Ephemeral messaging app Snapchat is now one of the world’s highest-valued private tech start-ups despite not having a proven revenue model.
Dublin: 28.08.2014 04.14AM
The full impact of Dell’s cutbacks in Limerick could run beyond the initial 1,900 to over 10,000 job losses in the region, as firms that supply the company also feel the cold winds of change.
The latest casualty — contract manufacturer Flextronics — is to wind down its operations in the city by the end of the year, with the loss of 150 jobs.
But Limerick isn’t the first city in Ireland to be devastated by the loss of a major technology employer, and how the city fights back will define its future for years to come.
When Digital Equipment Corporation (DEC) pulled out of Galway in 1993 and when Motorola pulled out of Cork after 25 years, both cities saw a wave of entrepreneurialism that boosted employment as well as salary levels.
Already, a group of entrepreneurs has joined forces to encourage Dell workers with experience and contacts to turn their fortunes around by building their own businesses and creating jobs.
The group, led by Tipperary businessman Evert Bopp, is in the process of establishing a business incubator called Greenhouse, which will fast-track new start-ups by providing them with office space.
Bopp’s aim is to ensure the centre will have cutting-edge IT systems, good canteen facilities, in-house legal, accounting and investment services, as well as short-term leases and hot-desking facilities.
He says the launch of Greenhouse is a response to perceived inertia of the Irish Government in reacting to the global economic crisis, as well as muddling over the make-up of the so-called ‘taskforce’ to combat the fall-out from the Dell redundancies.
Bopp, who runs a technology firm called AirApps, and is involved in the Open Coffee business-networking event in the city, says these are not the responses Limerick entrepreneurs are seeking.
He explains: “The involvement of a public-sector body in a private enterprise (a start-up in this case) brings a large amount of bureaucracy and red tape. It’s simply a fact of life and not a negative reflection on the public sector.
“However, the last thing a start-up entrepreneur needs is to become entangled in paperwork and red tape, or any other activity that does not directly lead to product/service development or revenue,” says Bopp.
“The primary goal of the incubator would be to let the entrepreneurs and start-ups concentrate on developing their business by removing all ‘non-essential’ activities from their workload and offering them not only work space, but also advice, guidance and hands-on participation, if needed.
“We will not only tell you how to do it, we will also show you how to do it.”
Bopp says that Limerick, with its strong neighbouring industrial base of Shannon and the right can-do attitude, could turn its fortunes around.
“Companies such as Digital and Motorola came because wages were low, but after they left wages increased because of the efforts of entrepreneurs generating new businesses.”
The closure of Digital also led to the foundation of one of the world’s most innovative medical device clusters, comprised of multinational, indigenous and start-up companies.
Motorola closed two years ago, with the loss of 350 jobs. Within the first year, at least 10 start-up companies emerged from the closure.
According to IDA Ireland, entrepreneurial learning gained in multinational organisations can actually equip people to start their own businesses. The majority (60pc) of those in start-up programmes worked in multinational companies.
Bopp says the business model for the Limerick Greenhouse is still being worked out, with the decision over whether to be a profit or a non-profit organisation under discussion.
“Personally, I would prefer non-profit, but we need to ensure continuing investment.
“The model we are following is that investors in resources, services and support would get an equity share in the company if it is successful.”
A property owner has already provided a building to Greenhouse rent-free, and Bopp says he has been contacted by a variety of businesses, from legal firms to accountants and broadband providers, looking to offer their support.
“Legal firms, for example, are offering pro bono support for the first six months. This could be invaluable in terms of securing intellectual property rights and filing for patents. Eircom has put in the phone lines and is offering unlimited broadband.
“These supporters realise that, ultimately, if these start-ups are successful, everybody wins. When they generate money, it will go back into the economy.
“We envisage having five to seven start-ups in the first six months,” adds Bopp.
By John Kennedy
Pictured: Businessman Evert Bopp is hoping post-Dell Limerick will see the same flurry of start-ups that happened in Galway and Cork following the departure of Digital and Motorola