EXCLUSIVE: Interview with a 20-year-old Irish tech millionaire

1 Jun 20111 Share

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Two years ago, the entire nation was stunned when the news emerged that two Limerick teenagers – John and Patrick Collison – had sold their first technology company for US$5m. There was no long journey to Silicon Valley for them, they built a product, bought their plane tickets and just went.

John Collison, the 20-year-old tech entrepreneur who, with his brother Patrick, sold their company Auctomatic for US$5m three years ago when they were just 17 and 19 respectively, comes cheerfully onto the line.

John is on a brief sojourn in Ireland before heading back to Silicon Valley to work on the Collison brothers’ next big venture, Stripe, in which top Silicon Valley investors Peter Thiel and Elon Musk are reported by TechCrunch to have invested US$2m. He assures me he’ll be back in Ireland in a week’s time to speak at tomorrow’s DotConf at the National College of Ireland.

The Collison brothers’ story is compelling. John and Patrick formed a start-up called Shuppa in 2007 and it later became known as Auctomatic and attracted funding from Silicon Valley venture capital firm Y Combinator and was acquired just a year later by Canadian firm Live Current Media for $5m (€3.2m).

Both John and Patrick offer a tantalising glimpse of what is possible if more Irish students were encouraged to excel at STEM (science, technology, engineering and maths). Their younger brother, Tommy, who is still at school, is an ardent tech blogger and public speaker.

From a family of tech enthusiasts, the boys learned how to code software by the age of 10 and Patrick came first at the 40th BT Young Scientist Exhibition in 2005 for a project he created on artificial intelligence.

Siliconrepublic: One of my anxieties about the country’s approach to technology in education is that in places where we do invest in computers and broadband we seem to be creating just users of technology as opposed to creators of tech, the coders. You guys showed what’s possible if you think outside the box and outside Ireland …

Um, you’re right, I haven’t finalised my talk yet but part of the stuff I’m thinking about is just that: we’re in the age where it’s the easiest to create things and we have the best tools to create things and as you say being able to go out and do stuff rather than just passively consuming. We’ve never had it so good in terms of the tools available to us.

I recently started learning Photoshop and it’s mind boggling the amount available to you and how much we’ve progressed versus what image manipulation was like 10 years ago.

And so I think you’re dead right, it would be a shame if we weren’t outputting more creatively than at any point in history, because what we have available today is so powerful.

Siliconrepublic: You and your brother Patrick created Auctomatic and sold it. And Tommy blogs a lot and has an infectious enthusiasm you can’t help but admire. I hear your entire family blogs, for example. How big an influence did the family environment have in helping you guys to do what you have done?

Our parents are pretty open minded, most evidenced by – but still can’t figure out how it happened – me going off to San Francisco when I was 16. I was fairly grateful for that opportunity and we look back and ask how did that happen? When we started tweeting and blogging our mum said one day ‘will you set me up with a blog?’ And I installed WordPress on her machine and she started writing, and on the same day they joined Twitter and loved it. It’s often a case of them keeping up with us and vice versa. My dad now uses Foursquare quite a bit and it’s funny, he’d auto tweet his mayorships and would be at some office for work and it’s so funny that’d he’d tweet how he became the mayor of wherever. They’ve always been fairly open minded about technology, in general, and that’s great fun.

Siliconrepublic: Was there always technology around the house?

My dad is trained as an electrical engineer and he’s always had a huge interest in technology and I suppose that … It’s very hard to judge what the factors were – there’s no narrative around anything. But I feel like certainly my dad was always interested in the world around him. He had an engineer’s curiosity about things, building things and how they worked. I certainly think that being close to somebody like that is kind of infectious and having this kind of attitude you should explore and find out and build and discover things, and poke at stuff and break things, whatever.

In fact, our mum ran a business for a while out of the house and the firm that serviced the computers had told us we weren’t allowed to go near the computers. We were always messing with them, they said, "keep those kids away from the computers", but we got around it. We were kids who were allowed to discover and mess with stuff.

Siliconrepublic: The first time I heard of you guys, it was on the radio and I was driving to work and the news came on Morning Ireland about two teenagers who had made millions selling their company. When I was a teenager I don’t recall ever hearing the word "entrepreneur." But for you at 16, creating a business, going to Harvard, selling a company to ex-Googlers – was any of it planned?

It was definitely not planned at all. I think they have a concept in computer science called the ‘hill climbing algorithm’, which is if you always just work at increasing some quantity or going one step up you’ll get to a local maximum point.

And so I’ve always felt that algorithm and of doing what seems is a good idea at the time and following a personal hill climbing algorithm and going with things in a good direction.

Patrick suggested starting this thing and it seemed like a good idea and I was back in school in Castletown college and had decided to go to college in the States. And while I was there we started another new thing and I took time off from Harvard to do that. It’s been, I think, far too disjointed and kind of interrupted to be in any way planned.

And when you ask did we know what would come of Auctomatic or what our plans were, I don’t think so, we started a completely different product. We started out Shuppa which was going to be an auction site that competed with eBay and we ended up merging with some other guys and working on a slightly different idea. Along the way if something seems like a good idea we follow that for awhile.

Siliconrepublic: Do you think Ireland as a country that we’re any good at supporting our young in things, particularly in terms of young companies? I mean, there is nowhere in the world like Silicon Valley, as place where money, technology and ideas collide …

Correct. We’ve a good tendency as a country to be very thoughtful and introspective and self-critical, but it’s not so much a question of in Ireland do we support entrepreneurship, the reason we went to Silicon Valley is that’s absolutely the best place in the world for this kind of thing.

London is kind of having the same questions, how do we support things here rather than having people going off to Silicon Valley and I definitely think it is a question. It wasn’t a thing about Ireland, we know lots of people here and love the place, or if there was something about Ireland’s supporting things as much as we’d hope. Really, it was, ‘why shouldn’t we go to this best place in the world to build this kind of company?’

Siliconrepublic: I met Niklas Zennstrom from Skype at F.ounders last year and his attitude is it isn’t all about Silicon Valley. But yet there just isn’t anywhere else on earth where money meets ideas in the same way. That said, Skype came out of Stockholm and firms like Foursquare came out of NYC, Groupon came out of Chicago. I would love to see some more Irish companies succeed like you guys. What would be the core lessons you could provide any young start-up that you learned at such a young age, going right into Silicon Valley and getting up and running?

The reason we went, what you say about Skype in Sweden and Foursquare, you’re dead right, there’s lots of successful cases of companies being built outside the Valley. Our reason for going there was this is our first time doing a company, we knew extremely little about it and so in a sense we were just trying to do what was easiest for us in the sense that Silicon Valley is like a university for this kind of thing.

You’re surrounded by these peers doing similar things and so we applied for a Y Combinator programme, a seed fund that will help you incorporate, give you legal advice and get some seed funding. Dennis Crowley setting up Foursquare was as an experienced entrepreneur who sold a company previously to Google.

This was our first time doing a company and so I think definitely Silicon Valley, a large part of it for us, was our learning experience and being able to meet people doing similar things, learn from them, meet people in tech, get opinions and if you want to hire people it’s a great place. For someone doing something for the first time, steeping yourself in that culture and that set of people is extremely useful.

Siliconrepublic: What are the core differences in your opinion between starting up in Ireland and starting up in the Valley?

I think again it is a cultural thing. The biggest thing for us was always the time commitment involved in getting started. In Ireland, if you’re looking to get money, you were filling out forms for grants and maybe 10 weeks later you’ll get some of the money, whereas there’s a different culture in the Valley.

You’ll meet an angel investor and he’ll write you a cheque. Of those people he meets, three out of four will completely fail and one will be successful and that’s how he works. There’s a culture there of failure being acceptable, and very rapid failure, and iteration and you do something it doesn’t work, that’s fine, you go back to the drawing board. That’s also a nice thing about being there.

The culture of moving quickly, breaking things, possibly failing and that being acceptable and everyone there is OK with it.

For us going out there for the first time, it was very nice being in a culture where it’s not a big deal to fail, lots of people are inexperienced. The structure in Ireland might be set up towards helping every business succeed, whereas investors in the valley are set up towards having some people succeed. And certainly for us, we like the fast and loose low-pressure thing out there.

Siliconrepublic: What did the Valley look like to two young Irish guys. You saw the film The Social Network, and I’m not sure whether it glamorised Silicon Valley or made it seem scary?

Patrick and John Collison

Patrick and John Collison

When I was in Harvard originally taking leave, friends were like, "wait, you’re dropping out and you’re going to be working at a start-up and you’ll have job that’s not really a job but why would you give up a perfectly good education and you’ll be homeless and why do this to yourself?"

And then The Social Network came out and they’re all like "OMG, you work in a start-up that’s amazing! When do I get invited to your huge party?2 I found it so funny. The Social Network did change perceptions among a large body of people who wouldn’t have been that familiar with things, but I find it funny the shift in reactions I got before and afterwards.

Siliconrepublic: Do you find that all the attention social networking and internet firms are getting right now – and let’s not forget LinkedIn’s US$9.5bn IPO – do you think there’s a bubble in tech?

The difference between this and the last bubble: the last bubble, the problem was the general public in America got burned. All these companies making lots of money with no revenues going public and people investing and getting burned. This time, LinkedIn went public but had revenues and profits. If there is a bubble and it does pop, it will only be a much smaller set of investors. It’s very different to 1999 in that sense.

In terms of whether we are in a bubble, I’m not experienced enough to give much of an informed opinion but do hear it was very different the last time. Facebook does have an US$80bn valuation but it does have 1bn or 2bn in revenues, but previously companies were getting insane valuation with no revenues or sign of revenues. Facebook is a profitable company. From the very little I know about the past bubble, it does seem different this time.

Economists have predicted nine of the last two bubbles – people do like to call things. No one remembers the person who said that there was a bubble and there wasn’t, but if there is you’ll say ‘that guy was right.’ I really feel very uninformed to be talking about this versus the last bubble.

Siliconrepublic: Your current venture, Stripe, and from what I understand from what Michael Arrington wrote on TechCrunch that Peter Thiel and Elon Musk were investing US$2m in Stripe, what can you say about Stripe?

The basic idea is it is very hard to realise value or to charge money for stuff you’ve created online. And we’re talking now how much easier it is to build things and deploy a piece of infrastructure. It was hard to host things previously on the web and then Amazon came along with EC2 and that solved hosting and if everyone’s coming to your site you just spin up another 100 servers. It’s not like it used to be, driving to a data centre in the middle of the night. Amazon solved hosting and this critical piece of infrastructure for the growing web industry and that I think was a watershed moment.

Similarly, everyone makes money from advertising on the internet and you see products, services and software and it feels a bit daft that advertising is the only way to monetise. It’s like a world where there were only free sheet newspapers and no paid versions. That because it is so hard to accept payment from the internet you have this weird ecosystem that it’s only advertising that will make you money.

Stripe was founded to make it easier for people to charge money online. A product we’re creating for developers is to make it easy for developers who build a site to incorporate payments into that. That’s what we’re building.

When you look at the iPad and how well it’s doing, it has solved the payment aspect. In-app payments – you just go to buy some app, hit download and put in your password and that’s it. But on the web this hasn’t been solved.

You go to a Wall Street Journal article and then you are redirected to forms and you could get rejected because your zip is incorrect and you don’t have a zip. It’s completely broken, when you think about it.

I’ve learned in life that people don’t like paying for stuff. But people still buy an order of magnitude of paid apps on the iPhone than they do on the web, so it is much easier. People can realise a lot more value and it would make a better web because people are more incentivised to create things if they could make money out of it.

Siliconrepublic: So in a sea of apps and a so-called ‘post PC’ world, do you believe websites will remain the motherships for everything?

There’s some nice properties about the web, it would take something really great to replace it. The things that are nice about apps, they load up quickly, it’s very easy to buy them and uninstall them.

On the desktop or on non-mobile devices, I think the web still has a lot going for it. Most people have fast internet at the moment, it’s an open standard anyone can build something on, we’re all offering systems, and I feel like certainly on the desktop there has to be something really good to replace the web because of so many nice properties now.

You do have to come up with something better and nicer, though, to get people to come over to that activation, you hear how about everyone measures their statistics and checkout flow conversions and bounce rates – but only 50pc of people go through checkouts – annoyed people abandon checkouts.

Fifty per cent of people are willing to put up with unreasonable requests for all this information and painful process. But anything we can do to improve that flow and conversion rate for websites and make it easier to get them set up on an ongoing basis is surely a good thing.

The founder of Quora, Adam D’Angelo, recently posted on his blog that it’s an historical accident that advertising has become so prevalent on the web that Google came along and did a phenomenal job on ads – it tided them over for the moment. But if they hadn’t used ads how else would economic value be derived from the web? Maybe just an accident of the way the story played out that we have such a heavy advertising focus at the moment.

Siliconrepublic: Returning to Ireland, you’re not that long out of school and I’m sure you must have many opinions on what we could be doing better as a country in terms of education? Do you think the answer is to spend a lot of money on computers and broadband in one go or is there something else that can be done?

Maybe that’s the first step of 20 but you can’t just give up after that. In 2009, I definitely loved the theme of the subjects I did for my Leaving Cert. Applied maths I thought was great and physics, graphics design communications, I had a fairly strong bent towards the sciences and I think I hugely enjoyed them and found them valuable.

I think any way we can, enable and make it easier for students to kind of pursue general scientific subjects. We don’t have to go as far as structured coded courses. Education is all about laying a good framework or groundwork for foundation in that if you have a very good maths, science, applied, maths, then people will do it in college, and don’t think you have to try and treat it as giving every skill by the time they leave secondary school so long as you set things up in the right way for them to go from there.

There are some American high schools that do offer computer science classes and I don’t know how well those work, but certainly I think experimenting with offering that as a subject would be very interesting and I would be very interested to see what a Leaving Cert computer science subject would look like.

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com