Message from Jeremy: To all Tech IT Easy readers, who could obviously not necessarily remember the initial announcement, I have invited my friend Kari to write … about stuff that happens to interest him at the moment.   

A while ago I was attending training and during a break I was reading the organizer’s customer magazine and what caught my eye was an article about the mythical beast of today’s internet, Web 2.0. Well, actually, what caught my eye initially was mentions of Flikr [sic] and Deli.cio.us (a lunch site for CIOs, perhaps?) in that article. Everywhere in this article, these wackily named services were continuously typo’d. I really couldn’t take these guys seriously, they were trying to be so hip and up with the times, but, come on, try to get even one Web 2.0 brand’s name correctly!

I also had trouble taking seriously a paper by Forrester about Ajax and Flex, when they didn’t even mention Prototype at all (Sure, GWT and Dojo got mentioned, because they have corporate backers). The other problem with that paper was that it framed Flex and Ajax as alternatives, while I think of them as more of complementing each other. Adobe probably agrees with me, as they launched Spry a while ago. Come on Forrester, just because those two sound similar doesn’t mean they have anything to do with each other. Spry also makes many of Forrester’s Flex arguments empty as they were more pro-Adobe arguments anyway - the article could have just been titled “Ajax or Adobe?”.

Anyway, back to the Web 2.0 article, I managed to read the article despite the mis-named Flikr and friends and learned a bit about Jaiku, a twitter-like social network thingie for Symbian S60 based phones. Both Jaiku and Twitter are taking the social network to narcissistic extremes. OK, I bet pretty much everyone has by now heard about Twitter (you know, like little birds making noises?). You send little SMS-like messages so other people know what you’re up to. I know I’ve heard enough about it for a while already. Jaiku (you know, like haiku?) is similar, but takes advantage of mobile phone’s capabilities (location awareness through cell tower information and Bluetooth) and is more akin to status-messages in IM apps and Tumblr. I hadn’t heard about it at all before reading that article couple of weeks ago.

Now, after this really confusing introduction I’m finally getting nearer to the point I want to make: Jaiku and Twitter are really good examples of the differences and stereotypes of US and Finnish development, especially regarding mobile phones, which are a bit involved in both of these services. Twitter is simple in that it’s web-centric, but is easily integrated to IM and SMS. Twitter’s process is that you send a message to people.

Jaiku on the other hand, takes most of its features through Jaiku Mobile, its S60-based software. It uses novel approaches to get all kinds of information about your location and friends automagically. The flip side, as mentioned, is that you need a pretty recent high-end Nokia phone to use all the features that make it different from Twitter et al. Jaiku’s process is that you update your profile and your friend’s poll you for your updates – this is the reverse of Twitter’s process – and oh-so-Finnish. Jaiku was also invented first, so it’s technically wrong to call it “twitter-like” and has more features than Twitter yet gets less attention, but that’s also oh-so-Finnish. And look at the logo! It’s so full of that Ikea-esque scandinavic design, just like Skype.

I don’t think Twitter could have been invented in Europe, because we’re so used to mobile phones and SMS in particular and mobile data is still pretty expensive and without good applications driving its adoption. Europeans on the other hand have been slower to adopt instant messaging, which took on much quickly in the US, if I remember correctly. Americans on the other hand have just realized the possibilities of SMS, which to be honest is a bit out-dated and inferior technology compared to what cuold be possible. But as we saw with the fiasco of MMS (have you Americans heard about that one? It involves lots of compatibility problems and adding cryptic settings to your phone and even then it might not work), the “next SMS” is not coming from Nokia or more accurately from mobile operators, because they are only looking at the profit angle, not the broad usability angle. MMS added too little too late and with too much trouble.

In the beginning I was talking about how I saw Ajax and Flex as complementary technologies and not as alternatives – that’s like saying JPEGs and Flash were alternatives – I also think that Twitter and Jaiku should aim to go beyond IM as I don’t see them as alternatives to Live Messenger, Jabber/Google Talk, et al. and neither do their users. It’s amazing that even today we’re lacking location awareness in our mobile phones, something that is a bare necessity for any other IM application.  In my opinion Web 2.0 is about connectivity between applications and users, we don’t need to reinvent the wheel or try to make alternatives, which never can feature-wise compete with the original, anymore but now we can try to complete them.

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As you may have noticed on the table on your right hand, France is neither famous for the effectiveness of its taxation system, nor is it recognized as a land ambitious entrepreneurs should head to when thinking of starting a new ambitious project – despite the fact that the very word entrepreneur is French.

Taxation-wise, France had it all wrong recently, except maybe for the “Young Innovative Company” or YIC (“Jeune Entreprise Innovante” or JEI) label the most innovative & R&D intensive start ups can be granted with, created in 2004 (Loi de Finance 2004). Of course, a lot could be said about the YIC status, which is yet to make of France a no-brainer for would-be entrepreneurs. However, I believe things are going in the right direction, and here’s why:

• YICs are exempted from paying corporate income tax for 3 years, and are entitled to pay just half of it for the 2 following years.

• YICs are exempted from paying the minimum annual corporate tax as well (named IFA, standing for imposition forfaitaire annuelle).

• YICs don’t pay any social charge for 8 years on R&D & R&D-related (patent advisory, contractors, etc.) employees. This measure looks to me as the most significant of the whole package. In France, social costs may represent up to 50% of the total employment costs (total salaries + social costs (including family benefits, illness insurance, social security, etc.) = on average 1,4x total salaries

• This may particularly be of interest to angel investors & start up early employees: when an individual exits a YIC, capital gains are fully tax-exempted (vs. 16% normally) provided that the seller has been holding her/his shares for at least 3 years, and that family capital doesn’t exceed 25% of the shareholder structure.

Another interesting set of measures named R&D Tax Credit (Crédit Impôt Recherche) was added to the Young Innovative Company label initiative, to help enhance French innovative projects further. It all consists in having any company, even those not YIC-labeled, being granted with tax credits amounting to [10% total R&D expenditures + 40% of the difference btw. total expenses & R&D expenses over 2 years & adjusted to a price index + legal costs (patenting, counterfeit cases capped at 60K euros)], capped at 10m euros.

Conclusion: France’s taxation system is still not optimal for the average company, but thanks to the introduction of the status of Young Innovative Company, it has improved a lot recently. As a matter of fact, I believe the French taxation environment tops the European class for innovative, R&D-intensive entrepreneurial projects. I spent some time benchmarking with other countries, and couldn’t find much better in corporate taxation. Now, it’s the individual taxation system that should be tackled: why not create, on the same model, a special status for entrepreneurs & early employees named YIP, standing for Young Innovative People?

Addendum to the happy few who read French, a detailed, official description of what Young Innovative Companies and R&D Tax Credits are all about.

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