Silicon Valley is dominating - for now. What would it take for Dublin to become its global rival? Our founder, Eoin Hayes, describes his journey in corporate America and Silicon Valley and what the Irish tech scene can learn from it.
Historical and Economic Context of Tech-Driven Growth
A recent article in The Economist quoted a venture capitalist saying, “Florence was in its position for more than 200 years… Silicon Valley still has many years to go.”
It is perhaps ironical that this statement was made by an American, Mike Volpi, who is employed by Index Ventures, a fund founded in Geneva and one that dominates venture capital in Europe - it’s not where you’d expect the comparison to come from. Yet the observation is astute: Northern Italy was the original birthplace of the term “bank,”. Indeed, rather than thinking of Silicon Valley’s success as similar to the upheaval of the industrial era in the 19th century, it may be more apposite to compare it to the development of modern finance during the Renaissance.
We can think about the competition for a place in the pantheon of cities leading this economic wind of change in a similar way– as Florence rose to dominate the trade, currency transfers, and financial backing of merchants of the Mediterranean and further afield, it had competitor city-states in Italy, Barcelona, and modern-day Istanbul. The same Economist article mentions London and Berlin as potential threats to the hegemony of the Valley, and Index Ventures compares Dublin and Amsterdam for American tech companies looking for an EU headquarters on its website. European leaders are similarly eager to recreate Silicon Valley on this side of the Atlantic, for economic and security reasons.
But as Northern Italy did not come to dominate the trade of the Renaissance overnight, neither did Silicon Valley dominate the Internet Age solely with the rise of Facebook. Adam Fisher’s book, Valley of Genius, chronicles the decades-long cultivation of an economic boom that started with a counter-culture, flourished with a university willing to invest in cutting-edge research with small companies, and secured a supremacy driven by companies so committed to innovation they didn’t even recoup their investments on some of the most prolific (e.g. the inventions of Xerox’s PARC).
Ireland has a lot going for it – unrestricted access to the largest market in the world, English as the dominant language, a strong history of world-class university research, a strong entrepreneurial spirit, a safe society with a strong commitment to the rule of law, open immigration policies, business-friendly politics, and a strong sense of community. But Ireland doesn’t have a history like Silicon Valley’s; we have a bit further to go. When Andy Grove was leading Intel’s boom, we were a second world country with a Taoiseach taking bribes from businessmen. Indeed, some commentators question our stomach for risk because of our fleeting history with economic growth.
So how do we get from where we are to where we want to be? The simple answer is the same way Silicon Valley did. The complex answer involves (a) a lot more capital, (b) a step change in talent, and (c) the evolution of a culture that allows great innovative businesses to thrive. Unfortunately, I can’t really solve (a) in a blog post, but hopefully I can chart a path for (b) and (c).
Great Businesses Require Great Talent
Having interviewed over 1000 people and designed innumerable hiring profiles and job descriptions, I’m constantly amazed by how often hiring is poorly understood. Many hiring managers can’t recognize and cultivate great talent when they see it. For example, when hiring CFOs or Heads of Finance, many CEOs in Dublin look for qualified accountants- in Silicon Valley I didn’t know one CFO that was an accountant. So many senior executives I speak with confuse big company brands or professional qualifications for business acumen, rather than understanding the competencies that will make someone successful in their markets and culture.
Part of the reason hiring managers in Dublin haven’t developed this skill is because there are few equivalent world-class jobs in the Irish business ecosystem – things that are prevalent in Frankfurt or London like front office investment banking or strategy management consulting (neither of which have professional qualifying bodies, by the way). That hampers the development of professional business skills in the ecosystem and too few professionals get exposure to real business problems before they “qualify”.
I was lucky enough that after spending over 2 years in management consulting to Fortune 500 executives, I came out with an executive business skillset – data analysis skills, executive presentation skills, project leadership and management, client relationship management skills, generalist business knowledge, domain expertise in sales strategy, commercial instincts, and a comfort with onerous travel and working 80-to-100-hour weeks. Universities in the US educate STEM students not just in technical subjects, but in finance, operations, and management. By the time the average entrepreneur in Silicon Valley starts a company, they’ve had exposure to how business people make decisions about products, marketing, sales, finance, operations, hiring, legal issues, entering new markets, and more. In Ireland, many starting entrepreneurs are at a disadvantage in knowing how to run or scale a company. If our aim is to develop world-class companies, we’ll need to invest in developing world-class entrepreneurs.
The comparison stretches further with technical skills. One of my standard interview questions was “describe to me how the Internet works”. It still baffles me how many Ivy-League-educated people failed that question - a rudimentary understanding of technology and how the world works is foundational to building a technically-driven organization. By the time I left the Valley, we were excluding most business hires that hadn’t coded anything before- if you couldn’t understand the product, you were unlikely be effective at anything meaningful at the company.
The Engineering Mindset Conquers
One of the more critical components to the development of any business ecosystem is a common culture, specifically the application of skills and customs honed through experience and education. My experience in Palo Alto was so unlike anywhere else I had worked before because there was a commonality in each person having a different way of thinking, often called 'contrarianism' fuelled by an engineering mindset. It was an ecosystem, with clear cultural signals.
As I transitioned from the corporate world of New York to the tech one in California there was a uniformity in professional standards. Communication etiquette was universally understood. Operational efficiency was the norm. Understanding basic finance was a baseline expectation. I don’t see those kind of ubiquitous business standards in Dublin.
The characteristics of the engineering mindset were critical in value creation. There were clear structured thinkers who were able to balance short-term priorities with long-term consequences in their decisions. Substance mattered more than style. Always. The Valley and its companies prided themselves on being meritocratic and hierarchy meant nothing: you were expected to speak up in meetings even as a newcomer with the CEO, and especially if you thought something wasn’t optimal. Taking the initiative independent of direction and self-motivation were default expectations. It was often said you should “ask for forgiveness, not permission”. Everyone held everyone else accountable to their goals. Some of the talent I’ve met in Ireland doesn’t think this way and it limits their ability to be part of building great companies. That needs to change.
One in every eight people in Ireland wasn’t born here now, but I see extremely few non-Irish nationals leading start-ups in Dublin. I walk into meetings with entrepreneurs and investors and I’m met with a room full of middle-aged men born in Ireland and primarily from South Dublin. A friend in a big IT consultancy firm here told me a story of how her manager laughed in her face when she brought up gender balance on her team. Companies in Silicon Valley are ritually focusing on what they can do to get more women and minorities into their companies and their companies’ leadership positions because they recognize it adds value to the company. Diversity discussions dominate board-room discussions and hiring committees there and should be a core value for Irish companies, too.
Some of these cultural tenets are growing in Dublin, but more of them aren’t. I’m probably not around long enough to make a holistic judgement on why, but my impressions are that we have a bit of a way to go until we imbue an engineering and executive mindset in the ecosystem. I decided to found Cantillon Labs to solve the problems I outlined in this blog post- to close that business culture deficit and propagate the skills and experiences I’ve accumulated from working with some of the world’s most talented businesspeople to European entrepreneurs to help them scale. I want Dublin to be at the heart of that. And perhaps 500 years from now, Dublin will be known as the city that rivalled the Florence of the Internet Age.
Eoin Hayes is the founder of Cantillon Labs, a firm helping European tech companies scale globally.