The sexiest start-up doesn’t necessarily have the coolest tech, but it has the instinct and gut to transform and survive, says John Kennedy.
In 2015, Enterprise Ireland-supported companies created 21,118 new jobs – almost two-thirds of these new jobs came from start-ups. The reality is that most new jobs in this country will come from entrepreneurs in all walks of business, not just technology. At the same time, job creation by multinationals backed by IDA Ireland – many of which, in the tech sector at least, can be classed as start-ups – has never been higher.
So much enterprise, so much optimism. It’s a little bit like Florence during the Renaissance.
According to business and credit risk analyst Vision-Net, by the end of December, the number of start-up businesses created in Ireland surpassed the 19,000 mark, the first time new businesses formed reached this level since 2006.
From our perch at Siliconrepublic.com, the most exciting start-ups are obviously in the realm of STEM, doing amazing things in areas like artificial intelligence, medical devices, big data, virtual reality, internet of things, biotech and much, much more.
Start-ups have the potential to create jobs not only in cities but in Ireland’s regions. Every town and city in Ireland should be able to foster promising start-ups that will create jobs and bring revenue into the local economy.
But here’s the rub. Start-ups are hard work and most start-ups actually fail. The lucky few go the distance, but lost among the sounds of corks popping and congratulatory chit-chatter on social media around the few that do achieve success, what rarely bubbles to the surface are the constant near misses, the sleepless nights, breath-taking pivots, nearly-missed payrolls, broken friendships, the burden of stress and sheer emotional terror.
Fail hard, fail harder … and other bad advice
There is a tendency to glamorise start-ups. Many believe all you need is an idea and sheer conviction. I won’t dismiss ideas, I won’t downplay conviction, but if all you needed was ideas I would be onto my 1,000th start-up by now. But we are not all cut out to be Elon Musk or Bill Gates.
Start-ups are sexy in the Ireland of 2016, but will they still be sexy in the Ireland of 2020?
In the 1990s, there was no venture capital and the term entrepreneur wasn’t to be found in many secondary school business books and, actually, was a term frowned upon, especially after the dot-com crash of 2000. A lot has changed.
Inspiring start-up stories and presentations are usually casually littered with pithy catchphrases and quotes by Steve Jobs and Mark Zuckerberg, with this quote by Samuel Beckett perhaps the most abused of them all: “Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better.”
I doubt Beckett had ever heard the term start-up in his lifetime or had entrepreneurs in mind when he wrote those words. But they’ve been taken to heart by the digital start-up community and are graffiti in countless PowerPoint slides. A battle cry, if you will.
But the reality is failure is not cool. It does not win you friends, or investment money for that matter. In fact, a good metric of friendship in the business world is where are those friends when you do fail?
As Marvin Liao from 500 Startups pointed out to me last year, it’s all well and good if you work in Silicon Valley, where if a start-up fails you can just go down the street and work at Google or Facebook. But if that happens in Ireland or the UK or Spain, are there similar parachutes?
Despite the start-up frenzy, I am not convinced that Ireland has grown up to the point that it will ever truly forgive failure. Failure being a badge of honour in Silicon Valley is actually an overrated concept. It is an object of derision on these islands, no matter how far we think we’ve come.
Don’t get me wrong, I’m an optimist by nature and I love start-ups, I love their energy and every day is an inspiration. But I also feel responsible and conscientious about the message. Inspire, by all means, but don’t give false hope.
I’ve said it before, the start-up journey is not a lifestyle choice.
What worries me is there will be inevitable failures. Not because the business idea or technology wasn’t sound, not because the people didn’t work hard or have the conviction to see it through to fruition, but because all business is based on risk.
I have seen perfectly good technology start-ups disappear due to competition, for example, or their technology gets overtaken by a new technology. One example that comes to mind is Altobridge, a Kerry-based maker of wireless technology for aircraft that was well funded and at its peak had revenues of €16m and was active in 60 countries around the world. The company was undoubtedly one of Ireland’s rising tech stars but sadly went into receivership in 2015 with the loss of 45 jobs. It is understood that a competitor in a key market ramped up its efforts to price Altobridge out of the market. Again, all business is based on risk, especially in technology.
The tendency at present is to glamorise start-ups to the point that it looks easy. It is not. The start-up ecosystem tends to glamorise and mythologise individuals like Jack Dorsey, for example.
That is dangerous at a time when the truly effective and successful start-ups are the ones based not on individuals but actual teams.
TransUnion’s acquisition of Cork tech start-up Trustev for $44m was a phenomenal feel-good story. But talk to Pat Phelan and he will no doubt remind you of all the planes, hotels, sales pitches, sleepless nights and probably, at times, nail-biting terror he and his team endured. And that’s before you get into talking about getting the technology to work, iron out the glitches, win deals and prove the concept. Behind entrepreneurs and leaders like Phelan are brilliant technologists like Chris Kennedy. Successful start-ups will be about the sum of their parts: the team.
Buried in those numbers of job creation and business formations is a stark fact that most new start-ups aren’t actually team-based but are actually sole traders. Many are sole traders who work from home and aren’t benefiting from ecosystems or shiny tech co-working spaces.
The reality often belies the romance of building a business from the kitchen table.
Of course, there are exceptions like Caelan King’s WhatClinic, which he started in the living room of his south Dublin home and which is now creating 26 new jobs in Ireland. WhatClinic enables patients to compare and review more than 120,000 private healthcare clinics across 135 countries worldwide and recently acquired a UK site called Toothpick for an undisclosed sum.
One organisation that doesn’t get enough credit for what it has done in a relatively short period of time is Startup Ireland, headed by Eoin Costello and Andrew Parish. Last October, the brilliant Startup Gathering saw more than 400 start-up events around Ireland take place in a single week.
A recent survey by Startup Ireland and Amarach of more than 400 start-ups found that a large portion of start-ups in Ireland (42pc) were formed in the last three years. However, 81pc of all start-ups surveyed admitted to having problems scaling their business, up from 72pc a year ago. The key obstacles were talent and funding in 79pc of cases.
A UK study by the ScaleUp initiative found that just 1pc of start-ups scale to achieving £1m in revenue six years after they start, suggesting, if the experience is the same in Ireland, then the majority of start-ups may never scale.
“If Ireland can get the fundamentals right at the beginning of the journey for start-ups then there is the potential for larger numbers of start-ups to be able to start, scale and succeed from Ireland,” said Startup Ireland CEO Eoin Costello.
The key words here are “scale” and “fundamentals”.
What, in fact, is Ireland doing to ensure that start-ups have what it takes to be sustainable?
It is not good enough to glamorise start-ups and shuttle people into what could be a meat-grinder that will shatter careers, lives, finances and relationships if the underlying fundamentals aren’t in place to give them a fighting chance at survival.
It is not about being lauded on the main stage of the Web Summit or fighting it out on the Start-up Battlefield at TechCrunch Disrupt.
It is about building something that will last. Something that is sustainable. Something that will provide an income and launch satisfying, fulfilling careers.
This means ensuring people who suddenly class themselves as “entrepreneurs” are also equipped with the skills of selling, properly managing their businesses, leading teams and meeting payroll. It’s about being good at business.
The sexiest start-up in my book is not the one with the coolest technology, the most photogenic CEO or the one that gets the most press coverage.
The sexiest start-up is a sustainable start-up with the ability to win and, most importantly, the instinct to survive.
Sustainable idea image via Shutterstock