- President Emmanuel Macron is an unconditional fan of start-ups.
- On several occasions, he has praised their model and intends to draw inspiration from it.
- But the book "Start-up Mania" recalls that the ecosystem and the functioning of start-ups are far from idyllic.
Officially, France has been a secular state since 1905. But a new cult that has appeared in recent years threatens this balance. It is attracting more and more followers, even in the upper echelons of power. Its followers use coded words - "pivot", "disruptive", " business angel " - and find themselves in temples with esoteric names - Station F, Numa. This religion is of course the "start-up nation", whose best prophet is none other than Emmanuel Macron.
"I want France to be a start-up nation, which works for and with start-ups, but also which thinks and moves like a start-up" preached the head of state during his homily in June 2017 at the Vivatech show. It must be said that a young innovative company, with strong growth potential (the basic definition of start-up), inevitably echoes the political journey of Emmanuel Macron.
However, is celebrating “French Tech” - the French start-up movement - hoping to see the future Google or Amazon emerge there, is it realistic? No, and it is even dangerous, essentially answers Michel Turin. In his new book, “Start-up Mania” *, the economic journalist develops a severe warning against those who would see start-ups as a new El Dorado. 20 Minutes was able to read the book in preview and extracted five arguments that show why we must keep a cool head in the face of the startup frenzy.
1. Because the environment for start-ups often resembles the Potemkine village
The expression “Potemkin village” designates a subterfuge aimed at concealing reality. Among start-ups, this art would be practiced with great care in the configuration of the premises. Michel Turin notes that they have their own codes, halfway between "the playground" (with table football) and "the three-room-kitchen" imitating a kitsch apartment.
Except that behind the varnish, "bac + 5 recruited by start-ups often find themselves busy performing repetitive tasks and without much added value," writes the journalist. Worse, "the supposedly relaxed working atmosphere and the supposedly warm open spaces are passing the big pill of working conditions close to slavery". Still want to play a game of table football?
2. Because the “valley of death” is never far away
In the jargon of start-ups, the “Valley of Death” ( Valley of Death , if you work in a start-up) indicates the moment when the first committed funds reach exhaustion. At that time, many start-ups, not yet profitable, fail to convince new investors and are wiped off the map. Even if the available statistics are rare, the various studies put forward by the author report a failure rate which oscillates between 70% and 90%.
Entrepreneurs should only blame themselves: the book cites the work done by the firm CB Insights. The latter has studied the "causes of death" of a hundred start-ups, and says that "the absence of a market" is responsible for 42% of "deaths", before the lack of money (29%). "Very often, first-time entrepreneurs do not master their subject," says Michel Turin. They are "much more concerned with seeking funding than with the need to respond to a market need".
3. Because start-ups have a very monolithic profile
The imagination of the start-up suggests that anyone can start a business and make a fortune. Nothing could be further from the truth. A study by the conference of the Grandes Ecoles shows for example that 79% of the founders of French start-ups present at CES 2016 in Las Vegas (the high mass of start-ups) had gone through a big school.
Another study by the French Tech Observatory dated 2017 revealed that 90% of start-upers were men. And many of them can count on their loved ones or their well-to-do families to get started cheaply. "Start-ups are not a social elevator," asserts Michel Turin, who also recalls that women who launch their projects are often victims of gender bias from French Tech investors.
4. Because they do not boost the economy
By definition, start-ups often have few employees (less than a dozen). They are often part of the digital sector, where the “intensity” of the workforce (number of workers required to produce) is low. Michel Turin quotes Patrick Artus, the chief economist of Natixis: "the idea that start-ups and digital jobs will make unemployment disappear is an illusion".
Similarly, the book recalls that the total fundraising carried out by French start-ups in 2018 amounted to 3.2 billion euros. An amount which may seem impressive, but which represents only 0.9% of the new credits granted each year to all businesses.
5. Because they are in a bubble that will burst
"When everyone dreams of creating their start-up, it is because things are going to spoil soon," warns Michel Turin. The economic journalist recalls that many start-ups accumulate colossal losses year after year, which could end up alerting investors. Uber thus lost several billion euros in 2019 and is only targeting profitability in 2021. WeWork, which specializes in shared offices, saw its valuation drop from 47 to 8 billion in a few months. "The question is not whether it is a bubble, explains the co-founder of a start-up interviewed in the book, but whether it will last long enough for me to surf on it."
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Start-Up Mania, French Tech put to the test of the facts (In bookstores on February 5, 2020. Calmann-Levy, 18 euros).
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