Why would any entrepreneur chose Ireland as the headquarters for her global start-up ?
I’m not a spokesman for the Irish Government nor any of its myriad of agencies and civil servants. But that was the question which we discussed over dinner last night, quite robustly it must be said, between members of the US based team for Enterprise Ireland (EI) and some of the 30 Irish based IT CEOs attending the Leadership For Growth programme. This one year programme is organised by EI and the Irish Software Association, together with the CLG Executive Coaching, some experienced Irish technology business coaches, and hosted here this week at the Stanford Graduate Business School from where I write this blog entry.
I think any business visitor to Ireland today will be confused by the image which the country presents. On the one hand, Ireland appears to be thriving, with evidence of strong economic growth driven by a combination of indigenous and multinational companies. Dublin, Galway, Cork and Limerick are all exciting cities, with young and dynamic societies. On the other hand, there is clearly so much which is broken. The physical transport system is still very poor indeed, with long commutes, and highways which are frequently car parks. The health system seems to be a black hole and, despite larger public investment as a proportion of GDP (currently abut 6%) than many other countries, appears to fall very far behind what is available elsewhere. Labour and housing costs are expensive. The corporate legislative environment is onerous and burdensome. Personal taxation, with the top tax band at 41% is moderate compared to other European countries but the tax band threshold is quickly reached by most professional staff.
Joe Macri, an ebullient Australian friend, and the current head of Microsoft in Ireland, spoke forthrightly recently that the sole reason that multinationals stay in Ireland is to avail of the low corporate tax rate of 12.5%. Past advantages have been eroded by international competition: it is no longer the quality of the Irish workforce, or cost competitiveness, or the telecommunications infrastructure, or anything else. If he and the American Chamber of Commerce are right, then clearly Ireland needs to grow its own indigenous companies and entrepreneurs to sustain economic growth as multinationals in due course move elsewhere.
Michael O’Leary, of Ryanair, is probably the most outstanding CEO which Ireland has yet produced. Ryanair is now amongst the most profitable and largest of the global airlines. Peter Conlon – himself a highly experienced technology entrepreneur – nominated O’Leary at dinner last night as the role model which Enterprise Ireland should adopt, and I think Peter is correct. And there are others who come to mind: Liam O’Mahony, CEO of CRH, a company which has global presence through outstanding execution of M&A; Eddie O’Connor, CEO of airtricity, ironically having far more success with wind farms outside of Ireland – such as Texas – than at home; and Liam Fitzgerald of United Drug, who has built a highly regarded company. Noticeably absent from my list above is of course global Irish ICT companies, and that’s part of what the Leadership For Growth programme aims to solve.
I believe that Brand Ireland is now internationally very strong. Ireland is a neutral nation. It is now well on to its commitments to donating 0.7% of GDP for third world aid, made at the UN Millennium Summit in 2000, which has further raised its international political profile. It is also important to recognise that Irish aid is not tied to trade requirements, as is frequently the case for some other western governments. Ireland boxes above its weight at both the UN and European Union institutions. Ireland is the home of the “celtic tiger”. The consequence of Brand Ireland is that being an Irish company opens opportunities for global business, whether it be in the US, or China, or Saudi Arabia, or Israel, or Brazil – pretty much wherever. Without wishing to be geo-political, frankly I believe that certain other national brands are now extremely damaged in the global community, creating obstacles for their own entrepreneurs to undertake business and opening opportunities for others, such as the Irish.
I also pointed out last night that the substantial investment in world class R&D in Ireland, by Science Foundation Ireland and industry, is now also creating entrepreneurial opportunities for new global businesses. As chair of the CTVR initiative, there are clear global leadership positions emerging in cognitive radio, dynamic spectrum management and trading, and terabit per second laser technology. There are further significant global advances in, for example, bio-diagnostics, nanomaterials, the semantic web, and alimentary pharmabiotics amongst the other Irish Centres for Science and Technology. Such world class research will be exploited by visionary entrepreneurship.
It is also remarkable how the composition of the work force in Ireland has changed this decade. The Polish, Chinese, Latvian and other communities are significant. While these nationals are visible in the hospitality service sector, a visitor to Ireland might not realise how many professional grade staff there are amongst the new immigrants, including in particular the ICT sector. Ireland is also has quite a number of start up companies founded and run by immigrant entrepreneurs, and I believe that some of these entrepreneurs may well emerge as global leaders. The strong linkage to other, frankly lower cost, economies which the immigrant communities create, are enabling relatively easy off-shoring opportunities to globally compete with world class products, of Irish based innovation, with high value propositions.
Ultimately, the striking observation is that the most successful world class entrepreneurs based in Ireland, have done so despite the challenges: the physical infrastructure, even the physical location of Ireland, the cost challenges, and the frequently dysfunctional civil service. The Irish have historically been the “under-dogs”, and rise to the challenge. Ireland has now become culturally deeply entrepreneurial, with a deep “can do” attitude swelling in its national psyche.
I know a German CEO who relocated herself from Munich to Dublin last year to found her global company, which is based on a highly innovative and insightful use of web 2.0 social community technology. Watch out for Anna Kupka and Ammado. I suspect there will be many more like her.