Location matters 1

Paul Graham, the essayist, venture capitalist and founder of Y-Combinator wrote in 2009 about whether it was possible to "buy a silicon valley". Clearly if you could "buy a Silicon Valley" most countries would write the cheque  for the economic results that follow - tax revenue, job creation, inward investment, perpetual innovation etc. As Graham points out - a lot of cities look at Silicon Valley and ask "How could we make something like that happen here?". 

The organic way to do it is to establish a 1st rate university in a place with a lot of rich people, which is how Silicon Valley came to be. Clearly that in itself is not sufficient - there are particular cultural characteristics that are unique to Silicon Valley that make that world work - hippy, laissez-faire attitudes fostered in San Francisco in the 60s and 70s are part of the story. 

While it's possible to create an environment that fosters entrepreneurship, the real goal is to tie the culture of entrepreneurship to a particular place, so that the economic benefits are captured by that place. What ties founders to Silicon Valley for the long-term is often different to what originally fostered the entrepreneurial mindset. As Graham points out encouraging startups is different from encouraging startups in a particular city. "The latter is much more expensive". 

This week in the UK a report from the Centre for Entrepreneurs and Duedil, showed that 1 in 7 companies in the UK is founded by an immigrant, with 14% of the workforce employed by companies started by immigrant founders. 17.4% of migrants start a business versus an average of 10.4% for UK nationals. Top of the pile of immigrant founders, are the Irish with a staggering 48,854 founders of UK companies registered as Irish by Companies House. I am one of those 48,854. Not so unique anymore. 

 

Most of these 48,854 founders run SMEs. In the real world (as opposed to the popular press) start-ups don't typically reach the multinational status of the iconic tech names that have emerged from Silicon Valley. Most are small to medium sized local businesses. Nonetheless, these businesses are the lifeblood of the economy (40% of the value of the economy in the UK and significantly higher in other countries). 

 

A major concern for Ireland from Duedil report is that the culture of entrepreneurship clearly exists, but swaths of the value of the entrepreneurial culture are being captured elsewhere. The report just covers the UK and not other popular spots for the Irish diaspora. 48,854 Irish founders in the UK is a staggering number in the context where the total number of registered businesses actually in Ireland is around 190,000. 

 

The Irish economy is recovering from a truly awful economic crisis, but getting a percentage of the pioneering foreign founders to build their business "at home" has to be key to safeguarding the future. (The next blog might be on why I am in London as opposed to Dublin)