A bit of controversy can go a long way in business, particularly if you’re a start-up trying to gain some attention. Even still, taking a full-page advertisement in the Economist magazine in which you claim to have outsmarted the laws of physics might be pushing it a little.
The Impossible Dream, Barry J Whyte’s new book about the rise and fall of what he describes as “the Celtic Tiger’s most audacious start-up”, proves once again that not all publicity is good publicity. It also shows that smart people can be as likely as fools to be easily parted with their money.
Indeed, more than 400 mainly Irish investors stumped up over €23 million during Steorn’s lifetime. All walked away with nothing. Were they victims of a massive fraud, or did they buy into an ambitious project that was horribly misguided from the start?
Whyte’s book seeks to answer this question. It also goes some way to exonerate the company’s founder, Shaun McCarthy, someone who remains something of an enigma despite being the author’s key source.
Steorn was an Irish technology company that seemed to burst from nowhere to making headlines around the world. The £75,000 it spent for the Economist ad back in 2006 certainly got the company the attention it craved. It also cost Steorn plenty in terms of credibility, however, something from which it arguably never recovered.
It is one thing to claim to have developed a technology that produces infinite amounts of clean, free and constant energy, but quite another to prove that the technology – which goes against the basic principles of physics – actually works.
According to Steorn, the discovery it had accidentally made, which it named Orbo, could be used to develop everything from mobile phones that wouldn’t need charging to fuel-free cars. But, as the book shows in great detail, the company consistently failed to demonstrate that it was viable.
In fact, the infamous ad was something of a last-ditch throw of the dice by McCarthy. Having grown frustrated at the failure of academics to get onboard and validate the discovery, he opted for Plan B: a public call for an independent scientific jury to test Steorn’s claims.
Almost immediately the call was met with derision, with Forbes magazine describing the whole thing as “powered by blarney”, while the Economist declared it to be “perpetual nonsense”.
Despite the derision and a seemingly unending failure to prove its discovery actually worked, Steorn was able to attract many private investors, including doctors, farmers and solicitors, who tend to be conservative by nature. What made them go for such a risky bet?
Whyte, the chief feature writer at the Business Post, brilliantly sets the context in which Steorn was first active, a time when it suddenly didn’t seem strange to hear of taxi drivers buying apartments in Bulgaria. Writing of the Celtic Tiger, he asks: “If the price of a house could go up forever, why was it impossible that someone could create energy from nothing?”
He adds: “After centuries of near poverty, Irish people had, within a few years, shed their caution and frugality and apparently decided that our wealth would simply continue to create itself. From where? It didn’t matter, just so long as we continued to spend and invest.”
The book shows how most of the investors were neither stupid or greedy, but had money at a time when it seemed limitless and saw nothing rash in throwing a spare €30,000 into a risky proposition that might turn good. Many also wanted to wear the green jersey and back an Irish company that potentially had made the discovery of the century.
That they stayed the distance and put further money into Steorn over the years to come, despite its spectacular failures, shows the zealous collective belief of many of its backers that any day soon success would be achieved. Time and again the company changed tack as it sought to build products that would win acceptance only for them to fail. Whyte is excellent at charting these pivots and the eventual liquidation of Steorn in 2016.
While many branded McCarthy as a conman or a chancer, the book paints him in a different light, showing him to be misguided, but, like his investors, a true believer in what he believed he could achieve. “I wasn’t doing it to defraud people. I wasn’t doing it just for a salary...I was doing it because I honestly thought we had a chance of winning,” he says at one point in the book.
Whyte seems to agree. He notes how the entrepreneur dedicated years to the company, and lost plenty of his own money as well as his reputation when Steorn came to an ignominious end.
Whyte is evidently predisposed towards his key interviewee, perhaps a little too much at times. While he portrays McCarthy as warm and charismatic, the entrepreneur’s own words show him as anything but. He comes across as arrogant and pigheaded, yet we hear of little resistance or criticism from those closest to him. His fellow workers aren’t seen to put up much of a fight when he comes up with yet another pivot, and we never hear if family members or friends are embarrassed by his actions.
Celtic Tiger era
That said, this is a minor complaint. While there is some technical jargon and deep dives of company documents to wade through, The Impossible Dream is for the most part an easy-to-read yarn that firmly places the ascent and crash of Steorn within the context of the Celtic Tiger era.
Entrepreneurs are often by their nature a bolshie lot. Throw in arrogance, a hostile response and a pot load of money and the chances of them falling flat on their faces jump markedly. As McCarthy says himself: “That’s just the nature of trying to be aggressive with a start-up business. When it all works out, you’re a legend, when it doesn’t you’re a scumbag.”
Last heard of, McCarthy was still living in Dublin, running a cryptocurrency mining and trading company.