The high king of Irish software on Dublin’s future as a European dev hub

11 Jun 2015

Workday's Annrai O'Toole

As indigenous Irish software industry stalwarts go, few individuals are as accomplished as Annrai O’Toole, who was part of the founding team of Iona Technologies and successfully sold his second start-up Cape Clear to Workday.

At one point in the late 1990s the average person in Ireland could have been forgiven for being surprised Ireland even had an indigenous software industry when Irish software company Iona hit the headlines.

Of course this is a far cry from today, where start-ups and entrepreneurship carry a certain cachet and people no longer look at you doe-eyed if you say things like broadband, processors and storage – so long as you do so in the context of smartphones.

In the 1990s three hardworking, softly-spoken and enterprising academics at Trinity College – Chris Horn, Sean Baker and Annrai O’Toole – decided to turn their research into a business. This was unprecedented but paved the way for a generation of software companies like Havok, Demonware and ChangingWorlds to follow.

‘It was a very odd time. And for this unknown Irish software to get funding from two of the real bluebloods of Silicon Valley was a real achievement’

There was no venture capital at that time and they bootstrapped the start-up doing nixers while at the same time winning major middleware deals with aviation giants like Boeing.

In 1997, Iona became the second-ever Irish technology company to go public on the Nasdaq exchange, the fifth-largest IPO in Nasdaq history at that time, raising US$137m in the process.

At its peak in 2000 Iona, which was leading the world in the development of middleware for large enterprises, was worth US$1.75bn and had an annual turnover in excess of US$100m. Iona was sold in 2008 for US$162m to US firm Progress Software.

It was precisely at the peak of Iona’s success that O’Toole decided to go it alone. “I had come to a juncture and really wanted to see if I could build another substantial company.”

O’Toole’s timing wasn’t the best. In March 2000 the Nasdaq imploded when the dot-com bubble dot-bombed and an almost decade-long tech downturn began. Despite this, in 2001 O’Toole’s new start-up Cape Clear succeeded in raising a substantial investment from top Silicon Valley venture capitalists Accel and Greylock.

“It was a very odd time. And for this unknown Irish software to get funding from two of the real bluebloods of Silicon Valley was a real achievement.”

The economic headwinds really picked up after 9/11. “Much of the spend on start-ups disappeared literally overnight. But what most people don’t realise is software spend itself didn’t disappear, it stayed with established players like Oracle and SAP. The bigger guys kept on trucking.

“There was a flight to safety during that period and that impacted Cape Clear negatively. As well as this the general move towards open source challenged our business model.

“But the great thing was we hunkered down and worked through it and we eeked some hard yards before being acquired by Workday in 2008.”

Dublin’s software prowess is understated

The general lament about technology investment in Ireland is how much of it tends to be supportive business processes rather than core development. But Workday’s acquisition of Cape Clear flouts this notion.

“We were acquired for our integration expertise and very quickly that integration became bolted onto Workday’s technologies. The Irish operations at Workday are very different to other international companies in Ireland. We do core product development here, not localisation or translation, it’s core development.”

At the time that Cape Clear was acquired by Workday it had 30 employees. Today the business in Dublin has 350 employees and is bursting at the seams ahead of a move to new offices at King’s Buildings near Smithfield on Dublin’s northside.

“What we brought to Workday was an entrepreneurial culture and we basically stood up and volunteered for every interesting challenge that came our way.”

Interestingly, out of the 30 original people who were at Cape Clear at the time of the acquisition, every one of them is still at Workday. “The team stayed together and we transferred the entrepreneurial journey into Workday and, as a result, we were able to achieve the things we wanted to achieve.”

One of those achievements is the creation of a technology that uses predictive insights from data to help companies retain talent.

‘Property was an anomaly. It displaced the potential investment in software certainly’

“I’m not a huge fan of the phrase ‘war for talent’. We have created a technology that firms can use to mine their data … and get prescribed choices that ensure core talent stays rather than leaves.

“By looking at historical trends of what successful things people have done, the jobs they have taken on, and when it comes to a critical decision about an employee measure the hard bits of data as well as the softer things to make decisions that ensure employees will stay on.

“It’s about using analytics to not just look at the past but make informed decisions about the future. Mining data to get insights into how you run your business better is what Workday is enabling. And that’s the power of the application that we have created in Dublin.”

Engineering Dublin’s core

O’Toole believes that in the late 1990s and early 2000s the glimmer of success of companies like Iona and Trintech paved the way for the management talent that helped international companies like Amazon eventually establish in Dublin.

He also believes that as well as the fright caused by the dot-com bubble, the ensuing property bubble in Ireland that famously imploded in spectacular fashion in 2008 impeded the march of the indigenous technology sector in Ireland.

“Property was an anomaly. It displaced the potential investment in software certainly. But what happened behind the scenes in the mid-2000s with the advent of YouTube, Bebo and Facebook was the tech industry found its feet again. Google and Facebook decided to locate in Dublin and it is worth noting that the iPhone didn’t appear until 2007.

“The impact on Dublin has been considerable and every day the landscape is transforming.”

‘Every European city has a vibrant inner city and I think there is more tech companies can be doing for the areas in which they locate’

In terms of the indigenous context, O’Toole points out that Iona’s workforce spawned at least 20 start-ups and he believes the present start-up activity will only be bolstered by potential spinouts from global internet giants based in Dublin too.

“The industry has changed a lot since Iona went public. Mergers and acquisitions have become more common and are a regular exit. The start-up recipe book is readily understood and it is now much easier to set up a software company, gain customers, enter markets and generate revenues without going through the hoops that we did at Iona. Iona had to build a workforce, establish offices around the world and we had to build everything from scratch.”

Digital Liffey over Silicon Docks

While most technology companies in Dublin are flocking to districts like the Grand Canal district, the so-called Silicon Docks, as part of their talent acquisition strategy, O’Toole believes that technology companies should become part of the fabric of the local community.

In moving to Smithfield from Fumbally Lane — “we’re sticking to our inner city roots” O’Toole jokes – the idea is to ensure there is room for growth in a way that will fit in with the lifestyle of Workday’s employees.

“Every European city has a vibrant inner city and I think there is more tech companies can be doing for the areas in which they locate. Our general philosophy is to engage with the local community, it is important to us.

“Engaging with the community in which you work adds to the experience of the employees and it works well with the inhabitants of the city. We all share the same space.”

‘Silicon Valley doesn’t grow enough indigenous engineers, but yet is a massive magnet for talent. Hopefully we can replicate that in Dublin’

O’Toole believes Dublin has what it takes to be a core software development location for Europe and it needs to shake the support and localisation tag.

His intensity and attitude are reminiscent of the same driving forces that have enabled companies like NearForm to create a core software hub in Tramore in Waterford.

“For Workday we are the next major development centre outside of Pleasanton, California. And all the machinery of the Workday app that makes it operate at an infrastructure level comes out of Dublin.

“As well as developing our own homegrown talent, Ireland needs to realise that it is no big deal for people from all over Europe to relocate here from Italy, Portugal or Romania. Silicon Valley doesn’t grow enough indigenous engineers, but yet is a massive magnet for talent. Hopefully, we can replicate that in Dublin.”

But key to this is the removal of frictions like visa applications, an area where O’Toole believes Ireland has already gained considerable ground.

“We’ve got a fair share of it right and it is clearly working at the moment. But this is not something we can afford to take our eyes off. I’m not a policymaker, I’m commenting as an employer. As well as visas we need to ensure we have suitable accommodation in terms of rental properties, and a transport infrastructure that works.

“And we need to focus on making Dublin a livable place that is on par with the most vibrant cities in Europe.”

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