Starting up for global success
There is a new FDI phenomenon – the start-up multinational
Online marketplace Etsy set up its Irish operation in 2013. Photograph: Spencer Platt/Getty Images
The stereotypical view of an FDI company is of a large global enterprise which announces the creation of hundreds if not thousands of new jobs in a large facility either in the centre of one of our main cities or in purpose-built premises on a greenfield site elsewhere in the country. However, more recently, these major players have been joined by a new breed of fast-growing start-ups.
In many cases, these companies would still be classified as early stage SMEs, have been in business for just a few years and yet are already categorised as multinational organisations.
“We regularly talk to small companies who are by definition multinationals but are still start-ups as well,” says David Carthy, head of FDI with law firm William Fry. “We regularly see very early stage companies who come to us looking for advice. They are taking their first steps into the European market. This has been a definite trend in the last 10 years or so and we have developed a package specifically for them.”
According to Carthy, the companies typically start very small and grow quickly. “Companies come here to put a toe in the market,” he says. “They start with a couple of people, they find they like the work ethic and the business environment here, they employ more people, then they start putting tax structures here, R&D, data-hosting and so on. It’s a very common story. Take Workday for example. They came here five years ago as a very small company and they now have 1,000 people employed in Smithfield.”
Another firm in this category is Indeed, which opened its EMEA HQ in Dublin in early 2012 with just three employees. “In just under four years, the highly skilled workforce available in Dublin has facilitated the rapid growth at Indeed,” says EMEA vice president Gerard Murnaghan. “We have experienced three office moves and now employ over 450 people in Dublin in our new office on St Stephens Green. We are looking forward to continuing to grow our workforce over the coming years in the areas of finance, IT, marketing, sales, customer service and human resources.”
He says Irish workers embody the customer-focused ethos which the company strives for. “Dublin also offers a competitive advantage in its local infrastructure – high-speed broadband, public transport, an international airport and the availability of office space have enabled us to scale up quickly and easily. In Ireland, we strive to provide the best job search experience to every Irish job seeker. Our Irish site is thriving too and we are the largest job site in Ireland with over 35,000 fresh, relevant Irish jobs to search and over 800,000 unique visitors every month.”
Growth continues at the company. “We hope to grow further and create more jobs in this market,” Murnaghan adds. “We plan to expand our two key audiences – people looking for jobs, and employers seeking to attract talent. This includes continuing to expand globally to reach more people, finding better ways to match candidates with employers, and making it easier for people to apply for jobs.”
Barry O’Dowd leads IDA Ireland’s efforts to attract companies like Workday and Indeed to these shores. He points to independent research by fDiMarkets.com, which confirms Ireland as the market-leading destination country for FDI flows from North America to Europe during 2010 -2016. During this period, Ireland won 47.5 per cent of the projects and 47.7 per cent of the companies.
“We also performed very well in the early-stage company space,” he says. “Ireland is the number one destination country for early-stage companies from the US setting up in Europe.”
Ireland also ranks number one for combined US- and western European-sourced projects with a 39 per cent market share, followed by the UK with a 24 per cent share.
“What’s happening is very exciting,” says O’Dowd. “It’s a newish phenomenon which has been around for a few years. We started focusing on the area about five or six years ago. We knew that things were going really well with the bigger companies and we wanted to backfill space with early-stage companies. We set up a new division for this area and we have team members in California, Texas, Chicago, New York, London and Frankfurt.”
Prestigious project wins
This relatively new area of focus has already achieved considerable success, with a long list of prestigious project wins such as Indeed.com, Riot Games, Etsy, Zendesk, Squarespace, MongoDB, Qualtrics, New Relic and many more.
“We try to catch them early, just at the stage where they are internationalising,” O’Dowd adds. “They are just coming into Europe and Ireland is their first port of call. They are putting their HQs for Europe here. Ireland is seen as a good place to do business and to execute business plans. Speed to market is one of the things they look for and Ireland offers that. They want to get up and running very fast and get people and team quickly within weeks or months – they can do that in Ireland.”
Ireland’s track record is immensely important in this regard. “Our long pedigree of major companies with a strong cadre of middle and senior management who are open to the idea of moving to early-stage companies is a key strength. There are a lot of offices here run by guys who used to work for major FDI companies. That is something that is not readily replicable in other locations. Our main competitors are Berlin, London, Amsterdam, but they don’t have that pedigree of long-established companies. They don’t have Google with 5,000 people – that’s a very powerful message for early-stage companies. They feel very comfortable being where those companies are.”
They also find Ireland very good from the point of view of attracting talent. They see Europe as their talent pool,” O’Dowd points out. “If they can’t get skills locally they can go to Germany or wherever and bring them in.”
Carthy believes start-up FDI firms will be a feature of the landscape for the long term. “It is no longer the case that you can build out slowly, moving from city to city and wait to go global,” he says. “News travels fast and someone else will move faster than you if you wait. Funders are also forcing firms to go global very quickly.”
Part of a new reality
Augmented reality specialist firm Daqri established its EMEA headquarters in Dublin in 2014. Since then, the company has grown rapidly and exceeded initial expectations, according to Daqri International general manager Paul Sweeney. “We are a private company with 330 employees worldwide,” he says. “We have offices in six locations, two in the US, four in Europe; our international headquarters is here in Dublin. We have been in Ireland for two years. We started up in a small office on Sir John Rogerson’s Quay and subsequently moved to an 11,500sq ft premises on Hanover Quay to accommodate growth.”
The company is a leader in the field of augmented reality. “Our technology superimposes graphics on the real world and empowers workers to do their jobs better,” says Sweeney. “It empowers manufacturing operations to achieve massive improvements in productivity. Studies by independent researchers have shown a 30 per cent to 60 per cent productivity improvement when this technology is employed. There is also a dramatically improved error rate; Boeing has showed that errors in the wing assembly process are reduced by 94 per cent.”
Explaining how the technology works, he gives an example of a technician in Dublin Airport who receives a request to replace an engine valve at night. “He has to go out to the aircraft, lift the engine cowl, use a flashlight to find the part and so on. Using augmented reality, the headset highlights the part, tells the technician how to remove and replace it, and records and documents everything they do. It ensures that the right thing is done in the right way, every time.”
The decision to come here was effectively made at the Web Summit. “One of our founders participated a few years back and found the can-do attitude here very impressive,” says Sweeney. “He was also very impressed by the people he met from the IDA. The amount of people volunteering to help with various aspects of establishment was also great. The history of US businesses setting up in Ireland makes it a natural place to set up an office for start-ups. The rationale for coming here was that it was easier to service our European customers from here and that there is a lot of technical talent already in Ireland.
“We have grown quicker than we hoped,” he adds. “We have just started shipping Daqri smart helmets and our engineering team here in Ireland is being expanded and developed. We will also expand R&D activities in Ireland – there are some great incentives in Ireland for that.”