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Why iPod Creator Tony Fadell Is Bringing His Old Co-Workers To France

This article is more than 5 years old.

Photo credit: Levon Bliss for Forbes

Silicon Valley is where programmers grew Google, the iPhone, Uber and Facebook into behemoths, so conventional wisdom dictates you should go West to build the next big thing.

Tony Fadell disagrees.

When he was dreaming up the smart thermostat company Nest in 2009, he wasn’t in Silicon Valley at all, but Paris.

“Nest would never have happened if I didn’t get out of the echo chamber of Silicon Valley,” he says.

Five years later he sold the company to Google for $3.2 billion in cash, and today he’s using some of that money (reportedly more than $500 million) to invest in startups across the globe from his new base in Paris, France.

‘France?’ you may be wondering.

Long derided for its strikes, 35-hour-work week and convoluted labour laws, the country would seem to be the last place on Earth to base a startup or venture firm.    

But things are changing, contends Fadell, who first moved there in 2009 after a round-the-world trip that saw his family stop (and stay) in Paris.  

Photo credit: Levon Bliss for Forbes

He bought an apartment in the seventh arrondissement and enrolled his kids in the local schools. Now, he tells Forbes, he’s also helping several families relocate from Silicon Valley to France, to join what he calls an “entrepreneurial revolution.”

In Silicon Valley, the French are everywhere; around 60,000 make them the biggest European nation represented in the tech-focused region, according to ManpowerGroup.

But some of those French expats who used to work with Fadell at tech giants like Apple and Nest are now asking him for help to move back home.

“My inbox has multiple emails from those families now,” he says, adding that in the last nine years since since he first moved to Paris, he's seen a "dramatic change in entrepreneurial tone.” 

The biggest change comes at the top.

While Britain and the U.S. have opted for protectionist reforms with Brexit and tariffs, France’s President Emmanuel Macron, 41, has opted for more a more open-border, business-friendly regime.

In his first year he’s pushed through executive orders to make it easier for companies to fire in France, and for startups to hire foreign workers with new tech visas. 

Photo credit: Levon Bliss for Forbes

And in an interview for our recent cover story on France's ongoing transformation, Macron revealed he’d also end the notorious exit tax. (Leave France after five years, pay a 30% levy.)     

It’s a legacy rule that Fadell himself discussed with Macron’s cabinet. “They are open to finding solutions,” he says of those closest to the President.     

Fadell has put his money into more than a 100 startups through Future Shape, the venture fund he founded after leaving Apple. Among them: Paris-based Everoad, a marketplace for the shipping industry ($21 million raised to date, according to Pitchbook) and Nutley, New Jersey-based Modern Meadow ($53 million raised), which makes “biofabricated” leather products. 

Future Shape is based in Station F, the gargantuan startup incubator that was launched a year ago on the outskirts of Paris and financed by tech billionaire (and friend of Fadell’s) Xavier Niel.

Around 30 venture capital firms including Accel Partners, Index Ventures and Balderton Partners are members of the incubator, which claims to be the world’s largest.

Data from GP Bullhound and Pitchbook

They pay 5,000 euros ($5,900) per year to get unlimited access to the 1,000 startups based on the campus.

In an open-plan, 40-desk zone for such investors, Fadell’s is the one venture firm to have a private corner, according Station F director Roxanne Varza. “They’re the only fund that’s going to be permanently based,” she says.

He’s not alone in keeping a foot in the world of French startups. Dollar funding to tech companies in France this year should outpace 2017 by 7%, according to an April 2018 report from CB Insights.

And while uncertainty from Brexit has made it harder in the last year for venture firms in London to raise cash — according to conversations Forbes has had with VCs there — recent data from market-intelligence firm Dealroom shows that French funds were out-raising the rest of Europe last year.

Isn’t the language barrier an issue? When asked if he speaks French, Fadell responds thusly: "Quand je travaille avec des entrepreneurs français, je n'ai pas de problème à ne pas savoir le français couramment." In other words, he can, but doesn’t need to. 

This is one thing that has changed a lot since we first lived there,” Fadell adds. “French entrepreneurs know that English, and increasingly Mandarin are the unofficial language of technology.” 

Fadell’s own migration to France is only partly down to its attraction. He also got burned in Silicon Valley - twice. At Apple, he was credited with doing the early developmental work on the first iteration of the iPod, which led to the development of the iPhone under Steve Jobs.

But reports of his mercurial style of management saw him clash with mobile software chief Scott Forstall and even getting his contact card “deleted” on Jobs’ first demonstration of the iPhone, which Forstall scripted:

Fadell moved to Paris in 2009 and laid the early groundwork for what would become Nest, taking his expertise in making elegant consumer electronics at Apple, and applying it to smart thermostats and smoke detectors.

But things came to a head in late 2015, when after moving back the Valley, Google bought Dropcam and Fadell clashed with its CEO Greg Duffy. He then came under greater pressure as Google looked to sell Nest under the revamped Alphabet umbrella. Fadell resigned from Nest in June 2016.

Since then he’s found a new calling in France, rubbing shoulders with startups and other VCs at Station F and hanging out with the incubator’s billionaire financier Niel. They first met in 2009 when, on the recommendation of his colleagues, Fadell emailed Niel out of the blue and then stopped by his office.

“It was supposed to be a 30-minute meeting,” he recalls. “It lasted over three hours.”

It’ll take longer for Station F to become the beating heart of the revved-up, startup ecosystem that Niel and Macron are cultivating. “Station F is only 9 months old,” Fadell points out, adding that eventually its first graduates will "come back as alumni to mentor, fund or even acquire the next generation.” 

“That’s why Silicon Valley has become such a force,” he says. “Look at the angel investors, look at the people running venture companies in the Bay Area. Most of them are startup alumni that are sharing what they’ve learned in their early years and helping the next generation grow. Station F and Paris will experience the same multiplier effect.”

More like this: 

Inside The Entrepreneurial Revolution Happening In France

French President Macron's Says He Will End France's Notorious 'Exit Tax'

Station F Is The World's Biggest Startup Incubator, Can It Be The Best?

Why French President Emmanuel Macron Is On Forbes' Latest Cover

 

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