Opinion

The Great Debate

To boost entrepreneurship, France tries to change its attitude toward failure

When entrepreneur-turned-venture capitalist Mark Bivens first moved to Paris in 2001, he regularly introduced himself as someone who had started three software companies in the U.S., two of which had flopped. That’s a badge of honor in Silicon Valley, where failure is viewed as a rite of passage. Not in France. One day, a French colleague took Bivens aside and gave him some friendly advice: if you want to reassure people, stop talking about the companies that didn’t work out. “I soon realized that failure carries a stigma,” Bivens says.

The French word “échec” is indeed loaded with negative connotations. It starts at school, where pupils who get bad marks can be quickly branded “in a situation of failure” early in their education, and often drop out before graduating. In the business world, failure has long been fatal: bankruptcy in France is a lengthy and complicated process, and can scar entrepreneurs for life. And in addition to the logistical hurdles of starting a new business after bankruptcy, second-chance entrepreneurs must contend with the social stigma associated with failure, which makes raising funds or even opening a new bank account difficult.

But at a time when France, and Europe more broadly, need a burst of entrepreneurial dynamism to jump-start their economies, an intriguing shift in mentality is starting to take place. It’s partly coming from the top. The French government is now wondering aloud whether this deeply ingrained aversion to failure is actually holding back the nation’s entrepreneurs, preventing them from attaining the sort of scale and greatness that startups in Silicon Valley have been able to achieve. The private sector, led by people with firsthand experience of failure, is also playing a role, by advocating changes that would lessen or remove the stigma and help entrepreneurs get back up on their feet.

Inspiration has come, in part, from the U.S. When Fleur Pellerin, the French minister in charge of innovation and small business, was attending the CES consumer electronics show in Las Vegas earlier this month, she met entrepreneurs and consultants who impressed on her the idea that failure can be beneficial. “I want to change the French cultural software about risk-taking and the vision of failure,” she said in an interview on her return. “Valuing failure is one of the major elements of economic dynamism.”

Public opinion seems to be on her side: a December poll showed that 83 percent of the French think people who fail in business are overly stigmatized. Seventy-one percent agree that in order to succeed professionally people need to take risks, even if that means failing from time to time.

Five steps the SEC can take to make crowdfunding work

A few weeks ago, President Obama signed the JOBS Act into law, making equity-based crowdfunding legal for businesses that want to raise capital in smaller amounts than traditional venture capitalists or accredited investors supply. Depending on who you ask, crowdfunding is either going to democratize access to capital and serve as a boon to small businesses across America, or it will be rife with con artists intent on bilking seniors out of their hard-earned savings.

Let’s hope the former is true. But concerns about fraud must be addressed so the emerging market can thrive without being spoiled by fraud and scams.

The Securities and Exchange Commission is currently writing rules that will govern crowdfunding and, it’s hoped, guarantee its success. (Disclosure: I worked as a securities lawyer at the SEC from 1986 to 1990.) To properly regulate crowdfunding without suffocating it at inception, the regulators at the SEC must strike the right balance between guarding against fraud and allowing the marketplace to work its will.

from MediaFile:

Instagram’s Facebook filter

The startup had millions of users, but, from the beginning, just one customer.

The predominant way of interpreting Facebook’s billion-dollar purchase of Instagram, in light of the social-networking giant's forthcoming IPO, is that Mark Zuckerberg had to pick up the photo-sharing app to boost his company’s mobile engagement. That would allow him to guard the mobile flank against incursions from Google, Twitter, and whatever other social-media tools might next arise.

That may be true – and it may even be the way Zuck thought about the deal when he swallowed hard and ponied up the purchase price. But that way of analyzing Facebook’s pickup, and the pickup of dozens of other startups, not just by Facebook but by Google, Twitter, LinkedIn and others, is probably not telling the whole story. Here’s a different theory, one that better describes the tech world that we, the users of the Internet, now inhabit: Instagram may have had millions of us as its users, but it was really built for just one customer: Facebook.

Silicon Valley, for too long, has confused the issue of what it means to be a user of a website, service or app, and what it means to be a customer of the app. Intuitively, you’d think they would be one and the same: The person using the app is the person consuming the app. But increasingly, apps are being made to grab the attention of the hegemonic companies in tech. Whatever it takes to get bought.

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