Is Ireland too risk-averse to create tech unicorns?
Our past has left us with a more pragmatic view of failure than the Silicon Valley trope
“Saying we’re only looking for unicorns isn’t necessarily taking the right view; we’re looking for quality.” Image: iStock
Failure, in most walks of life, can seem like such a final, irreversible misstep. In Silicon Valley it is just the beginning. Steve Jobs said of failure: “You’ve got to be willing to fail, and crash and burn … if you’re afraid of failing, you won’t get very far.” Jimmy Wales of Wikipedia says “real entrepreneurs fail, fail, and fail again”.
The Silicon Valley attitude towards failure, however, can be viewed alongside the American dream – anything is possible if you try hard enough – as two sides of the same coin. In Ireland we have a fairly healthy tech start-up scene but we couldn’t be accused of being dreamers – so what does that say about how we view the trappings of entrepreneurship: risk, failure and, if we’re lucky, success?
“I think we could get [to the level of Silicon Valley] but we’re rather risk-averse,” says Pat Phelan, a serial entrepreneur whose fraud-prevention start-up TrustEv sold for $44 million in 2015.
“If you look at what you’d call unicorns, they’re not Irish companies at all; they’re American companies who might have an offshoot in Ireland; Stripe and Intercom have acknowledged they’re not Irish,” he adds.
As an Irish entrepreneur, is Phelan willing to embrace the possibility of failure, Silicon Valley-style, or is failure simply not an option?
“I thought about this seriously when I went back into the start-up space with [cosmetic clinic start-up] Sisu. I was frightened because I have a really good track record and I’m thinking: This is something really new, something I’m going to have to lead operations on as the CEO. I thought to myself, Are you ready for this battle again? Because that’s exactly what it is. You’re actually dusting yourself down and going to war.”
Perhaps, then, the battlefield analogy lends itself well to the start-up mindset, which is certainly not for the risk-averse: “This is only a game for fucking lunatics,” says Phelan in all seriousness.
“Whatever I made from Cubic, it was gone, and my house was on the line with TrustEv. I’m a lot more comfortable now, obviously, but I was in serious trouble if that hadn’t worked then. To take that kind of risk you need those kinds of extraordinary outcomes because it’s way different to a job.”
But not all start-ups have to risk everything and go it alone. Incubation spaces such as the NDRC offer a home of sorts to the budding entrepreneur and are, perhaps, a slightly safer option for the more risk averse. Over the past decade Irish start-ups who have gone through its doors have generated €486 million in market capital value and attracted nearly €200 million of follow-on investment, creating almost 1,000 direct jobs.
Dermot Casey, venture investment leader at the NDRC and a former entrepreneur, describes the company as a pre-seed investor and early stage accelerator: “It’s a combination of the cash (€20,000-€100,000) that we invest in these companies and the acceleration programme. Our remit is to find globally scalable Irish start-ups, so we’re looking for one that will scale internationally and who are, hopefully, highly original.”
So what about those unicorns? Phelan’s criticism of the Irish start-up scene is that we have failed to produce them, but Casey says we must look at this in context. It’s not necessarily just down to being risk-averse or not dreaming big enough.
“Yes, we are looking for companies that could be unicorns but we’re not focused on that as the sole outcome,” says Casey. “If you look to the US, there are only 167 unicorns in total. If you think of the thousands and thousands [of start-ups] that are out there, that is very few. Saying we’re only looking for unicorns isn’t necessarily taking the right view; we’re looking for quality.”
And in terms of entrepreneur material, Casey says he’s seen certain qualities over the years: “I don’t know that there’s a template but you’ll find certain characteristics: perseverance and tenacity, a hunger for learning and – in terms of coping with failure – the ability to learn and learn quickly.”
He says there is an always-on mentality; successful entrepreneurs are those who are hungry for opportunity and can be found following up on emails within the hour, even if it’s late at night.
But what about that Silicon Valley trope of not just coping with failure but jumping in headlong and embracing it as an indicator that you’re going in the right direction? I’ve often seen this “inspirational quote” from Elon Musk in my social media timelines: “Failure is an option here. If things are not failing, you are not innovating enough.”
“By that measure,” Casey says drily, “Mark Zuckerberg and Bill Gates are terrible failures because they succeeded the first time around. I don’t think that’s uniquely a Silicon Valley thing. Traditionally in the US – in comparison to Ireland – there is a toleration for failure and for building yourself up by your bootstraps.
“That’s a national and cultural thing that is probably more concentrated in Silicon Valley but historically, in Ireland, you couldn’t actually afford to fail. We have come from a history of being horribly poor, and the levels of deprivation have created that sort of mentality [that it would be better to go into a secure job than risk starting your own business].”
Casey differentiates between types of failure; if a business is an “honest failure” – you’ve tried in earnest and it hasn’t worked – people are more likely to be willing to work with you again because they know it was the idea that failed, not the founder who may have worked hard and used their funding well.
And these honest failures are even better when founders share their experience. Serial entrepreneur Eamon Leonard recently wound down his start-up Cohort. Instead of walking away quietly, he wrote a Medium post. “Maybe I could have worked more hours. Maybe I could have worked harder. Or smarter. Or whatever. Maybe,” he says.
The post gives insight into the back-breaking work that goes into creating a tech start-up and trying to keep it afloat and the fact that sometimes, lessons don’t just arrive in on the back of failure; you have to learn to live with the failure, which is perhaps a lesson in itself.
Then, as Phelan points out, there are obvious causes of failure.
“Do you know what most of the unsuccessful ones did wrong? They forgot to sell something. You’ll hear someone say: ‘We couldn’t find our market.’ Well go sell something. I had a sales person before I had a product. You have to be selling. You can’t find yourself two years later saying: ‘We’re almost ready for the market’ while someone in Silicon Valley has it out the door in three months.”
If you take Phelan’s admiration for a ruthless work schedule to get a product to market, you might think he’s had a few too many sips of the Silicon Valley Kool-Aid, but this is not the case: “I know it’s all trendy but I hate these Pizza Fridays, nap pods and all this bollocks. Just go to work, make something, sell it and try make some money. That’s the only way any company can be successful: start getting customers.”
This mantra of “make something people want and go sell it” follows through to a pragmatic approach to knowing when to call it a day.
“Start-ups don’t fail because they didn’t have Pizza Friday or the perfect product, they failed because they couldn’t sell anything. If nobody wants your product it’s no good doing a seventh iteration; if it’s not working, admit you’ve got it wrong, close the company and go do something new.”
And doing something new in Ireland is not as tricky as it was in the past. As Casey says, we’re much more tolerant of risk and failure now. When I tell him that I love the idea of being so well prepared that failure, literally, is not an option, he laughs out loud.
“Well, you can increase your odds of success significantly by figuring out much quicker what is working and what’s not,” he says, explaining that the flip side to failure is learning.
“That’s what we do in the NDRC, helping entrepreneurs really understand where the value is from a customer perspective. It’s better to spend six months figuring out that no one wants or needs your product and move on to something else than spending two or three years trying to push things at people. I’ve seen it happen.”
Failure is only useful if you learn the right lessons from it, he says with a nod to Bill Gates’s famous quote: “It’s fine to celebrate success, but it is more important to heed the lessons of failure.”
Maybe now we can claim back Beckett’s “Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better.” As literary scholars will tell you it’s not saying that if you try hard enough, success will be yours. Beckett was talking about being realistic and getting on with it. A few lines later, he wrote: “No choice but stand. Somehow up and stand. Somehow stand.”
There’s no doubt that Ireland’s technology scene has been heavily influenced by Silicon Valley’s attitude towards risk but we’re still a small country with a past that has left us with a more pragmatic view of failure.