Irish tech start-ups need to embrace the fast, competitive culture of Silicon Valley

9 Jul 2013

Simone Boswell, Enterprise Ireland's senior vice-president of internet, media and entertainment

San Francisco, California, has always been an immigrant city, but in 2013 tech entrepreneurs and coders from all over the world are converging on the city and nearby Silicon Valley, keen to be the next Twitter, Facebook or Yammer. In particular there is an increasing focus among Irish technology start-ups to locate in the area almost from the get-go.

In recession-ridden America, San Francisco is one of the few beacons of economic hope – unemployment in the region fell from 10.7pc last year to 8.6pc – and at any one time there are an estimated 22,000 start-ups active in Silicon Valley.

The Collison brothers from Limerick, John and Patrick, started their payments technology company Stripe in Silicon Valley rather than Ireland in order to accelerate its development by tapping into the culture, the availability of funding and engineering talent. They have attracted investment from PayPal co-founders Peter Thiel and Elon Musk. A further funding round of US$18m last year by Sequoia Capital valued their company at US$100m. A report by last year claimed Stripe could be the next US$1bn start-up.

Irish companies that have been based in Silicon Valley for awhile already include S3, PCH, Avego, Duolog, Skillpages, Accounts IQ and The Now Factory.

Irish technology companies that have moved out to Silicon Valley recently include Swrve, Sohalo, Pubble, Contrast, Datahug, Building Eye, Synergy Suite, Tethras and Cloudvertical. And Irish technology companies currently mulling a move to San Francisco to accelerate their business include Soundwave, VoxPro, Trustev, Cleverbug, StoryToys, Seevl and Goshido.

Access Silicon Valley programme

Recently, Enterprise Ireland, in recognition of the need to get fast-growth Irish tech companies into this environment at the right moment in their development, launched its Access Silicon Valley programme, which consists of a two-day bootcamp in Dublin, one-to-one mentoring and a two-week tailored itinerary to Silicon Valley to meet potential partners, investors and customers.

Simone Boswell, Enterprise Ireland’s senior vice-president of internet, media and entertainment, who is based in Silicon Valley, said the core reason technology companies from elsewhere in the world are converging on Silicon Valley is the opportunity to scale up very fast.

“Ideally the companies would retain their core development in Ireland but would locate sales offices or move their C-level team out here for a time in order to forge the alliances and make the deals that would help them to grow fast.”

The culture in San Francisco is different to Ireland in terms of being a faster-paced business climate, said Boswell.

She said this culture is great for start-ups because they can get a better sense of where their product is in the marketplace – in Silicon Valley, people are early adopters.

“(Start-ups) find that they spend less time explaining what their technology is and can test it. The US is also a bigger audience than what they are used to and they can shift product and grow faster,” said Boswell.

One of the key differences between Silicon Valley and Europe in terms of tech landscape is the fact that companies build products faster and spend less time on an idea; they’ll figure out quickly enough if the idea is going to fly or not, Boswell said.

“One Irish start-up came out with us to the SXSW media conference in Texas and met a founder of a Silicon Valley company. The founder asked the Irish entrepreneur how long he had spent on building his idea. The entrepreneur replied ‘nine months’, to which the Silicon Valley founder said: ‘Well then, you’d better hurry up.’”

San Francisco start-up culture

Often the hardest thing to get right about targeting the biggest tech hub in the world is the culture, said John Pryor, a young Irishman who works at RocketSpace, an innovation campus in the heart of San Francisco famed as the ‘Stanford for Start-ups.’

“What people need to realise about the culture out here is that it is very competitive. Everybody out here is intelligent and hard working, you won’t last out here if you aren’t smart,” Pryor said, adding that the environment is only ideal for technology companies that intend to grow global quickly.

RocketSpace hosts 130 start-ups in its building but also acts as a hub for 20,000 start-ups from all over the US and the rest of the world.

A RocketSpace company raises a Series A funding round every week, and so far, US$2bn in venture capital has been raised by RocketSpace-based companies, including Uber, Podio and Leap Motion. Current incumbents include Spotify and SuperCell.

RocketSpace is about to move to two new buildings in San Francisco, where it will double its footprint to 70,000 sq feet. It is also about to go global, beginning with hubs next year in New York and London, followed by 10 of the world’s top tech hubs, potentially including Dublin.

Pryor said Irish start-ups coming to the San Francisco region for the first time need to realise there are high expectations. “Getting meetings with the people you want is very competitive. So you need to be at the top of your game.”

The Irish Technology Leadership Group

John Hartnett, co-founder and chief executive of the Irish Technology Leadership Group (ITLG), has been based in Silicon Valley for 16 years. “The Valley culture is part of my DNA in terms of the positive experiences I’ve had and the go-for-it attitude,” Hartnett said.

Hartnett began working at Palm in the 1990s, when the company was a start-up with zero revenue.

“We created a US$2bn company,” Hartnett said. “That wouldn’t have been possible without that attitude.”

To get a sense of the scale of opportunity that exists in Silicon Valley, Hartnett said 40pc of the US’s venture capital is concentrated in the region, an estimated US$2.5trn.

“The focus is on going big early, but people are not overly concerned about risk. They are hyper-aware of making the right decisions, but ultimately if the idea has a chance it is about making it as big as possible early on,” said Hartnett.

The ITLG is an organisation that Irish executives in Silicon Valley created in 2007. Its purpose is to make better use of the Irish diaspora in US business.

The ITLG, which has grown to include more than 6,000 members, has its own 10,000 sq-foot start-up hub for Irish start-ups in San Jose, California, where 35 Irish companies are now located.

“Our Irish Technology Capital Fund has invested over US$10m in a portfolio of different technology companies, including Mcor, a Louth-based company that is leading the world in terms of 3D printer technology,” Hartnett said.

What entrepreneurs going to Silicon Valley should do

Hartnett’s advice for entrepreneurs coming to Silicon Valley is to network. “The first thing to do is hook up immediately with people like the ITLG; you can make a lot of mistakes very easily out here but we are well connected and we’ll show you where to go and what to do, which will save a lot of time, money and energy.”

Hartnett also advises start-ups to be clear about what they want to achieve and to clearly articulate their company’s technology and vision.

“Entrepreneurs from Ireland tend to waffle a bit,” Hartnett said. “They may have great technology but they need to pitch in a very refined way. The first challenge is to get your story right; the other is turn up for meetings early.”

David Smith is a former Enterprise Ireland executive with more than 20 years of experience in striking deals in Silicon Valley. He now works at Tirna Partners in Menlo Park, California, where he helps start-ups from all over the world focus on winning business deals and securing funding in the region.

“There are 22,000 start-ups in Silicon Valley – 90pc of them won’t exist in two years, because they will be replaced by another cohort coming into the Valley. So if you’re an Irish or European start-up, be prepared; you may be part of that 90pc,” Smith said.

Start-ups really need to be clear about what it is that makes them special and stand out in the most noisy technology environment on Earth, said Smith.

For example, there are currently at least 1,000 start-ups targeting Google as a partner in Silicon Valley.

A lot of the preparation Irish tech companies can do is at home, in terms of planning, analysing and finding a niche.

“And then come over,” said Smith. “Silicon Valley isn’t for everybody and some companies shouldn’t come here at all. For example, if you are a software company focused on the financial sector, your best bet is New York, which also has a vibrant start-up scene.”

From Cork to California

One start-up that has made the first tentative steps into Silicon Valley is Pubble, a Cork-based company. Shane O’Leary, Pubble’s chief financial officer, has been based at the RocketSpace innovation campus for a number of weeks. “I’ve been out here back and forth and we’re focusing on opportunities in the e-commerce and education space out here.”

Pubble’s technology allows consumers to submit questions to websites around products via their computers or smartphones and get instant answers that would ultimately lead to a sale or decision. The technology has already been deployed by INTO, the university network in the UK, as well as a number of universities in Ireland.

O’Leary said the hardest thing to adjust to in Silicon Valley is the sheer scale of everything. “It is definitely the place to be for opportunities to grow fast in terms of customers and funding. Even the scale of venture funding is different; one e-commerce company, 1 King’s Lane, recently secured US$113m in funding that valued it at US$1bn. There are a lot of companies like that here, that’s the scale you’re dealing with.”

O’Leary said start-ups in Silicon Valley are definitely competing against the best companies in the area.

“The one thing that surprised me a lot was how helpful people are. They don’t keep ideas to themselves, which happens a lot at home,” O’Leary said.

“In Ireland, there’s a lot of doubt around ability. If you say you are going to work your business to €20m in three years, people would look at you as if you had two heads. But over here the attitude is simply ‘go for it.’”

A version of this article appeared in the Sunday Times on 7 July

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