(FORTUNE Magazine) – I'm telling myself that Gulliver would have asked the same question. Or maybe Hunter S. Thompson. What on earth am I doing in a car with three Yahoos, speeding through the lush countryside of the Loire Valley at almost 110 miles per hour? After taking a dozen of their clients and business partners to watch a Yahoo-sponsored Formula One racecar roar through practice laps in a small town outside Paris, these three young employees of Yahoo France are hell-bent on getting back to the office. In the back, marketing executives Nathalie Dray, 32, and Carole Zibi, 29, have whipped out their cell phones and are courting clients. In the front, Raphael Tommasini, 24, who's in sales, tells me about his collection of spiders as he swerves our rented Ford around a BMW dawdling along at 80, then steps on the gas again. Meanwhile, your fearless correspondent is double-checking the clasp of his seat belt. Is this a metaphor for the fast-moving nouvelle economie, or what?

But wait a minute. I'm in France, and this is the Loire Valley, with acres of vines and thousands of bottles of straw-colored Sancerre waiting for us. Aren't we going to stop and idle away the afternoon in some seductive restaurant? Non. Alas, we continue to speed toward Paris.

These Yahoos--that's what they call themselves--are at the leading edge of Europe's corporate makeover. They are part of a young generation that is quietly changing the face of European commerce--and, more significant, its work culture. Forget about rigid hierarchies, three-hour lunches, and seniority. Young Europeans are showing the drive and entrepreneurial spirit to thrive in the rough-and-tumble new world of e-commerce.

There may be no better place to observe this transformation than in the office of Yahoo France. Founded four years ago by a 12-person startup team, Yahoo France is only one division of Yahoo Europe, the region's largest portal, which is run by Fabiola Arredondo (see the article in this issue on the world's most powerful women). Yahoo France, led by managing director Philippe Guillanton, now has 56 employees, half of whom joined the company in the past year. Their collective goal is to help realize Yahoo's vision of being the world's portal. Yahoo wants to provide a similar home page to every Internet user in the world--thus building a brand, but tailored to local language and culture.

The first portal in France to offer quality service in the French language, Yahoo reaches 63% of the 7.7 million French people who connect to the Internet each day; its early start has helped it stay popular even after France Telecom unveiled its own portals, Wanadoo and Voila. But Yahoo can't take that status for granted, says Guillanton. "Three months in an Internet business is like one year in the old economy, so we have to fight hard to maintain our lead."

What Web users find when they click on the Yahoo France home page is almost exactly what their American counterparts find on their Yahoo home pages but with much of the content decidedly French.

The market for these services is ready to take off. The U.S.-based Internet survey firm IDC predicts that the number of French Web users over the age of 15 will grow fivefold, reaching 34 million, by 2003. To cope with this growth, Yahoo France has recently moved from one room on Paris' Rue Sentier (known as Silicon Sentier) to an impressive three-story building in a serene and leafy neighborhood. Just around the corner an open-air market displays fruit from Provence, wines from Bordeaux, and cheeses from Auvergne--the old France indeed. But inside the building there's something new happening.

Quietly. No flamboyant Gallic temperaments. No haute couture. No whiff of cologne or stench of Gauloises. (Smoking is allowed only in a designated area.) No one playing foosball. Instead, Yahoo France's troops are ranged around open workstations in the company's signature-purple chairs. Clicking their keyboards and murmuring into their cell phones, they are living proof that the hard-driving business culture born in the garages of Palo Alto can work outside the U.S. The myths of the old Europe are dying.

MYTH NO. 1: Hierarchy Rules

When Alexis de Tocqueville visited the U.S. in the 1830s, he was astounded by the American hostility to rank, to rules and regulations, to bureaucracy and centralized government. And until very recently, Americans visiting France have been amazed (and annoyed) by the French affection for rank, for rules and regulations, for bureaucracy and centralized government. But thanks to the import of Silicon Valley's freewheeling e-commerce management style, the French business culture is changing--less bound by custom, more open to new ideas. Proclaims the headline of an article in the June issue of Connectis, the e-business supplement of Les Echos, France's largest-circulation business newspaper: LES START-UPS REINVENTENT LE MANAGEMENT. (And note the use of English words.)

For a glimpse of Europe's new management class, meet Isabelle Bordry, the 30-year-old head of sales who became a Yahoo in June 1997. Tall and elegant, Bordry is perhaps the most intense personality in the office. We meet in a small conference room set apart from the principal workspaces--maybe because this allows her to chain-smoke.

Bordry has modeled her own management style as closely as possible on Yahoo's Silicon Valley ethos. "I worked at Hachette Filipacchi, a publishing conglomerate, before I came here," she says, "and that was a very traditional French company. There was hierarchy, layers of management, and a rigid structure for making decisions. Here it is completely different." Bordry, who leads a team of 12, sets general guidelines but encourages people to make their own decisions. In negotiations with clients, for example, her staff decides on the approach to take and also--unless it is a very big deal--on what the specific terms of the contract will be. Bordry is doing everything she can to instill a startup spirit--working side by side with her teams, hanging out with them at lunch, delegating responsibility to her two team leaders. And paying them for performance, not seniority.

Her style seems to be working. Like its American parent, Yahoo France makes money by selling banner advertisements. Clients range from Vitago (health and beauty products) to Mauboussin (cyber jewels) to Amazon (you know what). Bordry will not break out revenues but notes, "I can say that our sales have far exceeded the expectations we began with two years ago." MYTH NO. 2: The French Take Long Lunches

But do the French really know the meaning of 24/7? Here the answer is more ambiguous. Certainly the folks at Yahoo France exert themselves. All the Yahoos know that they have to compete against huge players like France Telecom and Vivendi, and that the future of the company (and the value of their stock options) is far from assured.

But they also believe it's possible to work hard and have fun at the same time. The Yahoos often sound as if they're talking about a great party they went to over the weekend. ("You'll never get him to advertise on the Web: He still thinks you can make a fortune with a boutique in St. Germain.") They tell jokes, they laugh, they tease each other. In sales, an extrovert named Max is known to get up on his desk and howl like a wolf whenever he clinches an especially lucrative deal.

In short, French Yahoos seem to see no sharp distinction between their professional lives and their social lives, between work and play. You could say this is typical of U.S. tech culture too, but there's a subtle difference in emphasis: In the U.S., work has a tendency to absorb everything else, while in France the reverse seems to happen. As Nathalie Dray observes, "In France, people use the Internet for particular things, not as an all-day activity. It's rather the same with work. We have our work, which is very important to us, but we have a lot of other things in our life that are just as important."

Indeed, France's newly mandated 35-hour workweek is not a problem, because no one can tell exactly when work begins and ends. If Yahoo's Carole Zibi sits at a cafe and chats with a client on her cell phone at 9 P.M., is she working or having a good time, or both?

Even with all this optimism in the air, I can't help wondering what would happen if Yahoo France should fail. Sure, the Yahoos could take a lot of intellectual capital with them. But where would they take it? Nearly all the young Yahoos I spoke with had been brought up in Paris or its suburbs, and they showed no willingness to leave the city, or their friends and families, to seek fame and fortune elsewhere. France still lacks the labor mobility that has helped keep the American economy vibrant.

MYTH NO. 3: French Education Is Rigid

If all work and no play make Jacques a dull boy, then the French should be very dull indeed. Their school hours--from 8:30 to 4:30, starting in kindergarten--are among the longest in the world. French children take a prescribed national curriculum, which prepares them for a battery of standardized national tests. Doesn't sound like a system likely to produce the subculture of surfers and hackers that has helped fuel the explosive growth of the American e-economy.

But early one morning I'm munching a croissant and peering over the shoulder of Diego Angel Diaz, 26, a senior surfer at Yahoo, as he reconfigures the MAISON ET JARDIN ("house and garden") shopping category. A scrawny guy with a shaved head and steel-rimmed spectacles, Diaz bears an uncanny resemblance to his counterparts in startup companies all across the U.S. Behind the look of a skateboarding mall rat is a sharp mind every bit as steely as the glasses he wears.

Diaz studied library science and Spanish at the Sorbonne, then worked at the post office for a while. But that job, he confesses, was deadly boring, and he devoted all his spare time to his two passions: reading comic books and surfing the Web. "I was surfing late one night," he says, "when I ran across a listing for a job at Yahoo France. At first I couldn't believe that someone would pay me for doing what I liked most."

Diaz landed the job because he had precisely the blend of qualities that produces people like Napster founder Shawn Fanning--insatiable curiosity and a visceral feel for the creative possibilities of cyberspace. To a great extent, Diaz credits the education he received for his success. "It is true," he says, "that French education is amazingly systematized. But French culture also prizes creativity and originality, and as children get older they are given more and more complex and creative tasks in school. I know that since about the age of 16 my exams required me to think for myself."

With those words, he returns to his screen. Something about the hunch of his shoulders tells me that it's time to stop asking questions and let his surfboard disappear over the crest of the next wave.

MYTH NO. 4: Europe is stuck with an Old-World mentality

You can't walk 50 feet in central Paris without coming across a plaque or sign informing you that some famous person was born or lived or died in that particular building. The French have a deep respect for history, and with it a deep respect for age. And that has generated another myth about the country: the belief that it is a land where the old is always considered better than the new, where youth has no chance to make its mark, where innovation has no hope against tradition. Who else but the French could have coined the self-defeating phrase "Plus ca change, plus c'est la meme chose"?

But this myth too is increasingly out of touch with reality. Not just in the offices of Yahoo but all across Europe, a rising youth culture is rewriting the rules of European business. Several Metro stops from Yahoo France, I meet with Isaac Getz, a professor of psychology at ESCP-EAP, one of France's most prestigious business schools. Getz is one of several French intellectuals who think that the French are experiencing something like a Freudian revolution, the victory of the sons (and daughters) over the fathers (and mothers).

"Five years ago," says Getz, whose apartment on Boulevard Pasteur commands views of the Paris rooftops and the Eiffel Tower, "when I asked my students who was going to start their own company, not a single hand went up. Now, almost half the class raise their hands."

The lure of startups has had a ripple effect all across French business culture, even in old-economy manufacturers and law firms. "Graduating students in the past wanted more than anything else to look old," says Getz. "They bought expensive suits and shiny briefcases, and they arranged their faces to look solid and mature. Now it's completely different. Everyone wants to go out and work with a team their age. They don't have to submit to their fathers anymore."

One thing that differentiates this younger generation from their parents: money. To attract tech-savvy young workers, more companies are offering stock options--last December Vivendi gave out options to each of its 250,000 salaried employees, and more recently Alcatel extended options to 130,000 of its workers. And as huge new fortunes are made in the e-economy, the French are abandoning their reticence in such matters and talking more--and more openly--about how much people make.

As Yahoo sales rep Tommasini observes, "If my parents can hardly comprehend how a package of information can be transmitted in several seconds to the other side of the world, how can they understand that I might retire after just two or three years at one job?" Carole Zibi, the Yahoo marketer, agrees: "Money is probably more important [than it used to be]. Nothing like Americans, but still, our generation is much more money conscious for several reasons: the need to be autonomous at an earlier age; the desire for things like cars, mobile phones, and homes."

MYTH NO. 5: Red Tape in France Is Impermeable

It isn't easy to keep the startup spirit humming when your company doubles its size in one year, as has Yahoo France. And it's even harder when you have to fight against red tape. France has long been notorious for its labyrinthine code of laws--the word "bureaucracy" is derived from French for good reason--and this is still true enough to infuriate the rising generation of young entrepreneurs.

According to Internet economy consultant Michel Pezzulo, an experienced observer of the e-commerce scene in France, French rules and regulations present young startups with a thicket of problems. For example, it can still be excruciatingly difficult to fire someone: "You have to produce evidence of serious fault or unsuitability to the position and give the employee two to three months' advance notice." Stock options, too, are encumbered: The government recently increased the tax on them to a rate higher than the tax on salaries.

But these obstacles don't seem to have impeded the explosion of e-business in France, and they don't have much impact on the day-to-day operations of Yahoo France. Although regulations protecting the French language decree that computers shall be known as ordinateurs, Yahoo's pages freely employ such Anglicisms as "shopping," "people," and "surfeurs." Restrictive as real estate regulations may be, they didn't keep Yahoo from renovating and moving into a large building. It might be difficult to fire employees, but that didn't prevent sales chief Isabelle Bordry from dismissing two salespeople who didn't have the Yahoo spirit.

According to Sylvain Forestier, 40, the president of Croissance Plus ("growth plus"), an organization established three years ago to lobby for more business-friendly regulations, "Things are going to change slowly." The political environment is still hostile to the reforms that entrepreneurs would like to see: lower taxes on stock options (currently between 40% and 50%) and a redesign of the nation's tax on wealth (which tends to punish those who, like the founders and managers of most startups, hold a stake in a company). "Some companies have moved out of France for this reason," Forestier says. "I myself have had employees who went to work in the U.K. because of the tax on stock options here." When I ask Forestier if he is optimistic about the future, his laugh sounds bitter. "It's true that la nouvelle economie is popular here, and everyone loves the startups. However, they all want Microsoft without Bill Gates."

And that may be the toughest paradox facing France--and indeed Europe--these days. When it comes to raw human capital, France is the equal of any nation in the world. In fact, the country's cultural values and educational system might even give it an edge in the global struggle for e-dominance. But France has yet to figure out how to unleash the full potential of its extraordinarily talented young people. For better or worse, French law and custom conspire to discourage the unbridled ambitions that drive, say, a Harvard dropout to build one of the most powerful corporations in the world.

The team at Yahoo France could go head to head with rivals anywhere. But are they working in an environment that would encourage them to found the next Yahoo and go global with it? Not yet.

NICK BROMELL has written extensively about work and social change. He is a professor of American Studies at the University of Massachusetts.

FEEDBACK: nbromell@english.umass.edu