Growing pains of Dublin's Silicon Docks
'Ireland has become the Silicon Valley of Europe." It sounds like just another soundbite from someone looking to promote their business or plamas a conference. But this is how a senior lecturer at Massachusetts Institute of Technology, Brian Halligan, describes Ireland. Halligan was initially sceptical of Dublin's attractions as an investment location for the online software company he co-founded, Hubspot,
"Initially, I wasn't sold on Ireland," he said. "I was looking at Amsterdam and other cities in Europe. It was actually our COO [JD Sherman] who sold me on Dublin. He was right. This place is better than we thought."
A year later, Hubspot literally cannot hire people fast enough.
"We initially wanted to hire 30 people, but we've gone from zero to 75 people in a year," said Halligan. "Right now, we're looking for as many developers as we can find. The only limit is in how many developers we can actually find. We're building mobile apps here. The Irish office will keep growing, there's no doubt about that."
Hubspot, which specialises in online sales and marketing software, is just one of a flood of tech firms that have descended on one particular part of Dublin: the so-called Silicon Docks. Extending about a mile in three directions from Pearse Street in Dublin 2, there are now at least 50 internationally significant tech firms (not including newly-minted startups and 'incubator' centres) congregating in an area around the size of a single Dublin postcode.
Giants such as 2,500-strong Google, Facebook (500 staff) and LinkedIn (450 staff) are well known. But they have been buttressed in recent years by dozens of new international digital and internet companies.
High-profile outfits such as Twitter have been joined by less well known, yet thriving, mature startups like Nitro, Adroll and Zendesk. Brian Halligan's Hubspot is just such a firm.
"Our office in Dublin is like the UN of coding," said Halligan. "And the area is just getting stronger. All of these companies here are training people, making them highly skilled. Companies like Google are doing that. From our perspective, and I think from other companies' viewpoint too, it's great because then we have people who are highly trained who can join Hubspot."
Halligan credits, in part, the Irish Government's "aggressive" tactics at luring companies such as Hubspot to Ireland.
"The Irish Government does a great pitch," he said. "It's partly tax but it's mostly about great people. We bought that. I think great credit goes to them for what's happening here."
But it's not all sunshine in Dublin's tech world. Capacity constraints are starting to hit digital firms in a significant way. A crunch on office space and highly qualified workers is starting to put pressure on companies that have been lured here by the burgeoning technology ecosystem of the capital.
Some property firms say that "prime" city rents are currently rising at more than 25pc per annum because of the tech boom in Dublin.
"There's a massive scarcity of prime office space now for big companies that want to set up in Dublin," said Paul Finucane, a director of Colliers International which conducted a report examining commercial property development across Europe.
"There's no doubt that much of the pressure is coming from the success of tech firms here."
The Colliers report says that Dublin's booming tech market is now pushing corporate property deals at such a pace that it is close to overtaking London's tech real estate market in growth levels.
That is starting to have a real impact on companies such as Linkedin, which is close to outgrowing its European headquarters in Dublin 2's Wilton Place.
The company has now grown to "over 450" staff there, according to a spokesman, far more than it initially anticipated. It now needs to find a new headquarters building as it contemplates hiring its next 100 staff. But it's a tough time to be looking for a big office anywhere close to Ireland's Silicon Docks.
"Any company now looking for more than 5,000 square metres of prime space in the areas that tech companies want (Dublin 2, Dublin 4) is finding very little available," said Paul Finucane of Colliers International.
Access to money is another nagging issue for tech firms in Ireland. It's part of a wider European disadvantage compared to US counterparts.
"While it's a lot easier to find venture capital here today than it was a couple of years ago, the US is still the nerve centre, especially for tech firms," said Prof Vinny Cahill, Dean of Research and computer science lecturer at Trinity College Dublin.
"There is definitely a growing venture capital community here. But if you look at Silicon Valley, there's a network of people who have been through the business and who encourage investment. It's starting to evolve in Dublin, but we're not at Silicon Valley's level yet."
Despite these hurdles, some recent arrivals are upbeat about Dublin's emerging superiority as a tech location for international firms. The online travel website Tripadvisor recently started recruiting 50 engineers at a new office close to Dublin's Point Depot.
"Dublin has the best combination of business-friendly practices and top talent," said Lars Holzman, Dublin site manager for Tripadvisor. "We looked at London, but it just doesn't have the hiring climate that we've found here.
There's no friction when it comes to bringing other people here from the rest of Europe and lots of engineers in the US also quite like the idea of coming to work in Dublin for a while.
We've done a lot of research as to where we can expand and Ireland is clearly the best place in Europe."
Who’s next for the Silicon Docks?
While small companies are cropping up all the time, a couple of international firms could soon be on their way to the Silicon Docks. The US online software firm Evernote, which has 90 million users and over $250m in private funding, is close to establishing an office here with a view to establishing it as a European headquarters.
The company currently has offices in Switzerland and Moscow but none within the European Union. Evernote is understood to have received assistance from the IDA over a possible move here. The company’s chief executive, Phil Libin, has spoken before of Dublin’s suitability as a European office for Evernote.
“We’ve been looking closely at Ireland as a place to help us build the next great part of Evernote,” Libin told the Irish Independent at last November’s Dublin Web Summit. “Dublin is one of the major technology centres of the world now. There are people from all over the world coming here for opportunity.
Ireland is a really great place to be right now.” Last month, online accommodation firm Airbnb moved its international headquarters to Dublin with the creation of 100 new jobs.
Tax, talent & privacy
ASIDE from property and talent scarcities, Dublin faces a number of challenges in maintaining its upward trajectory. Tax incentives are one factor, according to Mark Little, right, the former RTE journalist who sold his news-verification startup Storyful to Rupert Murdoch’s News Corporation for €18m last year. “Ireland’s culture is one of internationalisation and it’s a great place to start a business,” he told a Dublin gathering of tech entrepreneurs last week. “But it’s not so good a place to scale a business. Some of the tax implications that faced us were a real impediment. The tax bill on dividends almost killed the (News Corporation €18m acquisition) deal for us.” Also, despite its growing reputation, Ireland can still be a tough sell as a relocation venue for senior tech industry executives. “When you go looking to recruit top talent, it’s still New York or California where lots of them want to live,” said Little. “So when we got to a certain size, we had to go to America because the star players wouldn’t live in Europe.” Little has had a front-row seat in comparing Europe and the US when it comes to startups. He believes that some of the challenges Dublin faces are not obvious ones. “In Europe, the data privacy issue is dominated by concerns largely on one side of the debate,” he said. “But there’s another element to that. Right now, the places that create the most jobs embrace a collaborative culture over the strictest privacy culture. Yet in countries like Germany, the number one thing they talk to you about is the need to protect privacy. I think we might be missing something in Europe. We need to amplify openness.”