SAP.iO Foundry’s Connor Murphy: ‘Focus on the use case first’

26 Mar 2018

SAP.iO Berlin managing director Connor Murphy. Image: Datahug

Entrepreneurs must avoid the temptation of boiling the ocean and just focus on building products that people will love, says SAP.iO’s Connor Murphy.

The first time I ever spoke with Connor Murphy was during a start-up pitch competition at one of the earliest Web Summit events in Dublin nine years ago. I was the accidental MC for the night as I thought I was there to just interview the co-founder of YouTube, Chad Hurley.

Three hours of mishaps, laughter and lots of insight later I had come to rue my enthusiasm, but had learned a great deal about tech and investment (and also my own resilience under pressure).

‘Irish entrepreneurs need to focus on the international picture, think completely internationally, and they can still make Dublin or Galway or Cork an attractive place to live and work and attract the talent if they want to’

As I bumbled through the evening (when you stare blankly at 300 sets of eyes staring right back at you, you just keep going) Murphy’s company Datahug emerged as the winner of the pitch competition.

At the time, the Cork native had left a high-flying career as a consultant with PA Consulting in Washington DC and decided to embrace start-up life back home in Ireland while the country was in the grips of the financial crash.

The truth is there is no perfect time to do a start-up and Murphy was simply passionate to solve a problem he found with data and people’s inability to find the patterns and relationships within all the data they had.

Two years ago, he sold Datahug to a US company CallidusCloud for €13m.

Today, Murphy lives in Berlin with his wife and three daughters and is managing director of SAP.iO Foundry, an accelerator powered by Techstars. He will be in Dublin tomorrow night (27 March) to take part in a fireside chat at StartupGrind, supported by Bank of Ireland, at the Google EMEA building on Barrow Street.

We recently covered 21 brilliant start-ups to watch in Berlin ahead of the recent Inspirefest Salon in that city.

An Irishman invented the term ‘entrepreneur’

Murphy explained that the focus of SAP.iO is to accelerate machine-learning start-ups operating in the B2B SaaS space that could benefit from working with SAP’s 380,000 customers across nearly every enterprise vertical.

“We view this as a mentor-driven accelerator because we can tap into a great global pool of mentors and experts,” he said.

“Last year, we invested in 10 companies after receiving applications from hundreds of start-ups from 68 countries. The successful companies range from early pre-seed companies to late seed, early Series A companies, and the teams were characterised by the diversity of ideas and experience.”

Looking back on his decision to leave the cushy world of consultancy to embrace start-up life, Murphy hadn’t really thought about being an entrepreneur.

“To be honest, I didn’t really know what an entrepreneur was until shortly before Datahug. In my research, I discovered that the term entrepreneur – which is someone who organises and assumes the risk of a business in return for profit – was invented by an Irish economist who lived in France in the 18th century called Richard Cantillon. A Kerryman!

“For me, the broad church of entrepreneurship is characterised by people who take risks and put up all the opportunity costs of a business without knowing or having any idea of what the return will ultimately be. Both my parents were entrepreneurs and ran a business together and, from quite a young age, the stresses of running a business were discussed at the dinner table.”

Murphy actually considers himself more of a founder than an entrepreneur. “There’s a subtle difference. An entrepreneur looks at the opportunity and tries to calculate a return on investment. As a founder I don’t care if I don’t get a return, I just need to do this. So if I am passionate about something and want to solve a problem, no matter what, I will found something.

“Having learned a lot about being an entrepreneur, I’d say I am more of a natural founder and a trained entrepreneur. I learned a lot of how to be an entrepreneur – raising the money, getting the deals – but in my heart I am more of a founder, which is the passion side of it.

“Datahug was a passion product for me and I learned a lot of lessons on the entrepreneurial side: how to structure investments, how to communicate with the board, how to build IP and how to have a narrower focus.”

The harsh lessons of start-up life

The core lessons Murphy learned were precisely around having a narrower focus. “I shouldn’t have tried to boil the ocean at the start or taking too long to get to the use case,” he said.

“We were going in different directions at the start. We wanted to win the war straight away but had to learn a lot about securing the beachhead first. So our mistake was probably trying to pursue a platform vision without securing a niche or use case first.

“If I could do it all over I would start with a product or use case, and not a platform, that people would love and trust and build it from there. It doesn’t mean selling out your original vision, just secure the beachhead first.”

In terms of the technologies that Murphy is fired up about today, naturally, machine learning, data, cloud and apps top the list.

“Some entrepreneurs are good at pattern matching, knowing what the market is looking for. If I was pitching Datahug today, for example, we’d be leveraging AI and blockchain to unlock the power of the data in your network.

“At the end of the day, it is about what is the problem you are solving, why you and why now? It comes back to the fundamentals. Datahug was about a problem that pissed me off. That problem is most likely now going to be solved by Microsoft after it acquired LinkedIn for $26.2bn. But I had to try!”

The SAP.iO Foundry’s focus on machine learning has provided Murphy with great insight into the next generation of B2B SaaS companies, particularly in the areas of using deep tech to automate things that range from R&D to objectives and key results (OKRs), the latter being a massive area of opportunity.

Be local, think global

Techstars’ Connor Murphy: ‘ wants to accelerate some good start-ups’

SAP.iO Berlin managing director Connor Murphy. Image: Kevin Abosch

Murphy’s advice to Irish start-ups is to think international from the get-go.

“It’s not Ireland v Germany, it is Dublin v Berlin. It’s not even versus: it’s Dublin or Berlin. There is only one Silicon Valley but then you have all of these different ecosystems, but they are all connected. You can live in London or Dublin or Berlin or San Francisco and move between these ecosystems.

“Datahug wasn’t an Irish company, it just happened that we had Irish accents and chose to live and work in Ireland at that time. Our customers were everywhere globally and our investors were international. The most realistic and most successful entrepreneurs are usually around 38 years of age, have a lot of industry experience, experience of international culture and are thinking internationally.”

He said that, for Irish entrepreneurs, the pressure is to constantly think global. “In Berlin you are in a German market of 100m people and you could probably start off serving that market. But, if you are in Dublin or Cork, you have to target the UK before thinking about the US next. That should be the psychology of the Irish start-up, and if not then they are not at the races.

“Ireland is a great place to live and work, but you are not going to get a big cheque from investors or customers in that market. In Datahug we lived in Ireland but spent most of our time in London.”

To Irish-based start-ups he said: “Don’t identify as an Irish start-up. Identify as an international start-up that happens to be in Ireland or wherever you live. It’s a simple mind shift but it will stand to you.”

He cites the example of Intercom, which may have an Irish founding team but considered itself a San Francisco-headquartered company from day one.

“SaaS enables you to run a global business,” Murphy concluded. “Irish entrepreneurs need to focus on the international picture, think completely internationally, and they can still make Dublin or Galway or Cork an attractive place to live and work and attract the talent if they want to.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years