Clare man with the Midas touch
Rory O'Driscoll has been named as one of the world's top tech-savvy investors. He spoke to Tom Lyons
Published 02/06/2013 | 05:00
IT'S 6.30am Silicon Valley-time, and Rory O'Driscoll is already at his desk at 950 Tower Lane, Foster City, California, close to Silicon Valley. The bounce in the Miltown Malbay, Co Clare, man's voice down the phone line is that of the habitual morning riser.
"I'm the early dude," he laughed. "I find it's my time of greatest productivity first thing in the morning, before everyone else comes in!"
The son of Noel and Elaine O'Driscoll is one of the lesser known Irish success stories in American technology.
Last month Forbes named him in the magazine's prestigious 'Midas list of Tech's Best Investors', for the second year running.
Forbes picked him based "on all exits (Initial Public Offerings or acquisitions) above $200m over the last five years". Since co-founding Scale Venture Partners in 2000, O'Driscoll's fund has raised $1.5bn to invest in dozens of companies.
There have been hits and misses, as with all venture funds, but two companies in particular have delivered such spectacular returns for Scale that O'Driscoll was propelled onto Forbes's list.
"Recent exits I have been involved with include Exact Target (a maker of digital marketing software), which went public on the New York Stock Exchange in 2011 and is currently worth $1.8bn; and Omniture (an online marketing and web analytics business), which was bought by Adobe in 2010 for $1.9bn," O'Driscoll explained.
It wasn't always the big time, however, he readily admitted.
In 1983, aged 18, he went to study in the London School of Economics before going into business in England in manufacturing.
"I had my own business and it didn't work out," O'Driscoll said. "I was broke. In America there is an entrepreneurial spirit that forgives, so I emigrated to California."
It was 1991 and the concept of Silicon Valley was still emerging. Working in tech was not on O'Driscoll's horizon.
"Like most emigrants my first job was a crappy one," O'Driscoll recalled. "It was in a graveyard in Los Angeles. I was doing the books, not digging the graves," he chuckled.
By chance O'Driscoll met Irish-American businessman Jim Murphy. Murphy saw his financial skills and offered him a job working with him in investment banking. "I worked on corporate M&A. I had a good education and an economics degree, which all helped me," said O'Driscoll.
In 1992 Murphy went into venture capital, and he again took O'Driscoll with him.
O'Driscoll now had experience both buying and selling businesses, as well as knowing what to look for when investing in start-up or mid-life stage tech companies.
Later O'Driscoll, with some partners, bought out the venture fund he was working for. This allowed them in 2000 to found Scale Venture Partners. O'Driscoll was one of four founders of the firm.
The timing of setting up a fund, just as the tech bubble burst, was bad – but it was a learning experience.
"The bubble was easy. The crash was hard. From 2000 to 2005/2006 was a really tough time in tech," O'Driscoll recalled. "There were a lot of failed companies."
He added, "Being in venture capital sounds very exciting but it is a job. It's a great job and you meet really interesting people, but I am basically a guy putting out capital and looking for a return. I really enjoy it and like looking for good companies."
O'Driscoll said he rarely did interviews as he felt venture capital partners should stay in the background. "It is the companies and the entrepreneurs who should get the credit and not the investors. They are the ones who should do the lap of honour when things go well," he said.
O'Driscoll said he was excited about the future for Scale and its investments. "I love all my new deals equally, but Box (a secure cloud content management and collaboration company with over eight million users) and Docusign (an electronic signature firm) are definitely two of the most exciting," O'Driscoll said.
"Both are high growth companies in the business software market. They solve a common business problem that applies equally to the largest Fortune 500 company and to a small business run by a single individual. As a result the market in both cases is huge."
Looking forward O'Driscoll said he believed the technology trends of the last two years would continue. "The move to cloud back ends and mobile end points will displace the existing vendors of technology including PCs and expensive enterprise hardware and software systems," he said.
O'Driscoll said Ireland needed to guard its reputa-tion as it was dragged through the mill in America over tax deals with Californian tech giants like Apple and Google.
"It's not good for Ireland to be getting all this press and publicity," he said. "Ireland has had the ability to attract multinationals, and has done much better than other European countries have done. If you lost that ability it would be a terrible thing."
O'Driscoll said multinationals were creating the jobs and profits in Ireland that were giving us a "plausible chance of succeeding and recovering" quicker than most other European countries.
He also said it was not true that US companies came to Ireland just for our low taxes.
"I am at the boardroom table when people are saying 'we've got to do Europe'," O'Driscoll said. "They are talking about Ireland because it's a great place with a young educated workforce."
He added, "It's with the programme. It knows how to do business the American way. There are cultural differences but they're minor. Let's just say I've never been at the boardroom table and people are saying 'let's think about France'!"
"The reality is that if there is erosion of Ireland's low taxes, companies will give the UK some consideration. You don't want your reputation to be damaged or allow anything happen to a key competitive advantage like tax."
O'Driscoll said he had spoken recently at an event hosted by the Irish Technology Leadership Group, which promotes greater connection between Ireland and Silicon Valley. He said he was impressed hearing about developments back home to create an indigenous start-up culture. "You're not going to be Silicon Valley on the Liffey but you can do a lot," he said.
O'Driscoll said global companies like Intel and Dell had raised the standard of management in Ireland.
"You need to bulk them out and take it from there using the expertise you've picked up from multinationals. There is a real start-up eco-system being developed in Ireland which you need to keep encouraging."
O'Driscoll said he had looked at investing in Irish- owned companies but had yet to take the plunge. His fund, however, has interests here.
"Many of our firm's best companies have European operations in Ireland, including Lumension, Hubspot, Jaspersoft [which between them employ 220 staff] and others," he said.
"Many more investigate Ireland as an option. I think it is important that Ireland keeps some kind of preferential tax and regulatory regime. The primary attraction is talented employees and access to Europe, but the tax environment helps and countries like the UK are getting competitive."
Spoken like an Irish patriot.