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Most giants of French technology -- such as France Telecom, Alcatel, and Thales -- make their homes in Paris, tucked into gleaming office buildings with beaux-arts facades. But the emerging seedbed of France's technology future lies hundreds of miles to the south, near Nice. There, in Sophia Antipolis, a nine-square-mile, California-style office park, thousands of engineers and entrepreneurs chase high-tech dreams under the azure-blue skies of the French Riviera.
Once an empty patch of scrub brush spanning the jurisdictions of eight towns, Sophia Antipolis now houses more than 1,225 companies and organizations employing nearly 25,000 workers from 60 countries. It all began in the late 1960s, when IBM decided to relocate one of its French offices to take advantage of the area's cheap land and warm weather. (The unofficial story is that a top executive had a vacation home nearby and wanted to shorten his commute.) Soon, chipmaker Texas Instruments also set up shop in the vicinity, and the area slowly began to develop as a technology center.
It wasn't until the '80s, though, that growth really took off. Since 1988, the number of workers in Sophia has more than doubled, giving it the critical mass necessary to attract and launch new ventures. An impressive list of multinationals now has research labs in the area, including Compaq, Philips Electronics, Nortel Networks, software powerhouse SAP, and even Toyota, which runs an auto-design facility in Sophia.
ECLECTIC MIX. While half the area's tenants aren't engineering operations, but sales and support offices, trade associations, and a few graduate schools, Sophia is now spawning a growing number of information-technology and life-sciences startups. What's more, despite the downturn in venture capital and IPOs, the outfits are managing to scare up tens of millions of dollars in funding from investors around Europe and North America. Credit this in part to a post-bubble maturation -- Sophia's startups are offering more realistic aspirations and credible business plans than many first-generation dot-coms did.
During a recent two-day tour, I was frankly amazed at the vibrancy and innovation apparent in the region. Not that I didn't expect to see interesting technology: France is deservedly renowned for its engineering prowess. What surprised me was the entrepreneurial culture -- very much akin to that found in Silicon Valley and similar places in the U.S. Ambitious twentysomethings are teaming up with school chums and snagging venture capital, working cheek to jowl in companies as small as two or three people. The mild climate and plentiful open space encourage midday jogging, not three-course lunches. And English is spoken nearly everywhere.
While Sophia's sensibility seems very un-French, it's not another Silicon Valley. Still relatively small, Sophia can't boast the sheer concentration of talent and capital found in the 50-mile stretch from San Francisco to San Jose. It lacks the local business "ecosystem" -- the tech-savvy lawyers, accountants, and headhunters -- that allowed the Valley to turn out new companies on a dime. Nor is its economy as diverse. Most of the activity in Sophia, whether by startups or established companies, revolves around telecommunications and bioscience, whereas Silicon Valley also hosts extensive semiconductor, software, and tech-services businesses.
LITTLE OUTFIT, BIG DEAL. Even so, Sophia is producing its fair share of provocative newcomers. Take Castify Networks, a 40-person startup launched in December, 1999, by three doctoral students from Institute Eurecom, a local engineering school. Castify, which raised $4.5 million last March, has developed technology that lets corporations or Internet service providers distribute and manage streaming media over the Net.
Unlike such companies as Akamai and Cable & Wireless, Castify provides unpackaged products, not bundled services. This allows its customers to build their own multimedia networks and, in effect, compete with the Akamais of the world. On Feb. 4, the company announced a multimillion-dollar contract with Paris-based Eutelsat, the world's No. 4 satellite communications company, to supply technology for Eutelsat's satellite-based broadband delivery network. By 2004, Castify hopes to have annual revenues of around $70 million.
This may sound like just another startup fantasy, but Castify has quite a bit of company on the ground here. Indeed, while U.S. venture capitalists are souring on broadband and satellite investments, their European counterparts are still pumping money into outfits focused on those sectors. One standout is ActiVia Networks, a 30-person company founded in 1996 that aims to unseat or supplement Akamai and a host of other companies supplying so-called content delivery networks. The company's revolutionary technology, originally developed at France's prestigious INRIA computer science institute, handles all aspects of distributing and managing digital content across Internet networks.
CALIFORNIA CULTURE. ActiVia has stellar credentials. Its backers include some of Europe's most prominent venture capitalists, including Sofinnova Partners and Cross-Atlantic Ventures, the investment house led by Jean-Pierre Boespflug, former Cisco Europe vice-president. And to make sure it's not operating in a vacuum, ActiVia is cooperating closely with powerful standards bodies such as the Internet Engineering Task Force and W3C (World Wide Web Consortium, whose European office is in Sophia Antipolis) to weave its technologies into the Internet of the future.
Perhaps most striking is ActiVia's authentic startup culture. Housed in a nondescript three-story building perched over a parking lot, the setting -- except for the ever-so-European ashtrays on the desks -- is pure California: engineers in T-shirts, a rabbit warren of desks, Coke cans and coffee cups everywhere. Only the CEO, former IBM executive Pierre Liautaud, looks older than 40 -- but at least he's not wearing a tie.
Liautaud speaks fluid English and drops phrases like "monetizing content" with nary a pause. (He's also, coincidentally, the older brother of Bernard Liautaud, CEO of Business Objects, the most successful software startup in French history.) ActiVia's Liautaud won't say how much the company has raised or when it will start making money, but he says it's already shipping products and working with such big-time customers as Deutsche Telekom and France Telecom.
EXPENSIVE DREAMS. Just up the street is UDcast, yet another broadband upstart, which is focusing on a slightly narrower target. Founded in June, 2000, the company has developed routing software that makes it possible for Internet protocol traffic to travel over a satellite link and return via satellite, cable, or phone lines. Such technology will make it possible to do giant interactive Webcasts of live events of a quality that's far superior to the stuttering Internet video of today. The company has raised nearly $8 million in two rounds of financing and has deals with, among others, Alcatel Space and Hilton Hotels. CEO Didier Tymen aims to break even in 2003.
He acknowledges that the first wave of Net-over-satellite ventures in the U.S. was a bust, but he says the technology was overly ambitious and the capital markets were too impatient. "Big dreams that involve a lot of money are only successful when there's a lot of money," he reflects.
At this moment, that's not the case. Instead, more focused and realistic ventures like UDcast, ActiVia, and Castify could set the pace for a more successful second generation of Internet broadcast services.
Tomorrow: Part 2 of my visit to Sophia Antipolis
Reinhardt covers technology from BusinessWeek's Paris bureau Edited by Douglas Harbrecht
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Copyright 2002, Bloomberg L.P.
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