With DNA From DEC and HP, Galway Builds Startup Hub Outside Dublin
Irish entrepreneur Michael FitzGerald still gets calls from investors and potential partner companies in the U.S. who ask him “How’s Dublin?” when making small talk—even though his startup, OnePageCRM, is located a two-hour drive west in the coastal city of Galway.
FitzGerald usually doesn’t bother to correct them.
“They just presume we’re in Dublin,” he says. Although to be fair, he considers “all of them” to be in San Francisco, even if their offices are actually located in, say, San Ramon, CA, he adds.
FitzGerald’s scenario illustrates the global brand that Dublin has built—and shows that startup advocates in Ireland’s other cities have their work cut out for them in trying to get outsiders to take notice. Dublin unquestionably remains Ireland’s economic hub, its most populous metropolitan area, its most well-known city, and the seat of most of its startup activity, especially on the tech side. But even in a country of just under 4.6 million—smaller than the population of Wisconsin—there seems to be room for cities outside of Ireland’s capital to mold their own identities as startup clusters.
Xconomy recently visited both cities. We found that Galway indeed has a long way to go before outside observers would put it in the same class as Dublin. But it’s also got a lot going for it when it comes to nurturing a cohesive startup environment, locals say.
Galway’s advantages include a solid talent pool flowing from local universities; the presence of several major U.S. tech companies, including IBM, Hewlett-Packard, and Cisco; a small but rising number of home-grown tech startups; a pair of tech meet-up and support groups, Startup Galway and the Information Technology Association of Galway; well-funded university research and commercialization initiatives, like the Insight Centre for Data Analytics that involves multiple Irish universities; and the “quality of life” factor that comes with being a beloved cultural icon nestled on Ireland’s west coast.
In some ways, the Dublin-Galway dynamic mirrors relationships between U.S. cities like Milwaukee and Madison in Wisconsin or Denver and Boulder in Colorado (with obvious differences, too). Galway is the small, up-and-coming college town—around 75,000 people, roughly a quarter of them university students—to Dublin’s bustling, more cosmopolitan economic engine.
FitzGerald, for one, doesn’t think he loses anything by locating his software company in Galway instead of Dublin. Rather, the bigger question for him in the long run is whether OnePageCRM should be located in Galway or San Francisco, he says. His startup, founded four years ago, has raised about $750,000 in seed capital from Irish angel investors and Silicon Valley-based 500 Startups. He plans to raise a bigger Series A round next year. “Galway is quite a good city,” he adds.
Yet Galway wasn’t even on Miles Kane’s radar when he began scouting locations for his U.S. company’s new European headquarters earlier this year. When Beverly, MA-based SmartBear Software settled on Ireland, Kane just assumed the office would end up in Dublin.
But then he took a look at Galway (along with Cork in the south), at the recommendation of Irish economic development officials. He says he connected with Galway.
“We saw Galway as the fantastic alternative opportunity where we can get the same talented folks, but we can be in a smaller market and become a bigger name,” Kane says.
It would be hard for SmartBear to stand out in Dublin, where there’s a much larger software community, Kane says. Dublin is also more expensive, so the company’s office probably wouldn’t have been in the heart of downtown, next to the likes of Facebook and Google.
SmartBear, which employs some 300 people worldwide, has hired 12 staff in Galway and could grow that to 30 or 40 in the next couple of years, says Kane, who directs SmartBear’s Europe, Middle East, and Africa operations. He says his company has found Galway workers to be loyal, and it has attracted Galway natives who were looking for a cool job opportunity to bring them back home.
The talent issue looms large for a growing company, and loyalty is key.
“Bigger cities that have those big companies landing into town, you have to worry with job-hoppers and attrition, because six months from now there’s a new Silicon Valley-based company that just raised a boatload of cash, shows up to town, and starts dangling stock options,” says Kane, whose company is owned by New York-based private equity firm Insight Venture Partners. “You don’t want to worry that your whole sales team is going to jump ship chasing after the next shiny object.”
SmartBear aims to be an anchor tech company for Galway. It set up shop in the heart of downtown, which is actually unusual there because most tech companies are housed in business parks on the city’s outskirts.
“I think it is a landmark investment for Galway,” says Mark Gantly, managing director of HP’s Galway office and senior R&D director for HP’s cloud services business. “Other people will take note.”
More software companies will need to locate in downtown Galway if the city wants to “create that urban vibe” and attract more IT companies, Gantly says. One idea that could help, he says, is a plan to push some of the port activities out to deeper water and redevelop the current docks area for cultural amenities, office space, and other uses. “That would create a very nice environment for startups,” says Gantly, who also serves as Ireland’s western region chair for the American Chamber of Commerce.
Galway’s tech scene traces its roots back to 1971, when Digital Equipment Corp. (DEC) opened a computer manufacturing facility there. The company was founded in 1957 by MIT electronics engineers Ken Olsen and Harlan Anderson, and went on to pioneer low-cost minicomputers.
“The question around Galway is always puzzling because the obvious locations at that time would’ve been Dublin or Shannon, just in terms of connectivity and scale,” Gantly says. But Olsen tended to plant company operations in smaller cities, like Burlington, VT, because he was a community-minded “family man” who believed he could build stronger allegiance among employees in a smaller city, Gantly says. “That was definitely the case” with Galway, he adds.
Gantly joined DEC’s Galway operation in 1983 as a test engineer and stuck with the company through its acquisition by Compaq in 1998 and HP’s subsequent acquisition of Compaq in 2002. DEC’s local operations peaked at more than 1,000 people.
It devastated the local economy in 1993 when the company cut about 900 people in “one fell swoop” as it ceased hardware manufacturing in Ireland, during a time when commodity computer manufacturing moved to lower-cost countries, Gantly says. “That was kind of cataclysmic for the economy in the west of Ireland,” he says.
Thanks to a global economic upswing at the time, most of those workers were able to find new jobs nearby with other tech companies, and some of them switched over to medical technology companies with a local presence, like Boston Scientific or Medtronic, Gantly says. Other ex-DEC employees went on to start their own businesses, such as Toucan Technologies and Anecto.
Indeed, that DEC diaspora planted the seeds for Galway’s fledgling tech community today. “When you go across the Irish tech industry today, you find Digital people everywhere, plus quite a number of successful startups,” Gantly says.
Today, HP employs about 700 in Galway, and the operation has shifted away from manufacturing toward software development and business services, Gantly says. Similar transformations have happened with the Irish operations of other U.S. tech companies, like IBM and Apple, he says.
One of the open questions for Ireland’s tech community, particularly in a small cluster like Galway, is what role the big software companies will play in the startup ecosystem. Everyone seems to agree they’re an important source of talent for indigenous startups, and their presence boosts the credibility of Galway’s nascent tech startup cluster. But as Galway begins to produce more startups, will the established players increase their involvement, perhaps by becoming customers, investors, or acquirers?
Certainly the latter. Gantly says larger software companies are starting to show more interest in Ireland’s startup scene, citing Red Hat’s recent $82 million acquisition of FeedHenry, which spun out of the Waterford Institute of Technology in southeastern Ireland. IBM and Intel also have acquired Irish companies in the past several years.
Large companies are “asking the question now of Ireland—what have you got?” Gantly says. “IT companies are now going international not just to find low-cost labor or bright talent to do stuff. They’re actually going out looking for ideas” to acquire, he says.
Some of Galway’s more interesting and closely watched startups right now include Active Mind Technology, which counts President Barack Obama as a user of its wearable device, Game Golf; Pocket Anatomy, a 3D visual software maker that aims to be the “Google Earth of the human body”; and Altocloud, which is led by Barry O’Sullivan, a former Cisco exec who is actively involved in Galway’s tech startup community.
Still, the city will have to find a way to hold on to its promising startups if it wants to earn inclusion in the same breath as Dublin, London, and other bigger hubs. That task is made more difficult by the fact that Galway has fewer serial entrepreneurs and venture capital sources, says John Breslin, an entrepreneur and co-founder of Startup Galway. Breslin advises startups and is a senior engineering lecturer at the National University of Ireland, Galway, where he also conducts research for the Insight Centre for Data Analytics.
“The other challenge is companies/founders migrating to where the money/customers are,” Breslin says in an e-mail message. “Some feel it necessary to go to Dublin or elsewhere, while others seem to have managed to keep their feet in Galway while operating globally.”
For the companies that stay, this tight-knit coastal community seems to embrace the adage that “a rising tide lifts all boats.” SmartBear’s Kane, a native of Stillwater, MN, likened Galway’s attitude to some cities in America’s Midwest.
“They’re very competitive cities in their own right, but they’re not trying to kill you either,” Kane says. Other businesses in Galway “want you to be just as successful as them because they know that benefits the overall ecosystem. I see that a lot.”
This article’s featured image shows the view from Claddagh across Galway Bay to Galway City. Used under Creative Commons license from Flickr user rjs1322.
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