Heetch v. The French Government
European Straits #7
Dear all,
Heetch, one of the fastest-growing companies in TheFamily’s portfolio, has just been brought to a halt by the judicial system. Last week, a French court sentenced the company and its founders to pay hundreds of thousands of euros to both the state and taxi drivers who sought compensation for the damage allegedly inflicted by Heetch’s activity. We don’t know yet if Heetch will proceed in appealing the decision. What we know for sure is that we’ve just witnessed a spectacular failure from the French ecosystem when it comes to supporting local entrepreneurs.
Heetch’s mission is to make it possible for young people living in the relegated “banlieues” to go and party in Paris at night. Amateur drivers share their own car to enable them to safely travel back to their home. Before Heetch existed, young people going to nearby Paris for drinks, parties or simply meeting friends had but two options for getting back home late at night: wait until the early hours of the morning, when the public transportation system starts operating again; or take their own car, at the risk of driving drunk. No taxi drivers would take them home to those supposedly dangerous suburbs (and young people don’t have that kind of money anyway).
The context in which Heetch was put on trial was the war being waged between the local taxi industry and the new ride-hailing platforms such as Uber, SnapCar, and Chauffeur-Privé. Several times over the past few years, taxi drivers have staged violent strikes, with the government yielding for fear of chaos in the streets. What they demanded was not only tougher regulations for the new platforms involving professional drivers. They also wanted amateur ride-sharing platforms such as Heetch to be strictly forbidden as they allegedly impose unfair competition on the market. The French government then proceeded to sue Heetch, leading to last week’s decision.
Why is the result such a resounding failure? One reason is the deafening silence of the French government. Even though Heetch served 500 000 young suburban people, with half a million rides a month, the service’s being interrupted since last Thursday is apparently no cause for concern. No minister, no presidential candidate, not even Emmanuel Macron, who is prone to promoting innovation, has said a word about the decision. Talk about solving problems and making the disenfranchised banlieues more accessible!
It’s also a failure because we’re seeing, once again, the ambivalence of the French ecosystem when it comes to supporting startups. We love startups when they look like little children playing in a sandbox; but we cannot tolerate them when, like Heetch, they end up solving critical problems at a larger scale. If an established corporation is somehow threatened by those new entrants, the French ecosystem always prefers the status quo. It’s true for the government, and it’s also true with other players in the ecosystem: long-distance ride-sharing giant BlaBlaCar, a matter of national pride, chose to distance itself from Heetch instead of making the case that ride-sharing also solved problems on shorter distances.
It so happens that during this same week I had the honor of receiving Chris Lehane, the Head of Global Policy and Public Affairs at Airbnb, for a morning fireside chat in TheFamily’s Paris office. It was a privilege to discuss Airbnb’s vision of the future of cities as well as Chris’s past experiences in Democratic politics and how well-honed skills as a political operative can apply in the world of technology. Our discussion only made me more optimistic about Airbnb’s future, the exact opposite of how the decision against Heetch is yet another mark of a failing nation.
Once again, the contrast couldn’t have been starker between two very different worlds. On the one hand, US tech companies face as many regulatory challenges as ours do. But they manage to overcome many obstacles thanks to institutions that prove more welcoming for innovative business models. On the other hand, France has once again proven how ridden it is by corporatism and how far it will go to weaken exceptional Entrepreneurs, refusing to harness the power of entrepreneurship to solve critical problems, thus ensuring that only US companies will ultimately win in the end.
Alice, Oussama and I founded TheFamily to fight against toxicity in entrepreneurial ecosystems. We’re disappointed and taken aback by the many setbacks encountered by startups in France. But we’re certain we can make a difference over the long term. As always, it takes hard work, supporting exceptional entrepreneurs such as Heetch’s Teddy Pellerin and Mathieu Jacob, and making our voice heard.
I’ve just finished a new chapter in my book "HEDGE". Here’s the chapter’s overview: The Economics of the New Corporate World.
Also, two more Scaling Strategy notes have been published recently:
Warm regards,
Nicolas