Software à la française

March 18, 2010

Last night I had a pseudo-intellectual discussion over dinner with a friend and former Paris resident visiting from the States.

My friend is a competent business executive with myriad experiences in tech startups on both sides of the Atlantic, and he entertained me with some anecdotes of his disastrous experience at a once-hot French software firm that has since lost its way. Fortunately, enough time has passed that he could look back and laugh now on that particular episode, but the stories led us to a more generalized discussion contrasting the strategies of software startups in France and U.S.

Of course, it’s always dangerous to stereotype (though I love to do it), but I also sincerely believe there are a few common patterns that emerge in software ventures in both regions that may enrich a more general debate about the North American vs. European software sector.

Product management

Perhaps the most salient sympton of the differences between the geographies is the interpretation of product management. U.S. software firms do not take this role lightly. It’s the discipline that governs a software innovation from conception to market delivery and is managed by an early key hire in the firm, if not a founder that is exclusively dedicated to the task.

The emphasis of U.S.-style product management is its market-driven focus. It begins with an observation of an unmet market need, followed by a thorough identification of the potential market opportunity and relevant audience, and culminating in iterating a solution that addresses the unmet need.

Market-driven innovation vs. “technology-driven innovation”

In contrast, it’s not uncommon in France for a technology to be viewed as the raison d’être for a business. I put quotes around the notion of “technology-driven innovation” because many would argue that true innovation by its very definition must be market-driven.

Shocking as it may sound, innovation is often perceived as being technology-driven in France’s software sector. I have a few theories for this:

  • For one, the cradle of many French software firms are large technology giants. Groups like France Telecom boast enormous R&D departments which routinely give rise to technology spin-outs. At inception, these spin-outs generally consist of a handful of technicians with a cutting-edge technology who then set out to find a market.
  • Secondly, state subsidies play an instrumental role. There is a dearth of early-stage financial support for startups. Government subsidies fill the gap (more on this topic in a future post). However, French state subsidies are biased toward technology breakthroughs. Every firm that successfully receives state subsidies will have successfully prepared a convincing “dossier” of its technological prowess.
  • Ironically, perhaps another explanation is the market itself. Large French enterprises are reluctant to risk contracting with small French software companies. As many executives in the industry often joke, it is easier for a home-grown French software startup to win its first big corporate client in the U.S. than in France. The only way to overcome this, short of “conquering the U.S. market so that you can someday win France” is to identify some critical technology differentiator on which they can successfully compete.

To be continued…

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posted in venture capital by mark

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