Meet the man calling bulls**t on Irish tech 'gurus'
As head of one of Ireland's top advertising agencies, Gary Brown thinks most tech entrepreneurs he meets are just chancers on beanbags, accessing cash all too easily. Against a backdrop of global concern about overheating in the tech sector, Will Hanafin asks are tech evangelists the future, or do bubble-prone start-ups have a great future behind them?
Published 25/08/2014 | 02:30
Ten years ago, everyone wanted to be a developer. Five years ago, we all just wanted to hang on to our jobs. Now, everyone wants to be a tech entrepreneur.
For this article I found entrepreneurs everywhere, from techies beavering away developing technology, to online start-ups selling a bewildering array of their wares. There's the computer-engineering PhD who has developed an app to reduce mobile bills after being stung with a high phone bill. And the straight woman in Tralee selling gay and lesbian wedding gifts worldwide, making a killing from her 'his and his' moulded male torso wall-hangings.
If you've got a vaguely geeky demeanour and an even vaguer idea for an app thingamajiggy involving users and stuff, you're more than likely getting feted like a Lotto winner down at your local bank. Tech entrepreneurs are the new global gods, with the likes of Facebook's Mark Zuckerberg and Elon Musk of SpaceX achieving near-mythical status and eye-watering bank balances to match.
It once used to be tough to be an entrepreneur here. Most Irish people can't even pronounce the word entrepreneur properly because of all those closely packed vowels and consonants. We envisage entrepreneurs as those sad-sack guys who pitch stuff like solar-powered nose-hair clippers, and are used as cannon fodder on Dragons' Den.
Now venture capitalists, state agencies and government ministers are queuing up to help anyone wittering on about being a founder, monetising globally and self-titling themselves tech entrepreneurs.
But is it too late to jump on this particular beanbag? When the recession began, we heard terms such as 'negative equity' and 'credit crunch' for the first time. Nowadays, we should add 'substantially stretched' to our collection of foreboding economic terms. The first jitters about tech-company vulnerability have arrived. Last month, the formidable Chair of the US Federal Reserve, Janet Yellen, queried whether some of these companies were overvalued. "Valuation metrics in some sectors do appear substantially stretched - particularly those for smaller firms in the social-media and biotechnology industries," said Yellen. In plain English, it's the Federal Reserve's first signal that the value of unproven tech-sector businesses could turn into a potential bubble. As one US financial journalist said: "Janet Yellen will neither 'Like' nor 'Favorite' the valuations of social-media companies with little-to-no revenue and uncertain business prospects."
Some Irish people don't like the unbridled enthusiasm for tech entrepreneurs, either. Gary Brown is the chairman of Target McConnells, one of the biggest Irish advertising and marketing firms. They have a digital wing and are actively engaged in social-media campaigns, but he's worried about the rise of our self-proclaimed entrepreneurs. He's been around a long time, used to play League of Ireland football and wants to shout 'show me the money!' to these enterprising young folks. "People come up to me and I ask them what they do. They say they're entrepreneurs, so I ask them what they mean. Then they get this quizzical look and ask me what I mean! They tell me they're thinking of concepts. So then I tell them they haven't actually done anything!"
Gary Brown fears that much budding Irish tech entrepreneurship is simply all hat and no cattle. "The best way to be an entrepreneur is to go and start a business, call it a business, create a few jobs, and let someone else call you that. Self-proclaimed titles are very dangerous. Events like The Summit are fantastic, but look at some of the kids! Daddy buys them a three-day pass for it; they dress like someone from Mumford & Sons and sit on a beanbag for three days. That doesn't make them entrepreneurs."
The advertising guru thinks that even the successful tech bosses aren't really good business people. "Entrepreneurs are few and far between. Even the successful ones are actually inventors, but it doesn't make them entrepreneurs. You need business acumen, and to set up a business you have to do business. Some banks are being taken in because they don't understand the idea fully," adds Gary.
The Summit (formerly the Dublin Web Summit) is the conference that Gary Brown thinks all the Mumford & Sons lookalikes attend, pretending to be entrepreneurs. Whatever about the motivation of the attendees, The Summit is definitely the real deal. It's the largest tech conference in Europe, where CEOs rub shoulders with budding entrepreneurs. This autumn, they're expecting a crowd of 20,000 and recently had to deny rumours that they were being bought for €35m.
Daire Hickey is one of the co-founders of The Summit, and he disagrees with Gary's putdown of tech entrepreneurs. "That's just trite and hyperbole. Mark Zuckerberg wears a hoody! All sorts of different people come to The Summit - aspiring people and lots of credible start-ups. The Vine guys started off working out of a garage and it was sold to Twitter; they look like hipsters. SmartThings is now worth €20m-plus. They won our start-up competition and they look like hipsters. Mailbox founder Gentry Underwood looks like a hipster. He sold his company to Dropbox for €100m. David Karp from Tumblr looks like a bit of a hipster and is very skinny. Yahoo! bought Tumblr for €1.1bn last year. Nick D'Aloisio was worth €25m when he was 16 years old, so don't judge it on what they look like!"
He warns that snootiness about tech culture and their youth means investment opportunities are lost. "I think we would have looked to the Collison brothers from Limerick, [who were] on The Late Late Show, struggle for financing, and we would have agreed that it was a good idea not to give 16-year-olds money! But we all missed out! Irish investors are kicking themselves now that they didn't put in the first 50k."
There are also other examples of credible and successful start-ups. "People would have questioned why Mark Little left a stable gig in RTE to begin a start-up in publishing and news. He had a credible exit to a large company and is enjoying the experience," adds Daire.
The older business generation simply don't understand new tech-company models, according to Hickey. "I talked to young start-ups recently who had a consumer web app. They were talking about growing this, that and the other, and the revenue model. I asked them why they even needed a revenue model. What you need is to get millions of users and then get a revenue model like Snapchat and WhatsApp. The traditional approach to business is the 'money in/money out' one. For others, it's about building a product as happened with Instagram or WhatsApp, which only monetised last year."
The Summit founder also believes that the tech-industry workplace culture is a step too far for established Irish business people. "You go to these offices and none of them are unionised. They are all happy, and are on high wages. This is alien to people from a lot of places. They give workers free lunches and beanbags and 10pc of free time. These companies are very disruptive and don't take the status quo for granted. There really are so many credible companies out there."
But old-school advertising boss Gary Brown sees echoes of the property boom in the blind faith we've put in these tech entrepreneurs. "In the property boom, bin men became developers and teachers became developers. The banks were handing out money to people for some site outside Longford to be developed. Now, if a couple of students come with a really high-tech idea they could easily bamboozle the bank."
Brown is also flabbergasted by attempts to teach entrepreneurship. "In Ireland long ago, if you threw a stone you'd hit a high king - now it's an entrepreneur. What's wrong with being a teacher? I'm even sceptical about these entrepreneurial courses, which are like putting a saddle on a zebra. Stuff like that cannot be trained. Either you are one or you're not," he said.
The Summit's Daire Hickey disagrees that Ireland is bending over backwards to encourage tech entrepreneurs. "In general, Irish people could be a little more ambitious. Everyone is looking to be the best in their class in Dublin, but what they need to do is to look to be the best in the world; the venture-capital and banking community could be more supportive," he says.
Hickey also believes that shows like Dragons' Den don't treat new business people very well. "Look at Dragons' Den. People have to go there with their begging cap in hand and they give you €15,000 for 40pc of the company. But if you look at Snapchat or Instagram, the venture-capital companies rarely take more than 20pc in the first round. These are not the right incentives for entrepreneurs."
The Summit founders admit that they did benefit from support early on, which enabled the company to survive and thrive. "A lot of people are incredibly positive and we have had a lot of support on our journey. Companies like KPMG supported us when we were just young ones working out of a living room. They saw what we were doing and were willing to put their money where their mouth was. Microsoft and others were partners early on. When people give that level of support to three people working from a living room, that means there's a lot of people in Ireland encouraging entrepreneurial set-up."
American venture-capital firms have set up specifically in Dublin to develop and invest in fledgling tech firms and Daire believes that they have brought a different attitude with them. "Polaris Partners's @dogpatchlabs are now based in Dublin and have a different approach. The American venture-capital firms are more interested in risk and are less conservative. This helps to change the outlook when you have American money. The company Intercom was set up out of Dublin and one of the founders of Twitter - Biz Stone - has invested in them. Another company called Logentries got backing from Polaris Partners. Investment outside Ireland is good."
The real poster boy for our new Irish entrepreneurs is Cookstown native, Niall Harbison. He has just written his book Get Sh*t Done! which boasts about getting budding entrepreneurs from the spare room to the boardroom in 1,000 days. He tells his story about selling his fledgling business, Simply Zesty, for millions, at just 33, within 1,000 days of starting it. As well as taking on the world of business, his book is randomly crammed with yarns about his hip, global travels courtesy of Airbnb, his past as a private chef serving beef to Bill Gates, and his lack of access to geography books at boarding school.
Harbison's parting shot in the book is some homespun advice for the budding entrepreneur. "I'm a firm believer that every single one of us can achieve anything we want. It starts right now. Not next month. Not for your New Year's resolution. Lose the fear of failure. Enjoy every moment as if it were your last and, most of all, please start getting shit done."
It's pretty easy to get it on the first rung of the entrepreneurial ladder here, according to Niall. "Ireland has a lot of incubators where they get between 10 and 50 grand. You may need just to get out of bed to get those! All you need is the semblance of an idea. It creates a false economy, getting grants from everywhere. There are a million ways to get seed funding. The question is, what you do from there? They are not profitable. There is a bit of a disconnect. The 50k may get a minimal viable product out there, but the Irish banks are not really going to help."
Again, Gary Brown believes this is the wrong message to be sending out to budding business people. "There is nothing wrong with encouraging people to have ideas, but I don't know why they are getting grants. I never looked for grants in my old business. You come across people and they say they have an idea for an app. But they have no customers! Where are your customers? Under your beanbag?"
But tech evangelist Niall Harbison believes that many of these new companies are definitely here to stay. "There is a fear that it's a new gold rush and people are making a quick buck, but the simple reality is that all commerce and trade is heading that way. People say it's a bubble. There is a little bit of frothy stuff out there, but there is real revenue there too."
The Summit founder Daire Hickey is also convinced there won't be a 2001 dot-com-style collapse. "During the dot-com collapse, everything was built on the idea of monetising on advertising and buying online. That wasn't credible back then, but now you do see credible businesses being built on that. Facebook has gone on to build a credible company. A lot of people are unfamiliar with new revenue models."
The Summit is at the coalface of what's hot and not, so what trends is Daire spotting? "More and more people are buying online. That is a good thing and there are definitely opportunities. Right now, the tech sector is all about making dumb industries smart. Companies like Hailo and Uber see that taxis need tech, and they know there's a market for taxis, so they cut out the middle-man. For example, there's a New York company who sell eyeglasses - they send you out five different types, you pick the ones you want, and send back the four you don't want."
Niall Harbison has this advice for new entrepreneurs. "The only tip in the early days is to do everything. Try and build as much value yourself and start the business cheaply. Get money from the best funding routes and focus on your product. Opportunities are definitely around mobile right now. Consumers are making a decision to go online and mobile for their entertainment and news."
What about the people who are out there trying to become the next Zuckerberg or Harbison? Shane Lynn (30) from Celbridge is one of the founders of KillBiller. This is a new app that automatically looks at phone usage and works out exactly what you would have spent on every mobile plan in Ireland, and gives you the cheapest.
The NUI Maynooth PhD computer-engineering graduate works as a consultant by day and beavers away at becoming a tech entrepreneur by night. He puts me right about the different types of tech entrepreneurs now. "There are three types of entrepreneurs, really. I have friends who are real entrepreneurs, with no full-time job, who are building ventures for themselves. The second stage is people like me making apps, who are half-in, half-out. The third are the 'wantrepreneurs' who think about it, but don't set aside the time."
The aspiration of being a tech entrepreneur - or even a wantrepreneur - is definitely huge for Shane's generation. "It's a cool thing to be doing. A huge number of college students want to set up their own thing. I looked recently at a website and there were about three start-up events a week in Dublin. It's exciting, and a parallel I'd draw are friends who are in bands. They write songs for fun but deep down there's a little bit of hope that maybe, just maybe, they might make it. App development is like that."
Shane believes the lower echelons of tech entrepreneurship are sustainable. "The start-up culture is sustainable because it's not costing that much. Some of the valuations of the big tech companies who are new entrants to the stock market would seem ludicrous, with some valuations amounting to the public debt of small nations."
In Kerry, Lorraine O'Shea is hoping to hit it big with her online store, Republic of Pride, which is aimed at the LGBT market. She lost her job in a hotel in 2010, did an entrepreneur course in 2011 and worked on developing Republic of Pride for two years. "We have the 'only gay in the kitchen' apron-and-chef's-hat set. The 'only gay in the office' mug is very popular, as are the bronze 'his and his' wall-hanging torsos. Also there's the 'sexy man' and 'sexy woman' shower curtains. We haven't gone down the very-raunchy route, as I wanted to set up a website where people weren't going to lose their eyes when they go on the site," she says. "I'm not LGBT, but have a lot of gay and lesbian friends and came across the idea when trying to buy gifts for gay friends."
On a typical day in her unit in Tralee, Lorraine could be shipping her two naked ladies bronze bookends to Spain, or posting her leg bottle opener to the USA. "The website was the bane of my life to set up," she says, "but without it I wouldn't be around!"
In Cavan, Michelle Rudden operates her business, Funky Crayons. She started a recycling project with her kids to round up all the broken crayons in the house, melt them down in a mould, and make shapes from them. It was a word-of-mouth success with friends, and she set up Funky Crayons, based on the idea, last September.
"I make shaped crayons using wax and pigments and hand pour into silicone moulds. Popular items would be a gift of a child's name in crayon letters and added shapes. I use Facebook and sell on Etsy a lot. I've been contacted by big shop suppliers in the US, so I want to keep developing and hope to get a unit in Cavan next and employ people," says Michelle.
The country is crammed with tech entrepreneurs, mumpreneurs and wantrepreneurs. While researching this article, I came across people selling everything from personalised GAA babywear to retro candy carts. And I met mind-bending tech entrepreneurs talking about taking over the world with algorithmic-targeted content.
Here's the big lesson about how to deal with our new tech entrepreneurs. Be nice to those Mumford & Sons guys on the beanbags. They may have the bank balance of a successful small nation in 12 months' time!