Conor O’Neill might have just have sparked something off in his post “How to get and Irish David Heinemeier Hansson” which was followed up by equally pragmatic post by Alan O’Rourke in “Encouraging entrepreneurship in Ireland”. In their posts they offer suggestions to foster entrepreneurship for students which is something I feel strongly about.

Conor describes a “just a job” mentality displayed by a majority of students/grads who wanted nothing more than a bank or multi-national job. Unfortunately very little options are open to those students/grads that would love to work in a start-up and develop their careers quite apart from working in large multi-nationals.

In March after attending a ShareIT event organised by Damien Mulley I sent him an email outlining my own thoughts about what could be done to help tech start-ups in Ireland and what some of the current issues were. In two sentences:

Issues: Not enough tech entrepreneurs completing cycles and re-investing within Ireland.
Fixes: “We” ourselves become the angel investors and develop a way of encouraging students in setups similar to Y-Combinator.

Unfortunately, after re-reading the email, nothing I said hasn’t already been mentioned (nearly a year and a half ago). The vital component is the ‘Brain Trust’ as Damien Mulley referred to it. As we’ve seen, despite sitting on millions, Enterprise Ireland can’t give the money away. They’re looking for the big knowledge companies to appear out of a tiny tech-startup eco-system. Damien Mulley had the first post which kicked off this conversation (in Ireland) by highlighting the fact that the traditional VC’s are facing stiffer competition from savy tech entrepreneurs often with not a lot of money, the most famous being Y-Combinator (now Seedcamp in the UK is following a similar model).

James Corbett picked up on Damien Mulleys post and wrote about “Fantasy business teams” which included references to points made by Paul O’Mahony about bloggers and programmers who could “form some sort of loosely bound structure/organisation to facilitate this kind of collaborative enterprise. With enough members we may even be able to boot strap our own ventures through membership fees”.

Personally, I think Conor O’Neills ‘Hothouse’ idea is excellent and he and Alan O’Rourke have obviously given it a bit of thought because I couldn’t add a whole lot more to what they’ve suggested. My contribution would be to echo Paul O’Mahonys point that there is possibly an entrepreneurial opportunity in helping to develop <€100K start-ups in our own community. The 'Hothouse' idea would be a great place to start - we'd be helping to develop the right environment for a start-up culture as well as giving Irish investors additional confidence in these start-ups particularly if they've essentially been peer reviewed and investment from tech entrepreneurs had already been given.

Though Joe Drumgoole might have the last word? “Populations of multi-millions trumps populations of 4 million everytime.”

Pat Phelan over on his blog mentions Ooma and its founder Andrew Frame. Frame has a hell of a resume which Pat linked to on the Entrepreneurship Education Resources website from Stanford.

The site is a fantastic resource for videos and podcasts from Silicon Valleys (and beyond) top talent, take a look.

Frame and one of the directors of Draper Fisher Jurvetson, a VC investor in Frames company Ooma are recorded giving a hour long talk titled “Adventures of a Startup CEO: No Guts No Glory, 10 Lesson for building a successful start-up” which I’ve paraphrased below:

Warren Packard - DFJ
Andrew Frame - Ooma

1. Pick the big markets
It’s very, very difficult to start a company, why would you pick a small market. Idea started in a market, despite the technical background. Ooma are targeting telecoms - large market, low bar for innovation. 100 billion dollars in residential calls in the US alone.

2. Recruiting
Always actively seeking talent. Their hires were superstars in their last jobs. First get them out to lunch/breakfast, then get them in the building and pitch them. Slow process. Took several meetings to get the Yahoo Head of Customer Care in for example, try to get them emotionally attached. Don’t offer contract too soon, wait until they’re ready to close. Remove the risk before they sign. All of his executive team signed as soon as the offer was made. Talk about the numbers after getting them hooked. They should be willing to join on the opportunity alone. Employee fifteens fulltime job is to sit on LinkedIn every single day looking for staff. They have org charts for all the different companies and end up taking happy people from their current jobs. Recruiting gets easier once good talent is seen to be on-board.

3. Organisational Design
Important to get right from the start. Product management in the middle of everything. Product management controls the process. They are driven by the market and the ideas pool which everybody can contribute to. People need to know how they fit into the organisation. Lots of collaboration but clear demarcation concerning decisions.

4. Board Construction
When choosing a VC, try get a pro-entrepreneur firm, who understands the issues start-ups face. As long as the company is trending in the right direction. Get experienced CEOs. They’ve seen it before. Need to establish personal relationships with everybody on the board. Open, direct board conversation. Safe environment to talk about the ‘ugly’ [information]. You need to talk about the world as it is rather than the one that you wish that it is.

5. Alignment
How do maintain alignment as the company grows. Everything is governed by the company ‘playbook’. The playbook is revised each year by the leadership team offsite. Start with the vision - shared vision from among the leadership team which they also use to keep alignment in the company. Ask yourself where do you want to be in two years and try to get group buy-in. Six strategic imperatives in their playbook. If they meet all six of their strategic imperatives then they’ve reached their vision. Each strategic imperative is broken down to three or four strategic objectives. Each strategic objective has a set of tasks with an owner and a due date. All the tasks necessary. Now you have a self managing system. Simple Red/Amber/Green (RAG) tracking of tasks which are discussed at weekly meetings. Very clear to see how people are performing.

6. Mis-hires
Every successful CEO says their biggest mistake was waiting too long to fire a bad hire, especially in the leadership team. Best case scenario is a few million dollars, at worst the company will die. When you identify a bad hire, mightn’t be that they are bad, just not the right fit for the company, it’s vision. You have to move quick. Using the already agreed upon playbook it’s easy to communicate a problem. You don’t just fire someone. Praise publicly, criticise privately. Be open with your communication. When you have a bad situation, you need to act fast.

7. Build for scalability
First you need a leadership team that can scale. If they can scale, then the company can scale. Four questions each executive is asked - if you don’t meet these four then you don’t get in.

1. Do you have start-up experience? An exec with only big company experience might struggle in a start-up experience.
2. Do you have big company experience? An exec with only start-up experience mightn’t be able to scale the business.
3. Have you experienced a massive success? You need to know what that feels like.
4. Have you experienced a massive failure? You need to have felt ‘gravity’ and the bad times.

8. Product Development
Ooma is strict with the engineering department particularly not having control over where the product is going. Bad experience in a company where the engineers build something ’supercool’ but didn’t sell after four years of working on it. The product management role there was trying to keep up with what was going on so the PR department could be kept informed. The opposite of what was supposed to happen. In Ooma, you need to have a process. The requirements cannot change after their signed off. You won’t nail the specs 100% first time but fairly close.

9. Intellectual capital
Believes marketing is an intellectual exercise. Traditionally customer acquisition is seen as function of marketing spend but now there are lots of examples of companies getting market share with great products and not a lot of marketing. Examples of intellectual capital are things like designing ‘virality’ into the product. Creative strategy better than the standard press release.

10. Mentorship
Very important to give and receive mentoring advice. Lots of ways to successfully lead. Frame has a mentor named Keith Krach who was the youngest VP in General Motors - head of the robotics division at 26. He started and sold several businesses including Ariba.
Saw him at a talk and begged him to help him out. Believes that if you show passion and enthusiasm they’ll more than likely help out.

Commentary and Q&A
WP - 75% of their decision process goes into assessing the entrepreneur themselves.

WP - How did you come up with concept for Ooma and when did you decide to do something about it?
AF - It seems to occur over a long time, it’s an evolution. The idea started as something very boring, keep figuring it out. Focused on the market first and came up with a ‘base case’ but it had a lot of holes (from the VCs). You need to take that feed back, not take it personally, and keep going. You need to stick with the idea, hardening it and eventually it will happen.

WP gives an example of Mike Campbell and his Ultimate Arena product which allowed gamers to compete against each other for money. Problem was the great gamers were just stalked the novices and eventually the novices didn’t play anymore. The assets Ultimate Arena had was access to some great gamers so they changed Ultimate Arena to XFire which is an network for gamers. The entrepreneur wasn’t invested in the particular product itself, he was invested in helping gamers have a more enjoyable experience. The vision evolved a lot over time.

WP - What percentage of your time is spent recruiting?
AF - Probably 15-20%. He interviews every single potential employee for a ‘cultural’ fit. They need to be hungry, excited about the product, see the position as more than a job. You need to make sure the person is driven. Has rejected people because of their ‘negativity’ towards their previous jobs.

WP- Not everything works. You could have a great team and still not make it. Would bet on the team again in a heartbeat.

AF - Celebrate each success quickly.

it@cork have been doing an excellent job in Cork so it was no surprise that they managed to get Jerry Kennelly, of Stockbyte fame, to speak at their ‘Midsummer networking event’ last night.

For those of you who don’t know the story Kennelly, a former photojournalist, setup a photographic image company in Kerry in 1996. He grew it to become the third largest stock photography supplier in the world eventually selling the company for $135M to Getty Images.

At the time of the sale, he had 100% ownership of the company having bought out the VC share (approx 30%) beforehand (that’s a story I’d like to have heard). So Kennelly can afford to be brutally honest, and he is. Not long after the sale I heard Kennelly describe the banks in Ireland as ‘bastards’ on live radio. Often said in private, rarely said so publicly.

His family started a newspaper business (still running) in Kerry when he was a child which is how he got into the photo-journalism business. He realised that technology was radically changing the media world. After understanding the money that had been made from VHS he correctly bet that digital photography on CDs was the way to go.

Possibly like a lot of others I had heard about the company but just assumed that Stockbyte were a clearinghouse for stock images which they bought from freelance photographers. Turns out that the majority of Stockbytes then portfolio was created internally. They had teams of photographers and art directors who planned for months photo-shoots in locations all over the world. A huge amount of planning went to each photo-shoot since they were so costly but the more interesting aspect of that was how customer driven they were. As a company much smaller than existing competitors they were shameless in trying to engage their customers and getting feedback from them. He and his team were very, very focused on giving their customers what they wanted and making their lives easier.

I’m not sure if he said it directly but from his talk you understood that he built a fantastic team around him in what sounded like a great working environment. When the deal was done to sell the company one of the first things he did was write all his staff some serious thank-you checks!

Some points from his talk:

• Work in high-margin businesses - it allows you to make mistakes.
• Scale fast and keep it lean.
• Appear bigger than you actually are.
• Put a huge effort into understanding your customer (and getting all your staff to do the same).
• Instincts matter

Not only is it great to see somebody having done so well locally it’s great to see them willing to talk so openly about their own experiences.

Thanks to Donal Manning and Catherine Wall at it@cork for organising the event and Murphys-Heineken Brewery for hosting!

Congratulations to Conor of Argolon on the launch of LouderVoice. LouderVoice makes it easy to write reviews particularly if you blog.

If you like what you see then how about voting for LouderVoice at TheNextWebConference (Amsterdam, June). And if you get that far Walter Higgins of Pixenate would probably appreciate a vote!

Most of you have probably seen the Tourism Australia ad that has been running over the last year or two? (If you haven’t seen it already it, check it out at www.wherethebloodyhellareyou.com.) Overall, the campaign spent over 100M Euro to promote Australia using an ad culminating with a bikini-clad model stepping out of the ocean asking “Where the bloody hell are you?”

That’s the question I’d like to ask Irish tech investors and support organisations: Where bloody hell are you?

Given the enormous increase in wealth in the country its astonishing how VC’s almost avoid investing in small or medium tech companies. A lot of those with money now got it from literally ‘bricks and mortar’ investments and it’s easy to see how potentially riskier investments in start-ups could even be beyond the skill set of traditional professional investors. Why? Well, because using any measure you choose they haven’t been doing it, never mind doing it very well.

The chicken and egg situation in Ireland is that investors don’t routinely invest in tech start-ups which means fewer start-ups. Fewer start-ups mean less chance of success and, hence, increased risk. We have the people with the skills in Ireland and we have the people with the money. Why aren’t we a Silicon Valley of Europe? One difference (out of many) between Ireland and the Silicon Valley is that entrepreneurs heavily re-invest their knowledge and finances back into the system; Irish VC’s have a reputation not unlike some of their probably Nordic ancestors.

Given Ireland’s economic success over the last decade it’s not hard to believe that there has never been more wealth in the country. The policy, of successive governments, of attracting Foreign Direct Investment into the country starting more than twenty years ago has been a big factor in how Ireland developed economically. The IDA and Enterprise Ireland deservedly have been acknowledged for their part in this.

However, we have become a victim of our own success: Ireland is no longer a low-cost economy. Other countries which have studied Ireland’s past tactics have played a blinder introducing flat or low taxes to induce multinationals to invest in their lower-cost economies. Ireland’s current policies try to support developing a knowledge-based economy but, in aiming to launch 100M Euro enterprise IPOs rather than supporting small to medium size companies focusing on actual knowledge innovation, they are almost expecting too much.

So, Enterprise Ireland and Irish VC’s what should you be doing?

Just take a look at these two posts taken from TechCrunch on April 25th:
Y-Combinators European Clone
Scribd Rumoured Financing

Y-Combinator is a private investment group who invest modest amounts of money among many young entrepreneurs. It’s a simple idea: spend a small amount on lots of potentially-great ideas in the hope that one will hit the big-time. The European clone (first link) are private investors who are going to take on 8 start-ups at an initial spend of 15,000Eur (5k per person up to three people) for a total of 120K. They don’t care where you come from (within the EU) as long as you work in Austria. How much money is EI sitting on waiting to give to one of their High Potential Start-Ups? Keep waiting…

Now, look at the second link. Scribd.com, following a similar investment model, is looking at financing at around 10M dollars. That company was probably kick-started with 10-15K dollars.

Enterprise Ireland - Encourage lots of small innovative start-ups. You’ve been sitting on millions waiting for the big tech IPO which doesn’t happen all that often. Any businesses started in Ireland will more than likely end up being taxed in Ireland. Don’t be too focused on Irish nationals for that matter. Ireland is too small a country not to ignore talent from other parts of the EU. Ireland could and should be the hotbed of tech innovation in Europe.

Irish VCs - Just. Start. Looking. It doesn’t matter if you don’t invest because investment is becoming a lot more mobile, Irish companies will just go further afield to get it. The fact that you’re not even actively looking tells its own story.

Nothing in this post is either original or hasn’t been said before. It should be a no-brainer.

[Updated] - Damien Mulley has a great post about credit unions as possible funding sources. Check out the link to Joe Drumgooles posts about EI offering 175 million to Irish VC’s!