC is a fund that has stopped or severely curtailed the lifeblood of its business: investing in startups promising high potential, and culling those that don’t, all in the pursuit of financial performance.

When a VC runs out of money, it of course can no longer invest in new companies. Often those entering zombie status will preserve their remaining funds to support their existing portfolio.

The nature of France’s retail VC model, however, makes the onset of zombie status particularly acute. First, retail VC funds operate on a yearly, even semi-annual, fundraising cycle (whereas conventional institutional VCs raise larger funds on average every 5~7 years). The precipitous decline in retail VC fundraising (due largely to fiscal changes discussed here), combined with the economic downturn, has suddenly thrust the majority of France’s VC sector into risk of zombie status.

To make matters worse, a French retail VC zombie has little incentive to cull the underperformers in their portfolio. Better to keep such firms on drip financing status, just alive enough to justify continued billing of management fees to the funds’ investors (once a portfolio firm is written off, the VC can no longer charge management fees on that asset). The result is the creation of a class of Zombie Startups and a huge disservice to the funds’ investors who are paying fees to someone to throw good money after bad.

As the FT points out, “The problem with these ‘zombie’ funds is that if nothing is happening with a private equity fund, the very concept of charging a 1.5% to 2% fee for managing it deserves to be challenged.” (2.5% to 4% in France, by the way).

Taxpayers: do your research before sticking your necks out.

Last week NYSE Euronext announced the imminent launch of an “SME Marketplace.” Managed by a dedicated subsidiary set up in France, it will have its own brand, operating budget and team.

It is hard to understand exactly what this means. Judging from the Euronext press release, the initiative appears to represent more of a hierarchical restructuring of reporting lines than a new dedicated exchange.

Apparently, the Marketplace will encompass companies that are listed on the B & C compartments of Euronext, as well as the Alternext listed companies in Paris, Amsterdam, and Brussels, a total of 800 public companies, essentially small and mid-caps. It does not appear, however, to involve any kind of merger or aggregation of the three exchanges.

If this move merely represents an administrative reshuffling, that would be a pity. However, to the extent that this launch represents a concerted effort to improve accountability, visibility, and by consequence, trading volumes, there may well be some benefits in this.

I’ve long been a skeptic of small French tech companies going public too early. The Alternext tends to be the market of choice for such companies: it is lightly regulated (technically ‘unregulated’); there are a handful of local investment banks that will serve as listing sponsor for a modest fee; and raising capital in the range of 10M€ is fairly straightforward (albeit still requires a formal filing process and a successful sales effort of securities to the public market).

My beef with small firms going IPO is that after the initial capital injection occurs, many companies fall into some sort of purgatory. The trading volumes, and hence liquidity, are low. Two detrimental consquences ensue. First, low trading volumes often handicap a company’s stock price, resulting in a market cap that sits below the intrinsic value of the firm. The danger of a consistent situation of undervaluation is its demotivating effect on management, employees, and shareholders. It also taints any discussion with potential strategic acquirers with whom hypothetical negotiations would inevitably anchor toward the low market cap.

The dirty little secret of French VCs

The second consequence is a dirty little secret in the French retail VC world. It is not uncommon for French VC funds to push their venture-backed companies toward an IPO. The ostensible justification is the quest for an exit. However, barring a few limited exceptions, an IPO on these smaller markets is not an exit. Far from it. The trading volumes are simply not sufficient to enable a significant shareholder like a VC to sell its block of shares, even over the course of several years. Yet, this is where the dirty little secret comes in: VC’s that IPO a portfolio company while remaining a shareholder can still assess management fees to the funds’ investors. Furthermore, since management fees are calculated on the net asset value of assets under management, a VC can effectively increase its take in management fees if the IPO valuation of the company is higher than its initial investment cost (which is almost always the case). It’s the best of both worlds for a VC management company: boast about an exit while still milking high management fees.

A re-branding effort of the Alternext and its lightly traded counterparts B & C of the Euronext, with a veritable commitment to provide resources to and to promote the exchanges’ listed SMEs, would be a welcome boon to the investors and the companies who are floundering today on the public market.

Although there are no guaranteed methods to successful VC funding in France, some approaches are doomed from the start. Here are five such missteps I’ve witnessed, all from just the past few months, and of course kept anonymous because I believe in second chances.

1. Send me a blind teaser, aka Project X, containing such a paucity of information on the project that an initial judgment is impossible without signing your attached NDA.
2. Send your pitch to me in an email addressed as Dear Sir or Madam, or Monsieur/Madame.
3. On an even sillier variation of 2, send me your pitch in an email with numerous other VCs in the To: field.
4. Following exchange of pitch deck and upon my invitation, spend a fruitful first meeting with me, of which the conclusion is a clear decision to not invest, though not without a fair dose of constructive ideas for your business. Then a few months later, contact my partner behind my back with the same investment pitch.
5. Prominently pitch your project as having the Oséo qualification Entreprise Innovante. Believe it or not, I still frequently receive pitches where this point is displayed front and center in boldface in executive summaries. If the fact that you completed some government forms to receive an arbitrary “innovation certification” by some bureaucrat is your project’s best attribute, it’s not suitable for investment from a performance-focused VC.

I just returned Sunday following a week off the grid with family. Part of my travels took me through New York, during which I indulged on two of my favorite weaknesses: authentic New York bagels, and pastrami on rye from a Brooklyn deli.

Of course, nowadays I don’t have to travel all the way to New York for a bagel. Paris seems to be suddenly crawling with snack shops selling supposedly authentic NY bagels and pastrami sandwiches (less authentically, our city’s not crawling with the most frequent patrons of the NY shops: cockroaches).

So as a bagel and pastrami consumer, I should be delighted, shouldn’t I ? Well, actually, no.

Granted, for Paris to become a more international city, importing some trendy foreign restaurant concepts is both necessary and welcome. But this American copycat phase has gone too far. First came the Los Angeles-style food trucks like Le Camion Qui Fume and Cantine California (hats off to these pioneering expats who validated a market). Then the late adopters joined the fray, renovating traditional French brasseries into wanna-be Brooklyn-style hipster cafés (TriBeCa on Rue Cler, I’m thinking of you). And now, in proof that Paris has finally jumped the shark on this concept, a place on rue du Strasbourg St-Denis called PNY (Paris New York) opens up offering burgers, cheesecake, and “yumise”.

If Paris reduces itself to a mere fast food follower in the culinary sector, what’s next on this greasy slope ? Next thing you know we’ll be awash in unversity sweatshirts, startup accelerators, and government-sponsored Silicon Valley replicas. Oh wait…

The danger is that an egregious absence of original thinking manifests itself in questionable projects like the French Google-copycat, Quaero, or more recently, the Commission Innovation 2030. Announced just last week, the French government created the Commission Innovation 2030 headed by former atomic energy agency chief Anne Lauvergeon and 19 other old white Enarques (grads of the Ecole Nationale d’Administration, finishing school for top bureaucrats) whose mission is to identify France’s next Apple.

Maybe bagels every breakfast and burgers every dinner will be easier to stomach.

An interesting conversation I enjoyed last week directed me toward some research by Adam Grant, a tenured professor of organizational psychology at Wharton.

Grant’s research, on which he elaborates in his upcoming book, Give and Take, (and encapsulated in a great article by Susan Dominus in the NY Times Magazine), espouses the notion of how giving unconditionally to others can unlock professional success.

Grant identifies three categories of people through this lens: Givers, Matchers, and Takers.

Givers give without expectation of immediate gain; they never seem too busy to help; they share credit openly and mentor generously. Matchers view the world more in terms of reciprocal checks and balances, giving generously to people who they think can help them or when they can see how they might receive something of comparable value in return. Takers exhibit the Heads-I-win / Tails-you-lose mentality, are averse to sharing information openly and are defensive about their turf.

Grant advocates that helping lavishly without any expectation of payback motivates the Giver in a way that spurs increased productivity and creativity, effectively returning dividends far beyond the time and energy spent assisting other people.

Reading about Grant’s research triggered me to think of its applicability to venture capital. While I had never thought in terms of Grant’s three specific labels, my preconceived belief was that good VCs tend to be Matchers. They build relationships early with entrepreneurs with an eye toward future deal flow. They build relationships with other VCs with future co-investment needs or opportunities in mind. They build relationships with key actors in an ecosystem that may one day become suppliers, customers, advisors, partners, or acquirers of their portfolio companies.

I’ve generally modeled my own professional behavior on the Matcher model. And frankly, I submit that in Europe this has proven to be a differentiator for me. It amazes me how many VCs I’ve encountered that tend more toward the Taker profile. Taker VCs seek to come out ahead in every business exchange. My guess is that the VCs reading this do not fall into the Taker category, but that many entrepreneurs reading this have experienced an interaction with a Taker VC.

My thoughts are still evolving on this topic. While I could never accept being a Taker as it’s simply not in my nature, I cannot claim to be an altruistic saint of a Giver either. Inspired by Grant’s convictions, I’m going to think more about how I might exhibit more Giver-like behavior.

So ask yourself, entrepreneurs, is the VC with whom you are engaging a Giver, Matcher, or Taker? And similarly in the spirit of personal advancement, I welcome constructive suggestions on how I can be more of a Giver VC.

“Seek and ye shall find,” thundered Ed Harris from behind bars in a pitiful 1995 film called Just Cause that was a knock-off of Silence of the Lambs and In the Heat of the Night. Harris’ character, a wanna-be Hannibal Lecter, causing the whole movie theater to burst out laughing in ridicule at the over-the-top ludicrousness of the story.

Seventeen year-old memories of such an uninspiring waste of time of money that Hollywood tricked me into taking my girlfriend to see on date night were strangely unearthed last week when I read about the fate of Quaero.

Quaero, which means I Seek in Latin, was an initiative launched during French President Jacques Chirac’s administration with ambition to become the European ‘anti-Google’. It’s safe to say that France never found what it was looking for with this one.

I’ve already written about the futility of government attempts to carbon-copy Silicon Valley in their home territories. Just as previous attempts to duplicate the Silicon Valley ecosystem have ended in embarrassment and wasted resources, government efforts to duplicate specific companies without regard to market dynamics often meet similar fates. The latest example of this type of embarrassment and wasted resources made headlines last week in France upon the release of Oséo’s post-mortem of the Quaero project.

Even back in 2005, a government initiative to create a search engine counterweight to Google, was as silly as it sounds today. I recall mocking the idea at dinner parties back then, but I had no idea how stubborn and wasteful the government would prove to be in this distraction.

The verdict was rendered last week, paradoxically in the form of a celebratory luncheon: a leviathon of 32 industriel companies led by the French government collectively spent over five years and 198M€, half of which came from French taxpayers.

Oséo is arguing that the project spawned multiple ‘technological ruptures’. Possible. But over-engineered pieces of soon-to-be-obsolete technologies without a market is my bet. Even if some parts are salvageable (and I sincerely hope the full 198M€ was not squandered), the project is an epic fail. It’s not Oséo’s risk-appetite I’m against; on the contrary, France badly needs a culture of calculated risk-taking, and I commend Oséo’s attitude here. The problem is that Quaero is a fail (not failure, which is more respectable, but fail) in terms of efficiency of capital and opportunity cost.

You see, when the private sector invests in innovation, its capital can be patient (also like Oséo is proud to claim), but let’s not confuse patience with exigeance. Private capital demands a financial return on its investment. The higher the investment and the more time goes by, the higher the absolute return must be. When the leaders of an ambitious project request additional funds, private sector investors will carefully scrutinize signs of progress and confirmation of continued ROI potential before opening their wallets.

The opportunity cost of such a monumental misguided effort is that it sucks the air out of other innovative projects in adjacent domains. The talented individuals working on Quaero were off the market for five years. A project of highly-complex technical components can draw some of the brightest engineers away from other things. Former CEO and founder of Autonomy, Mike Lynch expressed it this way:

“Not only did [the Quaero project] fail but it had a scorched earth policy — no one would invest in related areas in Europe, thus it killed areas of innovation.”

Oséo remains undaunted, announcing its appetite to sponsor other similar ‘radically innovative’ programs. While I sincerely appreciate the government’s badly needed financial support to innovation in this country, I submit that there are more effective ways than dispensing large sums on projects that require unwieldy collaboration of multiple enterprises (hint: a week ago I wrote about just one).