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Very much so: technically, they are big independent ISPs. In practice, it is the keystone in the very ambitious investment strategy of Xavier Niel, France's most influential internet entrepreneur. It is a key reason why internet access in France is so fast and cheap. Both stories are worth reading, but I don’t know what would be a good reference in English. It’s 100% the most epic internet story I’ve heard (and I’ve got drunk with many famous nerds). Quick version: Xavier Niel started with the Minitel, making much money from “pink” pages (sex chat) and rapidly switching to offering similar services on the then-nascent Internet. That didn’t kill Minitel, but it was a forerunner. Having a lot of incoming traffic, he negotiated very beneficial peering contracts that allowed his company, called Iliad, to strong-arm FranceTelecom (the incumbent ISP) into granting him free high-tier internet access. They did not like that but couldn’t complain publicly that their customers were watching so much porn they had to give away the family jewels. (There wasn’t YouTube yet, and the legendary “The Internet is for Porn” from Avenue Q wasn’t playing on every screen.) Thanks to that free peering, and with a dash of advertising on the home page, he could offer free (hence the name of the ISP) internet access via phone in the late’90s: a toll-free phone number, no monthly fee, and the offer even included web email and a hosting solution, free for individuals: an absolute revolution at the time. FranceTelecom did not like that. They responded with a revolution of their own: they were the first to offer (A)DSL at an affordable price. They even escaped their legendary big-company committee-itits and released a marketable product: a modem that looked like a cute teal manta ray. I worked there a few years later, and the team was basically openly saying they were waiting for a Nobel prize (technically, it should have been the Millenium Prize, but that wasn’t invented yet). Except, being a big company, they treated poorly one of the critical engineers behind that miracle. Niel had learned from the unusual characters who operated his website that some developers prefer to live by their own rules. He poaches that guy, and Free releases another bombshell: same ADSL, custom modem, better spec, bargain price, and a marketing campaign that is so iconic people still remember it—20 years later, “He gets it: he’s got Free.” Basically, saying that using any other service is a sign of mental handicap. The idea of private telecom and internet service providers wasn’t the most comfortable for a country still proud of having a government-invented Minitel. Well, FranceTelecom didn’t like it: everyone else loved the competition. There are a lot of court trials, but almost all are in front of a special court for competitive matters. The president of that court (who happens to be my professor) loves the irreverent Niel. She mainly loves how much Free proves her theory that the court’s laissez-faire attitude (speaking softly and carrying a big stick aimed at the big guy) helps: it protects small players and allows them to run circles around the incumbent. FT (rebranded Orange) keeps losing. That comforts Niel into showing that he is for the consumer: increasing the number of services, overlooking things like music and later movie piracy, lowering prices, allowing people to hack their modems to filter ads, etc. He is about as allergic to profit as possible during the 2001 bubble. The guy turns into a genuine folk hero. He gets accused of proxenetism (from before his Minitel days), but no one cares. That page is turned for good. A couple of years later, he started offering mobile telephone contracts, famously a free zero-hour contract again (arguing they had been known for a paying service, the DSL access, for too long, given their name) and ties the mobile contract with the ADSL through genuinely sensible integrated products: for example, any mobile user roaming about town can connect through special access to nearby servers, lowering their mobile bill; when at home, calls to one’s mobile phone are forwarded to a phone-over-IP solution — both revolutionary ideas at the time. Having a landline becomes non-sensical overnight. That turns Niel into a billionaire, and he starts having some real impact: * opens Kima, the first very public, opinionated VC firm that invests in all the cool French start-ups; people discuss refusing to go to YC to take Kima’s money (in practice, smart people do both); * opens 42, a very anti-institutional software school: the tuition is free, no classes or exams, but students have to survive a grueling schedule of super-hard projects (called the “swimming pool”, because people “get it or drown”). At that point, any wannabe entrepreneur has two goals: get money from Kima and hire a CTO from 42. Sightings of the guy at the LeWeb conference or having coffee with an entrepreneur in the gentrifying Marais (the Jewish/Gay neighborhood that hosts both the fashion and start-up ecosystems) feed the rumor mill. Because that’s not enough (and because “la Cantine” the free-for-all it-place where all internet stuff happens in Paris — conference with Zuckerberg, FabLab launch, Wikipedia workshops, etc. and “le Camion,“ the accelerator program both start to lose money, coherence, and support), Niel poaches key people from both and fills the void and opens “Station F,” the now headquarter of all things tech. It’s a triumph. You might not have heard of Capitaine Train, Zenly, Swile, Front, PayFit, Younited, Boom, Carta, Movable Ink, Wise, Alan, Spendesk, Sorare, Ledger, or PandaDoc. Still, those are/have some unicorns where Kima was a key investor. It’s fair to say Niel has made much more money from investing than from Free. He’s now pretty much the king-maker, getting French President Macron to say that he wanted France to be a “Start-up Nation.” This was a rapid, unverified whirlwind. I expect to get a lot of corrections from many people (sorry, not trying to write a fact-checked book on the guy), but I hope to have made my point: we need Ridley Scott or David Fincher to make a biopic on him. |
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Cute!
And thanks for the story, I've heard bits of it, but it's special from someone who had the experience.