TIP Strategies is a privately held Austin-based economic development consulting firm committed to providing quality solutions for public and private‑sector clients.
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By: Sam Sturgis
One of America’s rising tech hubs may suffer unless it draws more foreign students to its universities—and welcomes them into the larger culture.
Today marks the kickoff of Austin Startup Week, a dawn-to-dusk boot camp for local tech entrepreneurs. And there’s plenty of varied programming to choose from. Seats for “What Willie Nelson Can Teach You About User Experience” were sold out nearly a week before the event’s scheduled date (maybe some think Willie will make a cameo). Thursday’s discussion “I’ve Got 99 Problems but a Pitch Ain’t One” will showcase entrepreneurial lessons gleaned from hip-hop. Given the city’s exploding startup scene, it’s easy to see why unorthodox innovation events are popular. To stand out in this market, entrepreneurs need an edge.
The Texas state capital has nearly doubled its population in the past 20 years, aided by a steady stream of cash from venture capitalists. A March report by the Martin Prosperity Institute found Austin’s $555 million in capital investment to be the eighth highest in the U.S. during 2013—more than Chicago, Seattle, and Los Angeles. Austin also placed in the top 10 for its total number of venture capital deals. Austin is undeniably one America’s newest “nerdistans,” as CityLab’s Richard Florida likes to call them—urban centers that strongly support high-tech industries.
Yet despite a robust investment culture, some Austin tech companies are having a difficult time accessing local labor. Shortly after launching Gluu, an Austin-based company that works with internet servers in 2008, Mike Schwartz was eager to hire international students graduating from nearby universities. The University of Texas at Austin’s engineering school, in particular, offered his young company well-trained tech engineers. On two separate occasions, however, international students hired and trained by Schwartz were ultimately poached by larger tech companies, including T-Mobile. They offered entry-level salaries that Gluu simply couldn’t compete with.
“There’s just not enough talent here and there’s too many tech companies chasing it,” Schwartz says. Subsequently, Gluu largely stopped hiring locally. Of the company’s 15 employees, including Schwartz, only two reside in Austin. The rest work remotely in countries like China, India, Bangladesh, and Ukraine.
“We don’t want to have to give people yoga classes and do their laundry in order to get them to work for us,” says Schwartz. “[W]e will pay you and you will be part of our team that loves to work together, but that’s it.”
Gluu’s inability to find young, employable talent is the product of an array of factors. But one glaring issue is that Austin’s universities appear to be limiting their admissions of tech-minded international students, many of whom would certainly see Austin as a great launchpad for employment after graduation.
While other startup cities like Boston, Seattle, and San Jose boast high numbers of international students, Austin on the whole retains a largely Texas-centric student body. The past 20 years have brought in hundreds of thousands of new Austinites and billions of dollars in tech investment. But foreign students otherwise eager to study in the U.S. have stayed away. What’s the deal?
“Everyone knows New York, it’s a very cosmopolitan city,” says Neil G. Ruiz of the Metropolitan Policy Program at the Brookings Institution. “And Austin, it’s pretty cosmopolitan within the U.S. and a very thriving town. But I think, internationally, people might not know that as much,” he adds.
Austin, according to Ruiz’s August study, “The Geography of Foreign Students in U.S. Higher Education,” is far behind other tech hubs when it comes to enrolling students from around the world.
Between 2008 and 2012, there were just 17 foreign students for every 1,000 students in Austin. Not only is that a lower ratio than other Texas cities like Dallas, Houston, and College Station—whose economies are less innovation-focused—it’s far lower than that of cities with similar rates of venture capital investment. For every 1,000 students that enrolled in Seattle colleges between 2008 and 2012, 50 were international students. That figure is even higher in San Francisco—60 per 1,000—and Boston’s student body was more than three times as global as Austin’s.
This is not to say that Austin has an inherent diversity problem. The share of Austin’s white, non-Hispanic population dipped below 50 percent for the first time in 2005, according to the city government. Census Bureau figures indicate that Latinos accounted for 35 percent of the city’s population in 2012. Moreover, the city boasts more than 10,000 residents who identify as being Chinese and nearly 9,000 who identify as Vietnamese. “Austin, I would say over the last 20 years, has had this technology explosion, so there’s probably, from a corporate perspective, a lot of catching up to do,” says Teri Albrecht, Director of International Student and Scholar Services at the University of Texas, Austin. “But from personal experience, Austin is a really great city to live in due to its cultural diversity,” she adds.
Texas law mandates that high-school graduates in the academic top 10 percent of their class receive automatic admission to public universities, Albrecht notes. This policy, she says, has likely closed many doors for international students applying to Austin’s universities.
UT-Austin is just one of five four-year institutions in the metropolitan region. That’s a small number for a city its size, so it’s really no surprise that Austin has a comparatively low net foreign student population. But with roughly 50,000 students, UT-Austin makes up the lion’s share of the city’s student population. And in order to meet state law requirements, Texans account for about 90 percent of all incoming freshman at Austin’s largest university.
“[W]e have a very small slice at UT that are U.S. students coming from out of state, and then we have very small slice of those who are international undergraduate students,” Albrecht explains, “And so that really drives what our overall student population is.”
The issue is that when cities such as Austin essentially cap the number of international students enrolled in their schools, they miss out on the many benefits of circular migration.
The city a foreign student chooses to study in essentially becomes his or her “home base” in the United States. If they decide to remain in the U.S. after graduation—possibly pursuing a green card—they will most likely consider that city as a permanent residence. If he or she decides to return to their native country, their college city will continue to be a networking source while abroad. If he or she starts a business back home, contacts from their college city will likely be tapped when conducting business in the U.S.
The long-term benefits that Austin is missing out on given its low international student population, says Neil G. Ruiz of Brookings, could ultimately be a major detriment to the city.
“In the long-term, what’s good about [enrolling more foreign students] is that a place like Austin can become more global and cosmopolitan,” Ruiz explains. “These students are mostly coming from fast-growing cities like Seoul and Beijing—huge mega-cities with large markets. So Austin’s employers can benefit from the students because they know the language and they have the networks of their home communities abroad,” he adds.
Venture-capital investors may come to Austin Startup Week for the Willie Nelson-themed idea session, but they might be left wondering why events focused on attracting young, international talent to the city were left off the agenda.
By: Sreekar Jasthi
In today’s economy, knowledge in the STEM fields (science, technology, engineering and mathematics) has become incredibly lucrative. According to data from the Bureau of Labor Statistics, the annual mean wage for a STEM job is $79,395 — nearly 71% higher than the national annual average wage across all occupations and industries. Over the past couple of decades, some cities in the U.S. have become more attractive to STEM graduates for a variety of reasons.
NerdWallet crunched the numbers to find the best places for STEM graduates by analyzing the following factors in the 75 largest U.S. metropolitan areas:
1. Income levels for STEM jobs: We looked at the annual mean wage for STEM occupations in each metro area. We also factored in median gross rent as a cost of living metric to see how far the average income goes in each place.
2. Size of STEM industries: We included STEM occupations as a percentage of all jobs in a city to measure the robustness of the STEM industries and gauge availability of STEM jobs.
For more information on affordability in each of these places, check out NerdWallet’s cost of living calculator. For similar studies and more, visit NerdWallet Cities.
1. San Jose-Sunnyvale-Santa Clara, California
The San Jose-Sunnyvale-Santa Clara metro area is the heart of California’s Silicon Valley, the home of thousands of technology companies. Although the cost of living is high, the region’s annual average STEM wage of $111,746 is also the highest on our list. As well, the valley has the highest percentage of STEM occupations in the country. Computer networking giant Cisco Systems is the largest employer in the area, and other companies, such as Intel and Adobe Systems, also employ a large number of STEM graduates. Santa Clara University’s Center for Science, Technology and Society aims to help social entrepreneurs by connecting them with technology mentors.
2. Seattle-Bellevue-Everett, Washington
The Greater Seattle area is a hub for the aerospace, information technology, clean tech and life sciences industries, so it isn’t a surprise to see a high average wage for STEM jobs and also a significant percentage of those occupations in the local economy. Top employers in the region include Boeing, Microsoft and Amazon. Washington STEM is an organization that strives to drive growth in STEM education statewide.
3. Washington, D.C., Arlington-Alexandria, Virginia-Maryland-West Virginia
In addition to the plethora of political and government employment opportunities in the nation’s capital, the region is also home to many jobs in technology and scientific research. Each spring, Washington, D.C., hosts the USA Science & Engineering Festival, an educational event that seeks to stimulate interest in the STEM fields. The DC STEM Alliance, another group that serves a similar purpose, provides resources to support STEM education in local schools.
4. Houston-Sugar Land-Baytown, Texas
People working in STEM occupations in the Greater Houston region enjoy a high average income of $94,766, and a relatively low cost of living to boot. Major industries in Houston include advanced manufacturing and technology, aerospace, biotechnology and life sciences and energy. The University of Houston STEM Center helps attract and retain students in STEM careers, both locally and nationally.
5. San Francisco-San Mateo-Redwood City, California
As the home to major companies such as Google, Facebook, Twitter and Oracle, and a countless number of technology startups, the San Francisco Bay Area is major hub for STEM jobs. The region offers the second-highest average annual wage for STEM occupations behind the nearby San Jose metro area. UC Berkeley’s Center for STEM Innovation, Leadership and Diversity is an incubator for college students in these burgeoning fields, while the California STEM Learning Network is a statewide organization that seeks to increase STEM knowledge and skills for younger students.
6. Austin-Round Rock-San Marcos, Texas
Austin has seen significant growth over the past decade, especially as a technology center. The region is home to the headquarters of Dell, and also regional offices of Google, IBM, Intel, Texas Instruments and other major companies. The University of Texas at Austin contributes significantly to the area’s STEM workforce and its Center for STEM Education supports education and research.
7. Boston-Cambridge-Quincy, Massachusetts-New Hampshire
Thanks to its major health care and research industries, the Boston area has a healthy demand for STEM graduates. Top employers include several hospitals and research institutions at Harvard, Boston University and the Massachusetts Institute of Technology. The Boston STEM Network advocates for STEM education and growth in schools, higher education and businesses. The Boston Area Girls STEM Collaborative works to increase young women’s participation in STEM fields through various programs.
8. Raleigh-Cary, North Carolina
As a major center for technology and research, the Raleigh metro area is an attractive place for those pursuing STEM careers. The region is home to companies such as SAS. North Carolina State University has a Department of Science, Technology, Engineering and Mathematics Education that produces graduates to teach STEM classes to help prepare students for the Greater Raleigh area’s workforce.
9. Denver-Aurora-Broomfield, Colorado
Aerospace, energy and health care are among the prominent industries in the Denver metro area, making it a great place for STEM graduates. And the University of Denver recently launched a STEM initiative to expand its existing engineering and computer science programs, which will allow the student and faculty population to grow 30%.
10. Dayton, Ohio
The Dayton metro area earns its place on our list primarily because of a very low relative cost of living — its median rent of $714 is the lowest of all the top 10 places. STEM graduates are in demand here to work at aerospace, health care and information technology companies, which are all major players in the local economy. Top employers include hospitals as well as technology corporations such as LexisNexis. STEM education also receives attention in Dayton — organizations such as the Dayton Regional STEM Center and the University of Dayton School of Engineering provide programs for STEM students and teachers.
Top 20 Places for STEM Graduates
|Rank||Metropolitan area||Annual mean wage for STEM jobs||Median gross rent||STEM jobs as a percentage of all occupations||Overall score|
|1||San Jose-Sunnyvale-Santa Clara, CA||$111,745.95||$1,560||17.31%||75.00|
|4||Houston-Sugar Land-Baytown, TX||$94,766.01||$873||7.09%||53.16|
|5||San Francisco-San Mateo-Redwood City, CA||$101,280.87||$1,399||10.49%||52.89|
|6||Austin-Round Rock-San Marcos, TX||$79,493.62||$978||9.76%||51.89|
|17||Minneapolis-St. Paul-Bloomington, MN-WI||$77,907.70||$895||6.95%||44.44|
|19||Hartford-West Hartford-East Hartford, CT||$81,932.00||$948||6.61%||43.78|
|20||San Diego-Carlsbad-San Marcos, CA||$85,685.96||$1,253||8.51%||43.40|
The overall score for each metro was calculated from the following measures:
- Annual mean wage for STEM jobs from the Bureau of Labor Statistics May 2013 Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates (25% of overall score)
- Median gross rent from the 2012 U.S. Census Bureau American Community Survey (25% of overall score)
- STEM jobs as percentage of all occupations from the Bureau of Labor Statistics May 2013 Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates (50% of overall score)
The annual mean wage for STEM jobs and median gross rent were each half-weighted. The study analyzed the 75 largest metropolitan areas in the country.
By: Katherine Mangan
Via: The Chronicle of Higher Education
Eight states are tackling a growing disconnect between the nation’s education system and its economy by exposing more middle-school and high-school students to jobs, making education relevant to careers, and beefing up alternatives to the four-year college degree, according to a new report from the Pathways to Prosperity Network.
The network, which began in 2012, works with 10 states to build pathways that connect the final years of high school with the first few years of career training in fields facing worker shortages, including information technology, health care, and advanced manufacturing. Led by the nonprofit group Jobs for the Future and the Harvard Graduate School of Education, the network is trying to increase the number of high-school graduates earning a postsecondary credential that will lead to a decent-paying job.
“There’s a lot of momentum around the idea of providing a much stronger set of career pathways for young people,” said Robert Schwartz, a professor emeritus at the Harvard education school.
Mr. Schwartz, one of several experts on work-force training who discussed the new report in a conference call with reporters on Monday, is a co-author of a 2011 report, “Pathways to Prosperity: Meeting the Challenge of Preparing Young Americans for the 21st Century.”
That report, which he said had galvanized support for a national network, concluded that Americans put too much emphasis on getting a degree from a four-year college, which it said fewer than one-third of young adults accomplish by age 25. It called for more focus on alternative paths that include career-focused education and apprenticeships.
The new report outlines the steps taken so far by California, Georgia, Illinois, Massachusetts, Missouri, New York, Ohio, and Tennessee. (Arizona and Delaware joined the network last month.) Their efforts, which include early-college high schools, technology-focused schools, and mentoring partnerships with local businesses, are a response to “the growing disconnect between our education system and our economy,” said Anthony P. Carnevale, a research professor and director of Georgetown University’s Center on Education and the Workforce. Mr. Carnevale is a national expert on work-force training whose studies about the economic value of various degrees are widely cited.
The landmark 1983 report “A Nation at Risk” was the impetus for providing solid academic offerings to every public-school student, he said, instead of steering underprepared students into vocational education. “We’re at the point where it’s too much of a good thing,” he added. As curricula became more academic and less applied, students were less likely to see the relevance of much of their learning, he said.
Dropping out or opting out of further education has serious consequences for today’s youth, who can’t just head to a factory to get a job the way their parents could have, he said. Automation has eliminated many of those jobs, and the only ones left “are the ones their bosses used to do,” said Mr. Carnevale. By integrating academic and skills training, “we’re providing the missing middle in American higher education.”
Among 2012 high-school graduates who didn’t enroll in college the following year, only 45 percent found work of any kind, the report notes, and only half of those jobs were full time.
Contributing to the problem is the “disengagement of American businesses” from the task of educating the next generation of workers, said Nancy Hoffman, a vice president and senior adviser at Jobs for the Future and the author of the state-progress report.
Early-college high schools, which allow students to start earning college credits while they’re in high school, are one way to provide momentum, she said.
Companies like IBM are struggling to fill jobs when many applicants come straight from high school and are underqualified, or have Ph.D.’s and are overqualified, said Maura Banta, director of citizenship initiatives in education for IBM. Businesses need to be more actively involved in providing mentors and internships to help cultivate more qualified workers, said Ms. Banta, who is also chair of the Massachusetts Board of Elementary and Secondary Education.
Darrell Steinberg, president pro tempore of the California State Senate, said he had helped secure $500-million over two years for a “career-pathways trust” that seeks to re-engineer the state’s high schools to make education more relevant to the needs of regional businesses.
By: Alexandria Icenhower
Innovation districts are geographic areas where leading-edge institutions and companies cluster and connect with start-ups, business incubators, and accelerators. These areas are usually physically compact, transit-accessible, and technically-wired. They also offer mixed-use housing, office, and retail space. Innovation districts create an atmosphere for job growth and help people connect across various sectors, generate new ideas, and accelerate commercialization.
The project is part of a $2 billion buildout plan that has already created 2,850 direct jobs to date and has sparked 1.5 million square feet of office and research space, housing, infrastructure, and retail in the Cortex area of St. Louis.
Research Triangle Park’s 50-year master plan calls for a greater concentration of buildings and amenities and possible construction of a light-rail transit line.
More than 200 technology, life science, and other companies have now moved into the Innovation District in South Boston, adding over 6,000 jobs to date.
The member institutions from Pennsylvania, New Jersey, and Delaware are leveraging their assets in teaching, research, and medicine to build the area as a hub of innovation and entrepreneurship.
Learn more about the innovation districts report by Bruce Katz and Julie Wagner here.
By: Renee Hansen
Via: Community Impact Newspaper
Weakness identified as mismatch between city’s jobs, workforce
The release of a new Frisco labor market study shows the city as having a strong talent base of employees that is attracting businesses and impressing employers. The comprehensive analysis was conducted by Austin-based TIP Strategies, an economic development consulting firm.
The report, released May 22, shows there is a highly educated workforce of nearly 500,000 people within a 10-mile radius of Frisco. The workers’ strengths focus around information technology and line up with the industries found in the city’s borders such as telecommunications, software development, and financial and medical services.
Area residents soar above the national average of educational attainment levels with 58.3 percent holding a bachelor’s degree or higher, compared with the national average of 28.5 percent, according to American Community Survey data.
Employers also give the area’s workforce high marks, with 80 percent surveyed saying the workforce is either “good” or “excellent” in computer skills, trainability and employee attitudes.
Given its size, quality of the workforce and ability to draw in workers from throughout the Metroplex, Frisco is the place to be for economic growth, according to TIP.
The Frisco Economic Development Corp. requested the study to gain insight on the labor market of the city, FEDC President James Gandy said.
“It was great for us to have an opportunity to work with [the FEDC],” said TIP Strategies President Tom Stellman. “They are one of the most respected economic development groups in the Metroplex.”
The FEDC has helped facilitate projects to create or retain nearly 12,500 jobs since 2009. With a population of more than 133,000, the report said Frisco is projected to gain 65,000 new working-age adults over the next 15 to 25 years.
Although Frisco houses a large and talented workforce, the study identified that the majority of Frisco workers commute out of the city for their jobs. The market overview reported Frisco residents fill only one in five positions within the city, which means there is a mismatch between employment options and the skills of the area workforce.
“The study has identified a number of things that we intend to work on,” Gandy said. “There’s a tremendous opportunity for new companies to move here and utilize the readily available workforce within our city that may currently be commuting outside our city.”
FEDC Director of Marketing Darcy Schroer explained the benefits to keeping Frisco residents within the city borders for employment.
“We have a great quality of life, and we want the people who live here to enjoy that quality of life,” she said. “It opens up a whole different lifestyle when you can work in the city you live in.”
By: Liz Alderman
Via: The New York Times
Guillaume Santacruz, an aspiring French entrepreneur, brushed the rain from his black sweater and skinny jeans and headed down to a cavernous basement inside Campus London, a seven-story hive run by Google in the city’s East End.
It was late on a September morning, and the space was crowded with people hunched over laptops at wooden cafe tables or sprawled on low blue couches, working on plans to create the next Facebook or LinkedIn. The hiss of a milk steamer broke through the low buzz of conversation as a man in a red flannel shirt brewed cappuccino at a food bar.
A year earlier, Mr. Santacruz, who has two degrees in finance, was living in Paris near the Place de la Madeleine, working in a boutique finance firm. He had taken that job after his attempt to start a business in Marseille foundered under a pile of government regulations and a seemingly endless parade of taxes. The episode left him wary of starting any new projects in France. Yet he still hungered to be his own boss.
He decided that he would try again. Just not in his own country.
“A lot of people are like, ‘Why would you ever leave France?’ ” Mr. Santacruz said. “I’ll tell you. France has a lot of problems. There’s a feeling of gloom that seems to be growing deeper. The economy is not going well, and if you want to get ahead or run your own business, the environment is not good.”
In the Campus London basement, Mr. Santacruz, who is 29, squeezed into one of the few remaining seats. Within hours, he was to meet with an entrepreneur he identified only as Knut, to discuss an investment in the company that Mr. Santacruz was trying to build. He called it Zipcube, and was pitching it as a sort of Airbnb for renting office space online.
From 80 to 90 percent of all start-ups fail, “but that’s O.K.,” said Eze Vidra, the head of Google for Entrepreneurs Europe and of Campus London, a free work space in the city’s booming technology hub. In Britain and the United States, “it’s not considered bad if you have failed,” Mr. Vidra said. “You learn from failure in order to maximize success.”
That is the kind of thinking that drew Mr. Santacruz to London. “Things are different in France,” he said. “There is a fear of failure. If you fail, it’s like the ultimate shame. In London, there’s this can-do attitude, and a sense that anything’s possible. If you make an error, you can get up again.”
Mr. Santacruz had a hard time explaining to his parents his decision to leave France. “They think I’m crazy, maybe sick, taking all those risks,” he said. “But I don’t want to wait until I’m 60 to live my life.”
France has been losing talented citizens to other countries for decades, but the current exodus of entrepreneurs and young people is happening at a moment when France can ill afford it. The nation has had low-to-stagnant economic growth for the last five years and a generally climbing unemployment rate — now about 11 percent — and analysts warn that it risks sliding into economic sclerosis.
Some wealthy businesspeople have also been packing their bags. While entrepreneurs fret about the difficulties of getting a business off the ground, those who have succeeded in doing so say that society stigmatizes financial success. The election of President François Hollande, a member of the Socialist Party who once declared, “I don’t like the rich,” did little to contradict that impression.
After denying that there was a problem, Mr. Hollande is suddenly shifting gears. Since the beginning of the year, he has taken to the podium under the gilded eaves of the Élysée Palace several times with significant proposals to make France more alluring for entrepreneurs and business, while seeking to preserve the nation’s model of social protection.
His deputy finance minister for business innovation, Fleur Pellerin, a dynamic 40-year-old credited with schooling Mr. Hollande on the importance of the digital economy, has been busy pushing initiatives to turn Paris into a “tech capital” to rival the world’s most active start-up hubs.
Those initiatives, however, have not yet closed the spigot on the flow of French citizens to other countries. Hand-wringing articles in French newspapers — including a three-page spread in Le Monde, have examined the implications of “les exilés.” This month, the Chamber of Commerce and Industry of Paris, which represents 800,000 businesses, published a report saying that French executives were more worried than ever that “unemployment and moroseness are pushing young people to leave” the country, bleeding France of energetic workers. As the Pew Research Center put it last year, “no European country is becoming more dispirited and disillusioned faster than France.”
Next month, the National Assembly will convene a panel to examine the issue
Today, around 1.6 million of France’s 63 million citizens live outside the country. That is not a huge share, but it is up 60 percent from 2000, according to the Ministry of Foreign Affairs. Thousands are heading to Hong Kong, Mexico City, New York, Shanghai and other cities. About 50,000 French nationals live in Silicon Valley alone.
But for the most part, they have fled across the English Channel, just a two-hour Eurostar ride from Paris. Around 350,000 French nationals are now rooted in Britain, about the same population as Nice, France’s fifth-largest city. So many French citizens are in London that locals have taken to calling it “Paris on the Thames.”
In the past, most of these people would have gone back to France after some adventure and experience. That may still be true of some in the French diaspora, but nearly 40 percent of French people abroad now say they plan to stay there for at least 10 years, according to the report by the Chamber of Commerce and Industry. Many are quietly saying that they may not return.
Taxes, Frustration, More Taxes
Mr. Santacruz grew up in his parents’ small, tidy home in a suburb of Aix-en-Provence in the south of France. During one of his summer breaks from college in Bordeaux, he visited a cousin who had become rich working in finance and lived in a sprawling residence in the Luberon Valley. When Mr. Santacruz drove up to the entrance, electronic gates opened to a vast garden.
“It was crazy,” he said. “I drove five minutes just to reach the house. That’s when I thought, ‘I want to make it like him.’ ”
“Making it” is almost never easy, but Mr. Santacruz found the French bureaucracy to be an unbridgeable moat around his ambitions. Having received his master’s in finance at the University of Nottingham in England, he returned to France to work with a friend’s father to open dental clinics in Marseille. “But the French administration turned it into a herculean effort,” he said.
A one-month wait for a license turned into three months, then six. They tried simplifying the corporate structure but were stymied by regulatory hurdles. Hiring was delayed, partly because of social taxes that companies pay on salaries. In France, the share of nonwage costs for employers to fund unemployment benefits, education, health care and pensions is more than 33 percent. In Britain, it is around 20 percent.
“Every week, more tax letters would come,” Mr. Santacruz recalled.
The government has since simplified procedures and reduced the social costs for start-ups. But those changes came too late for Mr. Santacruz, whose venture folded before it could get off the ground.
His parents were relieved when he took a job in Paris at the boutique firm NFinance. But he knew that it was a way station. He quickly turned to drawing up blueprints for a new venture.
“I asked myself, ‘Where will I have the bigger opportunity in Europe?’ ” he said. “London was the obvious choice. It’s more dynamic and international, business funding is easier to get, and it’s a better base if you want to expand.”
Diane Segalen, an executive recruiter for many of France’s biggest companies who recently moved most of her practice, Segalen & Associés, to London from Paris, says the competitiveness gap is easy to see just by reading the newspapers. “In Britain, you read about all the deals going on here,” Ms. Segalen said. “In the French papers, you read about taxes, more taxes, economic problems and the state’s involvement in everything.”
French officials have sought to play down such stories. Their takeaway is that migration — which has grown 4 percent a year since 2000 — is hardly new, so the outflow is nothing to lose sleep over. Bernard Emié, France’s ambassador to Britain, even argued that it was something to celebrate.
“The French are expatriating themselves more and more, but this is encouraging,” Mr. Emié told me. “We are not worried about it. They get experience, create wealth, and then they will bring that back to France.”
Mr. Hollande’s government is now trying to re-brand itself as business-friendly, especially for start-ups. Ms. Pellerin recently cut the ribbon on a large-scale technology incubator in Paris. She unveiled initiatives to free up venture capital and encourage digital entrepreneurship, including a “second chance” program intended to remove the cultural stigma attached to failure.
Defeat is seen as so ignominious that France’s central bank alerts lenders to entrepreneurs who have filed for bankruptcy, effectively preventing them from obtaining money for new projects — a practice that Ms. Pellerin would halt.
A pledge that Mr. Hollande made in January included a “responsibility pact” — a promise to relieve businesses of some of the burden to finance France’s welfare state. In February, he announced additional measures to lure investors back to France, unveiling plans to stabilize corporate tax rules, simplify customs procedures for imports and exports and introduce a tax break for foreign start-ups.
These changes were welcomed by business, but the more than 20 French expatriates I interviewed said their country was marked by a deeper antipathy toward the wealthy than could be addressed with a few new policies.
“Generally, if you are self-made man and earn money, you are looked at with suspicion,” said Erick Rinner, a French executive at Milestone Capital Partners, a British-French private equity firm, who has lived in London for 20 years.
Mr. Hollande’s election, and especially his proposal — since ruled unconstitutional — to impose a 75 percent tax on the portion of income above one million euros (about $1.4 million) a year, have only reinforced that perception.
“It is a French cultural characteristic that goes back to almost the revolution and Robespierre, where there’s a deep-rooted feeling that you don’t show that you make money,” Ms. Segalen, the recruiter, said. “There is this sense that ‘liberté, égalité, fraternité’ means that what’s yours should be mine. It’s more like, if someone has something I can’t have, I’d rather deprive this person from having it than trying to work hard to get it myself. That’s a very French state of mind. But it’s a race to the bottom.”
Sharing Space, Waiting Tables
Mr. Santacruz’s efforts to get Zipcube off the ground were full of fits and starts. While London had opportunities, living there was tougher than he had imagined. His apartment in Paris had been spacious, with tasteful modern furniture and French windows overlooking the gold statues atop the Paris Opera. After work, he would go to places like the Hôtel Costes or Le Forum, a bar on the Right Bank, to talk and to sip cocktails.
In London, he had none of that. Without a steady income, he was renting a room in a leaky group house with three roommates. He had also taken a night job as a waiter at Momo, a Moroccan restaurant near Oxford Circus, earning 6.50 pounds (about $10.80) an hour to make ends meet. He would come to Campus London every day to work on Zipcube, but by 4:30 he had to leave to be on time for his shift at Momo, which ended at 2 a.m.
Embarrassed, he hid the restaurant job from his family for two months.
“Sometimes I do ask myself if I’m making the right choice,” he acknowledged. “But if you don’t take risks, there will be no reward.”
Another French entrepreneur I met in the Campus London basement, Emilie Bellet, 30, had a more inspiring story. In less than a year, she had raised a half-million pounds to finance her venture, SeedRecruit, which finds talent for other start-ups. With two partners, she hired four more people.
“In London, every day is a fight,” she said. “But then you get rewarded. I don’t think this would have been possible in France.”
Such convictions are a challenge for officials like Axelle Lemaire, a lawmaker who represents the French population in Britain and Northern Europe in the National Assembly of France.
The growing number of French people settling in London is a sign that France needs to enhance competitiveness, Ms. Lemaire told me one afternoon in her office near Camden Market. But Anglo-Saxon-style capitalism was not the solution if it would compromise France’s social model, which she sees as protecting citizens from the ravages of the free market.
In Britain, “it has been surprising to see the level of deprivation of some of my fellow citizens,” she said. “When things fail here, they can wind up without a penny in their pockets, living on the street. That’s the part of the story you don’t hear.”
At the same time, she said, France’s generous safety net could not continue unchanged without risking further economic malaise. “Socialist politicians all agree on that now,” Ms. Lemaire said.
Back in France, Mr. Santacruz’s parents were still trying to grasp their son’s decision. Having spent her career at the state telecom company, his mother, like many others in her generation, assumed that her children’s main aspiration would also be lifelong job security.
“It’s 35 hours a week, good vacation, a pension and protections,” she told me. “O.K., it’s not very interesting, and I don’t get paid much. But it’s stable. I thought that’s a dream that our young people would want, too.”
His father saw Mr. Santacruz’s move as courageous but felt vexed to have invested in his son’s degrees, only to see him leave his country in a state of disillusionment.
The elder Mr. Santacruz had grown up poor, but eventually got a job as a government customs official.
“France gave me an opportunity to make a life,” he said. “The French Republic formed me, and it also formed Guillaume. When I hear young people disparage the country as they leave, I don’t like that. The children of France should not forget that the state has given them a lot.”
France? Maybe for Retirement
Guillaume Santacruz was grateful for the benefits that his country gave him. But he wanted something else — to innovate. By September, his project was not where he wanted it to be. Yet he maintained that he was better off pursuing it outside France.
He had incorporated Zipcube and had bites of interest from an executive at Booking.com, a website for booking hotel rooms. But Knut, the investor, was not willing to invest after all, and Mr. Santacruz was again seeking financing.
Even if Zipcube fell apart, he told me one chilly weekend at his Kensington flat, where paint was peeling off the walls, “I would not change my mind and head back to France; I see only cons to doing that, no pros.” He was skeptical that the government’s recent offensive to spur France’s entrepreneurial environment would quickly bear fruit.
Several of his French friends in London felt the same way. “I asked them, if things don’t work out, will they go back? Not one of them would,” Mr. Santacruz said. “Maybe for retirement. But not for work — we’d rather go to the United States or Asia before returning.” France seemed to have lost another citizen in the prime of his productive working years.
By February, though, Mr. Santacruz’s foray to England was finally paying off. He had a new programmer and a partner who was handling marketing and sales. Zipcube was selected by Sirius, a British start-up accelerator program, for a grant of £36,000, and he had recently started to reel in some clients. Though he still needed to build the business, he felt he was on the right track.
And while the bar to succeed was high, “I’m confident I’m going to make it,” he declared.
Correction: March 25, 2014
An earlier version of this article referred incorrectly to Milestone Capital Partners. It is a British-French private equity firm, not a British-based investment bank.
A version of this article appears in print on March 23, 2014, on page BU1 of the New York edition with the headline: Au Revoir, Entrepreneurs.