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The Future of Dublin Tech, Part 2: Startups Look West, Grow Diverse

The Future of Dublin Tech, Part 2: Startups Look West, Grow Diverse

Just up the stairs from Munchies, a sandwich shop owned by his mother, Ben Harris shows me his startup’s digs. It has the intense feel of people getting stuff done on deadline. Ten employees cram into one room, a mix of young programmers, designers, and business folks.

Harris’s startup is called Drop, and it’s getting ready to release its first app on Apple’s iTunes store, in conjunction with a nifty piece of hardware. The company makes a “smart kitchen scale” that connects to an iPad via low-power Bluetooth.

The idea is to make cooking more interactive—starting with baking. Drop lets users browse a curated list of recipes, then get started on the connected scale: you can weigh each ingredient, convert between units, and scale recipes up or down depending on how much chocolate you have on hand, say. And here’s the trick: you add everything directly to a bowl on the scale, without using separate measuring cups. Meanwhile, the app helps you stay on track and suggests things like substitutes if you don’t have a particular ingredient (for buttermilk, try regular milk and lemon juice, it says).

“The key is providing the information you need at the right step,” Harris says.

But his big goal is to build a business around hardware, content, and community that helps consumers apply digital tools to cooking and baking. “The kitchen is the heart of the home,” he points out, but it’s still overlooked by most of the tech industry.

This type of startup could have formed anywhere—San Francisco, Boston, London, Shenzhen. But here we are in Dublin, just north of the River Liffey on the city’s east side. And Drop’s experience is quintessentially Irish in several ways (starting with its need to “scale” smartly).

The two-year-old company has four co-founders, including Harris, the CEO, who’s an industrial designer by trade. He met the others through his brother, who worked at Dublin’s LaunchPad accelerator. One of the founders, Jack Phelan, previously worked at Google’s local office. The team got seed funding from Enterprise Ireland, the government agency that’s ubiquitous in any discussion of Irish startups.

In early 2014, Drop went through the Highway1 hardware accelerator in San Francisco, run by PCH International, a manufacturing and distribution company. The program provides $50,000 in seed funding, plus office space, mentoring, and, crucially, supply-chain connections in China. Drop now houses its four-person management team in the Mission neighborhood of San Francisco, along with having its developer team in Dublin.

“I’ll always be bi-located,” Harris says, between San Francisco and Dublin.

The company recently raised $2 million from a mix of Irish and U.S. investors including Frontline Ventures, Innovation Works (founded by former Microsoft and Google exec Kai-Fu Lee), PCH, WI Harper Group, and Vegas Tech Fund (run by Tony Hsieh of Zappos fame).

Ben Harris, CEO of Drop, demos his company's smart scale and app. (Image: Gregory T. Huang)

Ben Harris, CEO of Drop, demos his company’s “smart scale” and app. (Image: Gregory T. Huang)

It’s still early, but Drop is at least on its way to competing in the global tech race. And while Harris sees more of his Irish peers making progress as entrepreneurs, it’s clear the Dublin startup scene has a long way to go. “What’s missing is people seeing success stories here, like [they do] in San Francisco,” he says.

The main reason for that is, well, scale: there just aren’t that many startups and investors yet. But the numbers are growing. An October report by the nonprofit Startup Ireland surveyed 284 startups and 21 incubator programs. As the country continues to recover from the brutal recession of 2008-2010, the great majority of startups are less than four years old. It’s a very young ecosystem that’s just finding its legs.

“You couldn’t have said in 2010 to a guy, ‘Leave your job, do a startup.’ His wife would kill him,” says venture capitalist Elaine Coughlan from Atlantic Bridge Capital. “Entrepreneurship is celebrated now. The backdrop is much more positive.”

Coughlan sees a new kind of grit from Irish entrepreneurs who have been through a tough time and survived. She thinks they have more awareness of “what it takes to build a business,” as well as a “hunger to get connected on the international stage.”

But that’s a monster challenge for Irish startups. Because of the small domestic market for customers, partners, investors, and talent, companies need to think globally—and look west—very early in their development (as Drop did). “You want to go big, you have to get off the island,” Coughlan says.

Elaine Coughlan of Atlantic Bridge Capital says Irish startups need to look west early. (Image: Gregory T. Huang)

Elaine Coughlan of Atlantic Bridge Capital says Irish startups need to look west early. (Image: Gregory T. Huang)

So they have. The long list of Irish startups that have gotten outside funding and set up major operations in the U.S.—typically management and core business teams—includes enterprise software firm Logentries in Boston; anti-fraud company Trustev in New York; FieldAware, in Texas, which makes mobile software for remote workers; and in San Francisco, mobile-marketing company Swrve, customer management and analytics firm Intercom, and sales intelligence startup Datahug, to name a few.

And the one that got away? That would be Stripe, the digital payments company founded by two Irish brothers, Patrick and John Collison, who came to the U.S. for college (in Boston), pulled a Zuckerberg, and moved to San Francisco. They were last seen raising $100 million-plus from top Silicon Valley investors at a company valuation of $1.75 billion.

Which raises the issue that as a small ecosystem, Dublin needs to attract talent from outside to keep growing—and balance the flow of companies getting off the island.

The Irish government tries to do this in several ways: by securing foreign direct investment from multinationals through IDA Ireland, and by attracting foreign entrepreneurs at an early stage via Enterprise Ireland. (That last bit is one piece of what Enterprise Ireland does; it also invests in startups and venture funds, and helps Irish companies expand and export their products in new markets.)

“Attracting entrepreneurs [to Ireland] is kind of a new thing,” says Lorcan O’Sullivan, manager of overseas entrepreneurship at Enterprise Ireland. “There are no best practices yet, unlike foreign direct investment.” He adds that his staff “want to build diversity” and bring a “mix of nationalities” into the Irish ecosystem.

His colleague, project executive David Scanlon, says that “what we’re trying to do is push Dublin and Ireland as a credible competitor” to places like London and Berlin for attracting outside talent. “We’re hustling and we’re trying to do our best,” he says.

So far it seems to be working—in conjunction with the draw of big companies—at least if you look at the makeup of startups around town. Take Profitero, a Dublin company working on retail and commerce analytics. Its founders—Vol Pigrukh, Dmitry Vysotski, and Kanstantsin Chernysh—came from Belarus and Ukraine and previously worked at Microsoft, Google, and IBM. Their startup has grown to about 50 employees. Then there’s LogoGrab, whose founders Luca Boschin and Alessandro Prest moved from Switzerland to Dublin to build a startup that digitizes brand logos.

Guidecentral, which runs a website for crafts and décor, is another early example of an immigrant success story. Founder and CEO Gaston Irigoyen moved from Argentina to Dublin in 2009 for a job with Google. He met up with Israel San José González, a Spaniard, while working on a mobile app. In 2012, Irigoyen left Google to start Guidecentral, and González became chief technology officer there.

Dropbox Dublin executive Adrienne Gormley calls it “hugely energizing to see so many cultures here. It’s driven a lovely cultural vibe.”

Indeed, the presence of big multinational tech companies (see Part 1) seems to be impacting the homegrown startup community in many ways. “Having the likes of Google and Facebook here has really instilled understanding” of the broader tech and Web industry, Drop’s Harris says. “It’s given Dublin-based people expertise to build companies here.”

Yet it’s mostly been a serendipitous—or at least organic—phenomenon so far. Big companies make a splash, create jobs, and host entrepreneurial meet-ups. Their employees make friends in the community and leave to join startups or do their own thing. More tech and business talent is drawn to the area because of all of the above.

A big thing to watch over the next few years, observers say, is the relationship between foreign direct investment and Dublin’s startup community. Not surprisingly, private investors and entrepreneurs are calling for new tax policies, incentives, and other support that could make entrepreneurship more attractive and sustainable. There also seems to be a big need for more structure and mentorship around company-building and best practices for startups.

Will Prendergast of Frontline Ventures, in startup offices of Logentries. (Image: Gregory T. Huang)

Will Prendergast of Frontline Ventures, in Dublin startup offices of Logentries. (Image: Gregory T. Huang)

“If Ireland manages to unlock the foreign direct investment that’s here for the benefit of the companies starting here, that could be transformational,” says Will Prendergast, a Dublin-based partner with VC firm Frontline Ventures. “But it hasn’t happened yet.”

Coughlan from Atlantic Bridge adds, “That’s a 10-year cycle, not overnight.”

She calls the big multinationals in Dublin “a key validation here. But we’ve only scratched the surface between the research centers, accelerators, indigenous companies, and foreign direct investment. It’s a big opportunity over the next 10 years.”

[Editor’s note: Part 1 of this series looked at the current wave of U.S. tech companies that are growing in Dublin.]

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