Connor Murphy left the US to launch his software firm Datahug in Co Kerry, Ireland, and he says the country is ideal for start-ups.
They say in business you should never waste a good recession. A start-up that began in Kerry in 2009 and now employs 20 people in Dublin and the US holds the potential to be a global brand name in the business software world, taking on established leaders like Salesforce.com to help firms improve sales by managing their relationships better.
Datahug co-founder Connor Murphy left a high-flying career as a consultant with PA Consulting in Washington, DC, to start-up his software company in Ireland. It was just towards the end of 2009 and it was a grim time to be a start-up at anything. Ireland was just getting a sense of the enormous financial mess it was in.
Cork native Murphy jokes that he was probably on the same flight as the people from the IMF. “It was a pretty crowded flight, that’s for sure.”
He was on a sabbatical from his employers and decided to enrol in an Enterprise Ireland course for start-ups called the Start programme to try and crystallise the idea he had in his mind for a start-up.
He had been on a sabbatical, torn between setting up a business and going travelling for a year, when he heard Jerry Kennelly on the radio talking about his Endeavour programme. Kennelly, who in 2006 sold his firm Stockbyte to Getty Images for US$135m, helps promising entrepreneurs to develop their business plans by teaming them up with mentors. In return for €5,000 funding and free office space for a year, the programme takes a 3pc stake in the new company.
Murphy had one day to meet the deadline for Endeavour. “I drafted a proposal, submitted my application and got in,” he said. “Timing, luck and serendipity – that’s the story of what we’re trying to do with our core product at Datahug.”
Meeting of the minds
As Murphy came to the end of the programme in early 2010, he met Ray Smith – a technology whizz who sold his jet engine diagnostic and analytics venture to a leading global airline while still at university.
“We knew each other for a few years beforehand and we re-connected at a stage where I was getting a bit overwhelmed. We bumped into one another at a Microsoft Azure conference in Dublin and he decided to come on board.”
Zoom forward to now and Murphy and Smith’s venture Datahug now holds the promise to be one of the most important software start-ups to emerge from Ireland.
The company recently won two awards at the prestigious Europas start-up awards in Berlin and last October Datahug secured US$3.2m in Series A financing from Silicon Valley venture capital firm DFJ Esprit. This was on top of the US$1.5m in seed financing the company raised in 2011.
The company has just hired two salespeople for the US east coast and a third salesperson has just been appointed in San Francisco, California, to cover the US west coast.
Datahug at work
What Datahug’s technology does is mine all the communications data within a company, from email to social media, phone calls, text messages and more, to give the company a greater sense of the relationships it has with existing customers and future customers.
For example, it might help business development executives understand who in the firm has a real relationship with a company they are targeting, how much time is being wasted on communications with customers that don’t justify the time in terms of revenues and, of course, who are the real heroes in the organisation that are keeping business alive.
“I mean, why should it only be the salesperson who gets the commission when it was probably someone else who dealt with all the problems, saved the deal and is keeping the customer happy?” Murphy pointed out.
I ask him does he think Datahug is a competitor to players like Salesforce.com? “Not really. We are actually helping people who have invested in customer relationship management (CRM) actually catch up. We complement CRM, actually.”
Murphy provides a metaphor of someone investing in a fancy new car with all the bells and whistles. “The problem is there’s no gasoline or fuel. In business, the fuel is the data going in and but it’s not being used properly in CRM systems. That’s where we can come in and complement the CRM system.”
Murphy says that his time at PA Consulting, where he worked with clients like Thomson Reuters and Estée Lauder, gave him a valuable insight into how decisions are made in the US business world.
Smith also worked in the consulting business, at Accenture’s cloud and technology division.
“I lived four years in the States and worked across 20 or 30 different clients at PA Consulting in areas like CRM and knowledge management,” Murphy says.
“(The year) 2013 is all about sales for us and we are specifically focused on expanding into the US market. Our time in the US has been crucial for us. America is the most sales-focused culture in the world and its business communities on the west coast and the east coast are among the earliest adopters of new technologies.
“My time in the US gave me a core understanding of how quickly they can make decisions and for what reasons.”
Murphy says that in terms of entering the US market, Datahug has already secured a number of customers and before Christmas the company signed a six-figure deal with a major talent agency in California. For contractual reasons he couldn’t disclose the name of the company.
In Ireland, customers of Datahug include Grant Thornton and BDO, as well as a major global accounting firm.
Start-up environment in Ireland
Looking at the start-up environment for tech firms in Ireland, Murphy believes he returned at a crucial time, despite the troubled economy.
“The important thing has been that so many structures and programmes were in place that hadn’t been before, so I felt encouraged to come home.
“I was able to sign up for a Cord grant, which covered some of my salary and allowed me to be a start-up. I literally went back to Washington, DC, on a Friday and finished up a few things and on the Monday I was down in Kerry starting a company in Tralee.
“I didn’t live in Ireland during the Celtic Tiger years but I have to say there is a fantastic energy now in Ireland for starting up tech companies. Enterprise Ireland and IDA Ireland are doing great work in bringing in the next phase of companies, both in terms of local start-ups and adding to the local ecosystem with start-ups coming from Silicon Valley and elsewhere.”
He says the rise of local start-ups like Profitero and games company Swrve alongside the arrival of Silicon Valley players like Engine Yard and Marketo means a tremendous energy is emerging in Dublin.
“This generation is thriving because it can draw on talent that has been schooled in companies like Yahoo!, Facebook, Google, Salesforce.com, Twitter and LinkedIn. There are 3,000 people at Google in Dublin, 500 at Facebook and new companies like Hubspot that are arriving can draw on that. That’s the momentum of an ecosystem that is starting to happen in Dublin.”
Murphy says Irish people need to understand some of the advantages that exist locally for start-ups. “I gave a talk at Startup Grind in Silicon Valley and the Americans’ jaws dropped when I pointed out how many people in Ireland got their education for free.
“I got my computer science degree for zero dollars and my whole team got their electronic engineering, design and marketing degrees for zero dollars, which is a distinct advantage when the average US college student leaves college hundreds of thousands of dollars in debt.
“If you think about it, Irish people could go into start-ups earlier without the worries of debt burden on their shoulders.”
Murphy also points out that while the college fees situation has changed, there is more that universities can do to ensure they are providing the new generation of industries with smart graduates.
“The University of Waterloo in Canada is the No 1 university that companies like Google, Facebook and LinkedIn search for graduates. Why? Because during their four-year stint, the students do at least four-month work placements. They call them co-ops – at the end of the their first two semesters in computer science they get their first paid work placement. After graduation they are already experienced and have learned all the soft skills they need for the working world.”
Murphy says this approach could help solve the skills crisis and boost the performance levels of Irish graduates.
“It’s the model of the future.”
A version of this article appeared in The Sunday Times on 17 February