Get over failure and venture boldly forth: California’s technology hotbed sets an example

SILICON VALLEY was not created overnight. The seeds of California’s technology hotbed were sown by the US defence industry during the second World War, and could even be said to go back to the foundation of Stanford University in 1891.

So grandiose plans to recreate the Valley in Ireland, or any other location, would seem doomed. But without slavishly trying to recreate the conditions in California, there is much we can take away from its success in fostering hugely successful technology ventures.

Here are five pieces of advice I picked up after spending a week in Silicon Valley and San Francisco recently.

1. EMBRACE FAILURE

“Ireland needs to learn to celebrate the person who takes a chance,” says entrepreneur and adviser Salaim Ismail, who did stints in Ireland as a travelling technology consultant early in his career.

In Ireland and Europe there is a stigma attached to having set up a company that subsequently failed. In Silicon Valley, failure is seen as giving you experience – if you haven’t failed a couple of times you are probably not ready to succeed. “You should recognise the best failures in business every year so that people aren’t afraid to fail,” says Ismail. He also points out that it’s “easy to fail” in the US. A failed company can be shut down relatively easily unlike the lengthy and sometimes expensive process in Ireland and other European countries.

2. IMPORT TALENT

Every technology company I have spoken to in the last year – from major multinationals to start-ups – has said the biggest barrier to their growth in Ireland is the lack of suitably qualified technical staff.

Despite local concerns about tight immigration laws, the San Francisco Bay area and Silicon Valley are a melting pot of nationalities, largely due to talent being attracted to work in tech.

“All these great founders weren’t from here. We imported them,” says Don Wood, a managing director with Draper Fisher Jurveston, referring to the companies that have been backed by the legendary firm since it was founded in 1985. “Silicon Valley has always embraced diversity and celebrated great engineers.”

Others believe Ireland needs to rapidly overhaul its visa system so that much-needed techies can come here from all over the world and fill jobs that will otherwise go overseas. “Until the majority of people in Ireland doing technology start-ups are not Irish, we will be fairly insignificant in the big scheme of things,” says Patrick Collison, the Limerick entrepreneur who is developing his latest start-up, Stripe, in Silicon Valley.

3. BE CONFIDENT

In California there is little fear of leaving a big employer such as Facebook or Google to pursue a start-up. Contrast that with Ireland. It’s not uncommon for a redundancy cheque from a multinational to be sunk into a new venture, but it’s rare for people to leave “safe and pensionable” jobs to go out on their own of their own volition.

And, ironically, in the Valley, doing your own start-up can actually be a good way to get a senior position with one of the big players. Google thinks nothing of paying $20 million for a fledgling firm simply to acquire its engineering and executive talent.

4. CREATE GREAT UNIVERSITIES

“Stanford is the root,” says Stuart Coulson, an Irish entrepreneur who lectures at the university’s highly regarded Institute of Design.

“The top students get into Stanford and everything grows out of that,” says Coulson. “There is a huge loyalty to it.”

Ireland could learn from the US college system – particularly the system of giving students credits for taking courses in areas not directly related to their core subject. Stanford operates a well-resourced and well-regarded Office of Technology Licensing so the university can maximise the value of the research taking place on campus. It even has a searchable database, and an e-mail newsletter notifies potential investors and industry partners of technologies that are available for licensing. Under a licence deal that expires this year, Stanford received stock ultimately worth hundreds of millions of dollars and an annual licence fee from Google for the use of software developed by Larry Page and Sergey Brin when they were postgrad students.

5. FIND SOME PAYING CUSTOMERS

Venture capital and angel money is flocking to technology start-ups in the Valley. But there are other ways to fund your start-up than taking outside investment in exchange for a stake in your business.

George Moore, an Irish American who founded technology firm TargusInfo in 1993, took a contrary view when speaking at the Irish Technology Leadership Group’s annual dinner last month: “Don’t take venture capital; find a customer instead. Then the valuation of your company will be higher and there’ll be more of it for you if you decide to sell.”