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Featured Article 22 Jan 2015

The success of Dublin’s so-called Silicon Docks is a combination of enlightened public policy and the blind luck of good timing. 
 

This extract from a new book - Silicon Docks: The Rise of Dublin as a Global Tech Hub - details how one of the area’s landmark tenants was lured to these shores.

One of the many elements of David Denby’s job is spotting plot holes. Narrative problems are exposed and ill-conceived character decisions highlighted to his readers. This is perhaps one of the main reasons the New Yorker film critic can barely comprehend the logic he employed within his dot-com bubble diary, American Sucker.

Denby, a sometimes investor, wanted to make $1 million on the stock market to buy his soon-to-be ex-wife out of their Manhattan condo in 1999. To do so, he invested heavily in tech shares. He lost out. Badly. Denby, though, was far from the only sucker in town.

The end of the 1990s and the start of the next decade was a time littered with tales of investments gone wrong. Another man whose name is almost always thrown into the mix when discussion turns to dot-com-era mistakes is George Bell, the former chief executive of the online news source and search engine Excite. In 1999, he decided to decline an offer to buy a company by the name of Google for $750,000. Moreover, this was after the asking price had been brought down from $1 million.

Google, as a large portion of the globe knows by now, was founded by Stanford students Larry Page and Sergey Brin in 1998. It was their second stab at creating a search engine after another – which went by the moniker BackRub – suffered bandwidth issues.

Andy Bechtolsheim, co-founder of Sun Microsystems (a company which played a bizarrely large part in getting Google to Ireland), was their first investor, writing Google a cheque for $100,000 before the company was even incorporated.

At the time, very few people seemed sure of which web companies had potential for growth and which were built on sand. A number of European countries decided to withdraw foreign development offices from Silicon Valley, wary of getting involved with another dot-com-type blowout.

The IDA stayed though, with the agency’s director of operations in California, Dermot Tuohy, insisting there were still plenty of potential partners for Ireland in the area.

He kept knocking on the doors of PayPal, eBay, Overture (which would later become part of Yahoo!) and, of course, Google. By mid-2002 Tuohy – described, in a complimentary sense, by one person who met him at the time, as a ‘grizzled veteran’– had taken several meetings with the company, which has since become a verb for web searches, never mind one of the biggest names in Silicon Valley.

The IDA’s Gus Jones also worked on the Google “account” in California at the time, while back in Dublin, with the development agency now convinced it wanted to get the company to the Irish capital, John Bolton acted as project manager for the operation.

The Google they were trying to woo at the time had 500 employees and relatively modest (compared to now) revenue of $40 million per annum. The efforts of the three men, alongside recommendations from senior Google staff members who had previously done business in Ireland, convinced the company to take Dublin seriously as a potential location for its European headquarters.

In October 2002 Google sent to Dublin a trio comprising chief financial officer George Reyes, corporate controller Pietro Dova, and Ian Cunningham, a consultant the company employed for its site-selection committee. The itinerary that followed was, according to the IDA’s Jones, “typical” of the kind that had attracted previous technology companies to Ireland.

They went to visit the Dublin bases of companies such as HP, Symantec, SAP, Oracle, and Citibank, as well as a number of data centres in south Dublin, which, for the most part, had been mothballed in the wake of the dot-com crash.

The visit focused mainly on suburban office parks as, up to this point, all major technology brands that had set up shop in Ireland had done so on the outskirts of cities. Bolton remembers that after that visit, Reyes was positive about the idea of coming to Ireland. Both Reyes and the company’s chief executive Eric Schmidt were among the senior Google figures with Irish business experience from their time with Sun Microsystems, which had an engineering base in Dublin.

Two-city race

However, this was a two-city race for Google and for Dova, the company’s corporate controller, the preferred destination was the Canton de Neuchâtel in Switzerland. Contact continued between Google and the IDA over the weeks that followed but eventually the news filtered though that the company had chosen to go with Switzerland. In addition to Dova’s support for the decision, several of Google’s backers had eastern European heritage and liked the idea of the company’s European headquarters being closer to that region. That’s what they told the IDA anyway.

Nonetheless, the agency’s representatives in Dublin and California decided they weren’t going to accept the decision. They continued to press Ireland’s case on several fronts, with those mothballed data centres and Ireland’s favourable corporate tax regime front and centre in their arguments.

At the time, a data centre to meet Google’s needs would have cost in the region of €50 million to build anywhere in Europe. Those gathering dust in Dublin were available for somewhere in the region of €5 million. Considering Google’s relatively limited financial muscle at that time, it was a facet of the Swiss decision that didn’t make sense to some within the company, as there were apparently no available data centre facilities in Neuchâtel.

Google thought about it, but still decided that the best they could do was promise that, when they were setting up their next site in Europe, Dublin would be at the top of the list. Again it was a viewpoint the IDA couldn’t agree with. Previous experience with companies that settled in Ireland such as IBM, Microsoft and Intel indicated that once a company set up in a country, it expanded there. They doubted that, if Google ploughed funds into an operation in Neuchâtel, it would choose to start afresh in Ireland a few years down the line, rather than building on its investment in Switzerland.

Jones continued with requests to meet some of Google’s top executives and eventually got to sit down with some of the decision-makers in the company’s Mountain View offices in California. He put Ireland’s “clear, up-front” tax regime on the table as a positive against the possibility of having to negotiate rates in Switzerland. He introduced them to a US company with offices in Ireland that were thriving, while a larger Swiss arm of the company struggled to justify its existence. With enough doubts planted in the minds of the people opposite him in the boardroom, Jones would soon get confirmation that Google was to revisit the decision.

On January 8th, 2003, an Austrian by the name of Gerald Aigner arrived to inspect those near-vacant data centres in detail.

Aigner’s employers required persistent questioning and almost clinical examination of the facilities, and one data-centre manager apparently communicated to the IDA complaints about the Austrian’s behaviour. But dealing with Aigner – a man described by I’m Feeling Lucky: The Confessions of Google Employee Number 59 author Douglas Edwards as Google’s “flaming sword of frugality” – was more than worth it. By the time Aigner left Ireland on January 10th, the company had all but decided it should take space in three of the available data centres.

Top brass

Then, on January 19th, some of Google’s top brass arrived in town. The visiting party included Reyes, Cunningham, George Salah, who was vice-president for facilities, board member David Drummond, vice-president of global online sales and operations, Sheryl Sandberg and Adam Freed, who headed up the company’s international product-management team.

Jones picked up Sandberg and Freed from Dublin Airport, as the pair had arrived on a later flight than the rest of the group. He finds it funny to look back now and see the influence the pair would have in bringing more employment to Dublin years later in their subsequent roles with Facebook and Etsy respectively.

The group from Google looked at business parks in Cherrywood, Parkwest and Citywest in the south of Dublin, as well as Eastpoint and Blanchardstown in the north. Back in the city, they viewed the Digital Hub, a modern workspace close to the city centre which now houses 900 people and is the location for the European headquarters of companies such as Eventbrite and Etsy.

Google’s property advisors at the time also alerted them to an alternative location, identifying the potential of a number of buildings on Barrow Street owned by developer Liam Carroll.

Within walking distance from the city centre, the location was seen by the company as having the right mix of factors to attract the type of employee they wanted in Dublin. In their California offices Brin and Page had encouraged a college campus-style atmosphere, something that was alien to Irish offices at a time when a foosball table in the canteen was about as leftfield as companies were willing to go.

The visitors decided that, once the building – which was still under construction – was complete, they would rent 60,000sq ft of Gordon House on Barrow Street. It’s a choice still seen by those in the IDA as a seismic shift for investment in Dublin. The agency – and many others, including senior Google employees – feel the decision was directly responsible for many other Silicon Valley names, such as Twitter and Facebook, choosing to set up shop nearby.

To bookend this particular scouting mission, the then president of Dublin City University, Ferdinand von Prondzynski, hosted a dinner on January 21st, 2003 for the visitors, and the decision was virtually confirmed that night to IDA officials. Nine days later, The Irish Times reported that the delegation’s visit indicated a deal was close for the company to set up a European sales, marketing and technical-support centre in Dublin.

This wouldn’t be confirmed for another six weeks though, and estimates suggested the company could employ just over 200 people once it moved into Barrow Street. Now the hard work began.

For anyone who has taken a stroll through the company’s current docklands base, viewing the facilities that greet the 2,500 or so Googlers (yes, the term is used in the office alongside ‘Googliness’ and other variants), it’s hard to imagine the initially tiny remit of the company’s operations here.

Today, as you go from floor to floor, you’ll pass a restaurant serving food from around the world, you’ll see all manner of games – from chess to pool – being played, and you’ll notice a gym, a swimming pool, gaming consoles, toy cars rumbling along the floor, wonderful views of the city and a glass skybridge that connects three of the company’s four buildings in the area.

In the Dublin office more than 65 languages are spoken by employees from 60 countries. They’re having to speak about all types of Google innovations too. These days, the company is involved in areas as varied as modular mobile phones, intelligent home heating, wearable devices and gesture recognition.

Although its tax position raises eyebrows in many quarters, the company has been a hugely positive presence in Ireland and, in particular, the docklands. Aside from the time Google wiped Co Limerick off the map, things have actually been relatively controversy free.

To be fair, they didn’t actually annihilate an entire county. They were simply accused by a local politician, Fianna Fáil TD Niall Collins, of denying Limerick’s existence on Google Maps. It was, however, just a technical hitch with the tool’s zoom function. Google’s expansion plans for Ireland aren’t quite that drastic.

This is an edited extract from Silicon Docks: The Rise of Dublin as a Global Tech Hub, edited by Pamela Newenham and published by Liberties Press in paperback and as an ebook. The book is in bookshops nationwide, priced €17.99

Content supplied with the permission of The Irish Times Ltd.
For more see www.irishtimes.com

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