Every month an Irish high-tech company establishes a US headquarters in Silicon Valley. There are now more than 30 such companies in the Bay Area, all hoping to sample business life in the world's most vibrant high-tech economy. It is the new Irish invasion and it is changing the nature of Irish business.
"In the past Irish people came to the United States because they did not have jobs at home," said the Taoiseach, Mr Ahern, during a recent visit to Silicon Valley. "Now they are coming to establish companies. It is a welcome change." Firms such as CBT Systems and Iona Technologies have shown that it is not only possible, but necessary to conquer the US market to achieve international recognition.
Establishing a US presence is not just a matter of selling more products. It is also a matter of being featured in the US press, building a network of contacts, winning over US venture capitalists, building business partnerships and, for the very lucky, achieving a Nasdaq quotation.
"To get the attention we feel the company deserves we absolutely have to co-locate our headquarters in Silicon Valley and in Dublin," said Mr Paul Costigan, CEO of Massana, a high-speed integrated circuit manufacturer for the communications market.
Iona co-founders Mr Colin Newman and Mr Annrai O'Toole spent the first three years of the company's existence setting up offices in Boston and San Francisco. Likewise, Trintech co-located its headquarters in Silicon Valley and Dublin two years ago, and Baltimore opened its San Francisco office late last year.
However, for every successful Irish start-up in Silicon Valley there are countless failures, largely because companies come unprepared to do business in the US. "Working out of your back bedroom just does not cut it," said Mr Lesley Murdock of Murdock and Associates, a business consultancy that specialises in setting up foreign companies in Silicon Valley. "You will not be able to create a credible presence." So what does it take? At least $1 million (€1,269,738), according to experts. Office space is not cheap and costs between $15,000$30,000 a year. Hiring local tech-savvy staff will cost between $100,000-$150,000 apiece per year. PR representation will cost around $180,000 a year. Need a car? Add another $6,000.
That is just for starters. Companies will spend the real money on lawyers, business agents, air travel, computer services and telecommunications.
It's also necessary to hire local staff. Irish staff may help establish a US office but then the locals should take over.
"You have to build a US team," said Mr Murdock. "US workers will have their own contacts and experience that they can bring to the company." That is why Enterprise Ireland set up an Irish high-tech start-up factory in Campbell, just a five-mile jaunt from San Jose, California. The idea was the brainchild of 29-year-old Enterprise Ireland vice-president, Ms Marina Donohoe.
"The idea behind the start-up factory is to enable Irish companies to hit the ground running," said Ms Donohoe. "With our facility Irish companies are able reduce the time it takes to set up an office and concentrate on more valuable projects such as finding a US customer base." Enterprise Ireland does not just provide office space but also gives companies valuable advice on how to do business in the US.
To the Republic's TV generation doing business the American way may appear easy, but it is not and the devil is in the detail.
For example, many Irish companies do not see the need to tailor their marketing campaign to the US market, according to Ms Donohoe. "It's the little things that will trip you up," she said. "Companies need to create US-style marketing literature and have a .com Internet address or they just will not be taken seriously." Careful planning is also necessary. Companies need to decide what they hope to achieve and devise a suitable strategy. Some companies will simply want to increase sales, others will want to raise venture capital. And there is plenty of capital available in Silicon Valley.
Trintech managed to secure $20 million during its last round of finance. It is unlikely that a company based in the Republic would have succeeded in raising this money from US venture capitalists.
Venture capitalists do not like investing in foreign companies because they prefer to take a very active role in a company's growth.
"I will not invest in a company that is any more than a 35-minute drive from my office," said Mr Ted Schlein, partner in the venture capital firm Kleiner Perkins Caufield & Byers. "I need to keep an eye on my investment and it's very difficult to do that if the company headquarters is 6,000 miles away." Still, these days Irish companies should look to the Irish marketplace for venture capital.
"It's easier to get venture capital in Ireland than in Silicon Valley," said Mr Costigan. "There is more money than opportunity at the moment." Apart from the cash, Silicon Valley has a great deal to offer the Irish high-tech industry. For starters: access to the world's largest market, fruitful partnerships with US computer vendors and a shot at Wall Street.
The real pay-off for Irish business is that indigenous Irish high-tech companies are putting Ireland on the international map for the first time. Now the Republic is not just an educated third world country good for cheap labour and good craic, but a State ready and willing to compete in the information age. Indeed, it is a welcome change.
Niall McKay can be reached at irish-times@niall.org.
