Digital Tiger
Ireland is an export machine, very productive and globally competitive. It focuses on companies located in three of its big cities. Their model allows local businesses like Kerry Group, Smurfit Kappa, Ardagh Glass, CRH or Ryanair to grow worldwide, and has stimulated the establishment of external multinational companies due to lower taxes, more flexible labor laws, the lure of the English language and a flow of aid for the creation of real employment and — in order to stimulate a technological model – of research and development.
The opposite of what has happened in other countries that have been publicly rescued (Greece) or privately (Spain), the collapse of the economy, lowering of salaries, and administrative cuts has made Ireland more attractive for foreign investors.
Despite the fact that not everything is rose-colored and the difficulty of the global situation is what it is, on the streets of Dublin, you can enjoy vitality similar to that of what I experience in Miami or San Francisco when I am there. Thousands of workers from Google, Ebay, Facebook, Amazon, Citibank, Price or IDODI Ireland spread out on the streets of Temple Bar or the bodegas of the new Docklands and are able to see things in a different way. One of the members of the board of directors of our company in the Dominican Republic who took a course at Complutense described the socioeconomic crisis in Spain to me. He said, “They’ve turned out the lights in the souls of you Spaniards.
What a shame. So much complaining”. What do they do here? At a private level, they innovate; they are pragmatic and take risks. At the public level, they organize, stimulate and generate support models. Overall, they talk very little, but they do a lot. They were one of the first multinationals to set root in Ireland. In the Eighties they used to be Digital Equipment Corp., and used to be the leading manufacturer of the mini-computer. At its height, Digital had 1,500 employees assembling computers in Galway. It shows this didn’t start just yesterday, and it allows us to understand the spirit of this little nation. The chart represents data related to debt, management, and business. What stands out is the data on foreign companies that set up and how they make profits.
It’s interesting that the origin of Ireland technologically is not so much due to the lowering of taxes that it suffered at the beginning of the 2000’s but due to the fact that after the technological bubble of the Nineties many of those techs from Digital Equipment began taking advantage of their experience and found their way deep into the large American and Asian multinational corporations. Once in those companies, they began to push for them to branch into their home countries.
Digital opened the road to Hewlett-Packard in Galway. Most of them are engineers and programmers researching and developing advanced services for companies in the cloud.
Even though universities in Ireland don’t appear in the rankings, no one can ignore the fact that some of them have a lot to do with this resurgence in the new Irish economy — centers such as the Center for Research on Nanostructures and Nanodevices Adaptation (CRANN) at Trinity College. CRANN accounts for 300 researchers from 45 countries, working with more than 125 companies like Intel and Merck. Companies make use of the research and installations of CRANN, while students of CRANN and post doctorates acquire knowledge, experience and employment in the companies.
The connection between research centers and companies is enviable and follows the American model which has such good results. The combination of tax policies, research, history, entrepreneurship and innovation make Ireland an extraordinary place to start projects. It should be said though that here are those who insist it isn’t so.
In my case, we’ve always done it thinking ambitiously and consider that from this point we can get set up to later make qualitative jumps into the giant English-speaking markets, all the while becoming nourished by the greatest and best competition in which to learn and improve.
If you are interested, don’t hesitate to try. We can help you boost your project from here. It’s not easy to get set up; it’s not cheap to get settled; it’s not so simple to build a structure and speed up the necessary procedures to get set up, but we can help you.
Startups, ‘hubs’ and my future
My friends warn me that travelling so much can’t be good. A little bit is fine, but this compulsive need can’t last my whole life. I don’t know, maybe they are right, maybe they are not. What I am sure of is that you learn while travelling, you become more intuitive and you are able to catch scents that you didn’t even know existed before. Regarding what I want to talk to you about today, travelling was key, and still is.
A few days ago a report was released that focused on some world cities of high interest in terms of startups or as technological hubs. It was an approximation of places that are not traditionally regarded as such. San Francisco, Berlin, New York, Miami, Santiago, Dubai, and Singapore didn’t appear in that report. On the other hand, they pointed out places like Amsterdam, Bangalore, Bogota, Dublin, Lisbon, Nairobi, St. Petersburg, Stockholm or Toronto. All of them have a clear positive pathway ahead of them, but each runs parallel to its own local crisis; all of them are focused on concentrating talent, digitalization, and the expectation of making their products global.
https://twitter.com/marcvidal/status/329534602739855362
In this list, there are three cities where IDODI and its spin-offs are already settled and have been working hard for quite some time. Bogota, Lisbon, and Dublin. Each one for a different reason, but all of them with something in common. It’s not easy, and whoever believes it will spend money and energy, since it’s a very twisted thing, but it’s doable. The key is knowing where and with whom you are going, to persevere, to be prepared for often feeling alone, and to be ready to eat all types of food. I like to think that having been stumbling around for so long, knowing first hand who does what and how they do it, what processes, protocols, and contacts you need in order to understand the rhythm of each place, has given me clear advantages in being able to place bets on locations with potential in the near future, despite any data saying otherwise.
We’re still planning to open a round of investments in June for almost ten different companies from the pool we manage or mentor; we have finished their development and in some cases they are already in production. Now, it’s curious that having received requests to be part of those startups I supervise, most of that interest comes from the countries mentioned in this link, way above the interest shown by investors from Spain. Development requires ideas, entrepreneurs, technology, and stimulus, but above all, it requires venture capital. If it doesn’t flow in one place, it will in another, and everybody will follow that flow positioning themselves in the ways they see fit, bringing relief of some, bringing glory to some more, and disgrace to the majority that always stay on their “couch”.
I’ve been travelling to Latin America for business for two decades. I’ve seen everything, and I hope to tell the story one day. I remember how Bogota was eighteen years ago and how risky it was to attend any event even in the best areas in the city. Mr. Alvaro Uribe explained to me that when he still was the President of Colombia, his dream was to set the foundation there for the future of the Silicon Valley of Latin America. He knew it depended on much more that his own work and he concentrated his efforts on bringing together different agents that are now the key for this technological model to expand and take root.
There’s evidence that the socioeconomic model is at stake at a planetary level. We can see how environments that have traditionally been far away from the digital and technological scene have slowly become part of it. It’s no longer required to have sophisticated research labs in order to develop disruptive technology. Now a connection allows you to travel thousands of miles, get training without leaving Dakar and start giving birth to an idea that, even though it may be a copycat of a more developed one coming from more advanced countries, can be adapted to the location’s idiosyncrasies and current technological needs. Keep an eye on the most powerful startups from the African continent.
I leave you by posting again a link to the selection of cities to take into account, titled “Emerging Tech: 9 International Startup Hubs to Watch”. Here are the nine international centers for technological startups that could be under the radar of any entrepreneur with international sights. These vibrant communities are more than places where startups are set up. They are total points of reference in terms of innovation and support, where inspiration and transpiration combine with business plans ready to be incubated. Opportunities arise and, most certainly, even entire markets are born around them. Whoever believes that internationalizing technology doesn’t require hub destinations is wrong. For countless businesses, just doing it any which way is the second mistake. We will talk about the adventures my team is having in further posts, in case it interests you.
Ireland and the New Economy
When I lived in London I could already tell, but it wasn’t until living in Dublin that I really noticed I’m paying more taxes. I’m paying as well the demanding ones from other countries where I have commercial, personal, or corporate activity, but in Ireland all kinds of personal taxes are higher. Apart from the tax code, what matters is how the country and its rulers decide to stimulate the economy or change the economic growth model. Ireland did both a few years ago and now they are seeing the results.
Just dealing with the tax issue alone won’t shed light on the whole story. In Ireland, new and extraordinary things are transpiring which means a significant jump is taking place in the perception that the rest of the world has of Dublin, as well as of the rest of Ireland, which is becoming a technology industry hub with massive potential. Whether this started as a tax issue or not is now irrelevant, because the truth is that the large companies of the world in the technological vanguard are already here, and not just with a minor trade office, or a legal representative. We’re talking about more than a hundred thousand people working for Google, Apple, Ebay, Amazon, Cisco, Crompton Greaves, GSK, IBM, Intel, Merck, Microsoft, Siemens and IDODI (allow me to take the liberty). Moreover, we are not just talking about one city, but a whole national ecosystem adapting itself to all things digital. Galway, Cork, Limerick and Sligo, as well as Dublin, make up a format similar to California’s Silicon Valley. It has nothing to do with other places that try to label themselves as such. Every time a geographical area wants to “modernize” its economy, it tries to associate itself with that Californian image, but calling yourself Caesar doesn’t make you Emperor.
It’s true that the European bailout of the Irish economy will bring unpleasant consequences in coming years. Public investment will drop, there will be enormous pressure on the management of government aid, and attacks on their taxation system will be planned. Nevertheless, the journey has already started and it’s important for other places to take into account how and what they decided to change to get to their economic standards to attract technological talent. In Ireland, everybody is getting ready. Far from opposing the changes, many of the main corporations have decided to adapt. For example, the Facebook’s Dublin office is also its international headquarters and it has acted for many years as the monitor for the entire community of Facebook users outside of the United States. In fact, it is within the very heart of this Dublin office where the social network has created the Data Protection and Privacy Council, which is precisely in charge of assuring the privacy and security of the people using Facebook in the European Union. It’s known that in coming months there will be changes and the exceptional tax policy currently in place will be modified which will put Ireland in a less than ideal spot, but I doubt that all that has been created and built to date can be undone magically.
There are stereotypes that need to be revised. Currently it’s easier to set up a new company in Spain than in Ireland. The island has a lot of complications and many defects in their legal procedures which demand surprising analogical verifications (whoever says the opposite hasn’t tried starting anything here). But it offers a fiscal framework that promotes a certain business model. Ireland’s corporate tax rate stands at 12,50% of profits, they have a tax policy that grants a credit of 20% on the increase in expenditure on R & D incurred by a business which is independent of the deductions to which they are entitled for this expenditure. It was imposed nearly three decades ago and it has already been a few years that it represents an important factor in the GDP of the country. It’s not a new thing and isn’t anecdotal; it is structural and survives over time.
The opening up to technological intelligence is brutal and can be noted in the day to day. Tremendous tests of selection, with engineers monitoring on a screen what is happening on yours while you try to find out a system password in a quarter of an hour, or while you try to incorporate improvements into a code to simplify a process—these are just examples of what is happening. Now it isn’t so much the search for entrepreneurs as the certainty that the talent generated by the greatest will attract the first ones. I know Spanish university professors that have not been able to pass the tests of large companies there. The search for talent is to levels that I had only seen in Silicon Valley a few years ago. It’s fascinating and very competitive.
Ireland is a small country definitively focused on promoting the development of its technology industry and approaching it from many fields and modes. To give an example, there are currently more than six thousand jobs available in this industry, and a huge interest in promoting the immigration of highly qualified workers. This is the way to condition and prepare a country for a competitive future in the framework of the New Economy. It’s normal for criticism to intensify when one looks at their taxation system, but it’s a mistake to stop there because it doesn’t allow you to view where they are going with “modernizing the economy” or “changing the growth model”. Let’s take into account what other countries such as Spain are doing and what you get with that. It’s not that difficult, you only have to put yourself to it. Creating jobs isn’t either, but there is no other way. My team and I, we stay in Dublin.
https://twitter.com/onlyIDODI/status/313713375119032321