Europe is full of national champions and U.S. companies are very good at snapping them up in their bid to build international giants. But that is starting to change as European start-ups get better at the art of scaling. Sweden has a particularly good track record: think Qliktech, MySQL and Spotify. Now the French are starting to rack up some success stories of their own.
Four French companies that are scaling internationally — Criteo, BlaBlaCar, Smartbox and Videdressing — took part in a panel discussion moderated by Informilo Editor-in-Chief Jennifer L. Schenker at the Irish Embassy in Paris April 29th. The roundtable, entitled “How To Scale World-Class Technology Companies From Europe”, was part of a networking event sponsored by the Irish Development Authority (IDA) and Atlantic Bridge, a growth equity firm with offices in Dublin, London and Palo Alto. It is one of a series of networking events Informilo is organizing with partners around Europe. Next up? Moscow and London.
Participants in the Paris roundtable included top executives from Criteo, BlaBlaCar, Videdressing and Smartbox as well as Benoist Grossmann, a managing partner at Idinvest, an investment firm specializing in fund investments as well as direct investments in French start-ups. Grossmann is currently on the boards of Criteo, Viadeo, Dailymotion, 24h00 and Winamax.
No Lack of Skilled Engineers in Paris
Criteo, an ad tech company that prices and supplies personalized advertising in real time for e-commerce clients, is now present in some 50 countries. It had an upsized IPO on NASDAQ in late October. The company had to pivot several times before getting its strategy and product right. After a rocky international start – it launched its product into the UK before it was ready for prime time — it took the time to get the tech right, said Criteo co-founder and chief scientist Franck Le Ouay, a roundtable participant. (Le Ouay is pictured on Informilo’s home page). The ad tech company then hired natives of target countries to work in its Paris office to test that new markets would generate enough business before hiring staff in foreign locations.
Today the majority of company’s employees — now more than 900 — work outside of France, although the company is legally headquartered there. CEO and co-founder Jean-Baptiste Rudelle lived and worked in California for a time, as did Le Ouay, but both are now back in Paris.
There is no lack of skilled engineers in Paris, says Le Ouay, but as a company grows it needs people with specific types of experience, such as a marketing director who knows how to coordinate the brand globally or a chief financial officer who has experience taking a company public on NASDAQ. All of the panelists agreed that these types of people are still hard to find in Paris.
While finding the right talent is a hard task Criteo’s fast growth has posed a number of other challenges.
“The hard thing is you never know what will come next,” said Le Ouay. “There are so many issues and so many things you have to fix. And then you think you find solutions and six months later you go through the same thing again.”
How To Keep The Company Culture
Keeping the company culture is hard as the company grows organically and through acquisitions. Earlier this year Criteo bought France’s Tedemis, for €17 million in cash and €4 million based on hitting certain agreed milestones. Tedemis specializes in real-time opt-in personalized email marketing tools that are designed to help advertisers turn web visitors into customers. Criteo currently offers CPC advertising solution on the web and mobile, and Tedemis will allow their offer to expand to email.
“When you are 10 or 20 people you know everybody, you have drinks with people, and then suddenly you wake up and that is no longer the case,” says Le Ouay. “The challenge is how to keep the culture – to ensure that you share the same vision and values.”
Interestingly, another French company with ambitious global goals in the ad tech space is also emerging. Its goal, according to press reports, is to become the “Criteo of video.”
Speed To Market Is Crucial
France’s Ebuzzing and Teads, two companies in the video advertising space, announced that they are merging in March and setting their sights on an initial public offering on NASDAQ in 2015.
The combined Ebuzzing and Teads group will have more than 300 employees based across 10 countries (U.S., U.K., France, Germany, Italy, Spain, Switzerland, Luxembourg, Mexico and Korea), including an R&D team of more than 100 engineers based in France.
Pascal Gauthier, Criteo’s former COO, joined the merged group’s board of directors.
Le Ouay said that a number of former Criteo employees have joined other French start-ups, helping to strengthen France’s tech ecosystem.
BlaBlaCar, a pan-European ride-sharing service, is another of France’s fast-growing tech stars. The company now has more than three million members and is present in 12 countries, including Russia. It carries more than a million customers per month, more than Eurostar.
When it started, a ride-sharing service had already been launched in Germany. BlablaCar knew it needed to move fast if it wanted to dominate the European market. So, it went out to raise venture capital even before it had proven the model in France.
That raised eyebrows in the French VC community but speed to market is crucial for consumer businesses, round table participant Nicolas Brusson, a co-founder and COO of BlablaCar, told attendees.
Recruitment Is A Key Issue
Brusson and other company managers spend 25% of their work time looking for, and interviewing, potential employees in addition to using recruiters. And like most other tech outfits in the same workforce bind, BlablaCar has established an in-house incentive and reward scheme to encourage current employees to use their personal and professional networks to identify qualified people who might be interested in open positions.
Roundtable participant Meryl Job, founder of Videdressing, says she also finds recruitment the key challenge in scaling up. Love of fashion and luxury brought Job, an American, to Paris. She first worked as a product manager at Chanel and L’Occitane en Provence. The idea to launch Videdressing, a social marketplace for fashion lovers who come together to buy and sell pieces they love, was born while she was trying to sell some of her own clothing and fashion accessories in her overflowing closet. She said she could find no suitable sites and realized there was a clear need to build a specialized one that would appeal to fashion lovers who want to buy and sell high-end “pre-loved treasures” in a secure way. The site provides authentication to prevent the sale of counterfeit items. The company, which has raised $7 million in venture capital, is now operational in France, Germany and Italy with plans for further expansion.
Paris is at a disadvantage when it comes to tech hub cities like Berlin because top tech talent from Silicon Valley is less likely to want to move to France, she says. That said, the company has had no trouble recruiting in Europe: its management team includes people from Portugal, Germany and Russia.
Smartbox, which specializes in “gift experiences”, started out in France but has since moved its European headquarters to Ireland, explained roundtable participant Erwan Corre, CEO of Smartbox Experience Limited Ireland. Corre set up and manages the group’s headquarters in Ireland, growing the company from 20 to 110 people (comprising 21 different nationalities) in one year.
France Could Take A Few Lessons From Ireland
Today the company only does about 40% of its business in France and has a total of around 1000 employees. The experience of rolling out across the world has not all been smooth. Originally the company thought that each country could act autonomously but it soon found that centralization was essential, said Corre. And, he said, the product simply did not take off in some markets and the company had to pull out of several countries, including Brazil.
The company has successfully adapted products locally and is thriving in some 10 countries, Corre said. Growing the company’s international expansion from Ireland has a number of advantages, including finding the right IT talent. “Ireland is a great place to attract good people,” he said, adding that the cost of living and tax rates are more favorable than those in France.
The IDA is working closely with fast growth tech companies as they internationalize. “Ireland has become the home of many such as Nordeus, Smartbox, Culture Translate from Europe and Zendesk, Indeed, Squarespace, Riot Games and HubSpot from the U.S.,” says Barry O’Dowd, The IDA’s Emerging Business Director. “This recent wave of Irish based operations follows the earlier set-ups by companies such as Google,Facebook,Twitter,LinkedIn, PayPal and Dropbox.” The IDA helps companies to execute their European growth plans by “hand holdng them through start-up challenges, “ says O’Dowd.
The French government could take a few lessons from the Irish. It is true that conditions for entrepreneurs are improving in France. For example, the government is now considering issuing a special developer’s visa. But problems remain. Among them: People wishing to leave one company to join another are required to give three months notice. Firing people is difficult. Stock options are not widely understood or accepted by entrepreneurs and byzantine rules on capital gains tax are a nightmare for investors.
What’s more, the image France projects is a real deterrent. Idinvest’s Grossmann talked about how, whenever he meets U.S. investors, he is asked to explain the 35-hour workweek, 75 days of vacation and the French government’s blockage of the sale of Dailymotion to Yahoo. “We are used to having to swim with weights on our legs,” says Grossmann.
Videdressing’s Job and Blablacar’s Brusson agreed that building businesses in France is challenging. “If you can make it here you can make it anywhere,” Job said.The good news for France – and for Europe – is that a growing number of companies are taking up that challenge and despite the odds are managing to scale not just in France but globally.