

Patrick Collison: Could Stripe have been started in Ireland? - chinmoy
http://patrickcollison.com/post/stripe-ireland

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petenixey
As I'm sure Patrick knows a first degree of accuracy you could of course
substitute "Ireland" for "outside Silicon Valley" and the point about
acquisitions is especially well made.

Even in London we're seeing that the companies here are giving investor
valuations that simply 1/5 of the valley and on most levels I have to say that
I can't blame the investors for their pessimism as there are so, so few exits
here.

Exits (large or small) perform three important roles for establishing a
startup scene:

1\. They create wealth for founders who are themselves much more likely to
become investors

2\. They create wealth for investors. Whether an investor is actually in on a
deal or not this changes their attitude and their optimism and makes them more
likely to invest due to the perceived good climate

3\. As Patrick said, they increase the likelihood of high calibre individuals
doing startups. Good people can do very well in other jobs and if they see the
likelihood of success in a startup as being negligible, they'll stay
elsewhere.

All of these three tend towards self reinforcement which is powerful. It's
worth noting that none of them depend on the net P&L from angel investment to
be positive, only that the net gain in perception to be positive.

One of the simple reasons it's very hard to sell the types of companies we
discuss on HN outside the valley is that to sell a company you really need to
actually meet someone willing to buy a company. These things still tend to
start face to face.

Outside the valley there are far fewer biz-dev teams and, perhaps more
importantly, far fewer engineering teams. The types of companies that create a
lot of wealth are usually product focussed and get bought by product /
engineering teams. Most of those acquiring teams are based in the states. FB
only has a very small outpost in London and while Google's is huge and does
include engineering it's predominantly sales support and does not (as far as I
know) make many purchases.

I was fortunate enough to be able to sell my last startup (Clickpass) but
there is no way that would have happened outside the valley. For that reason
among many others we're moving back out to SF in January. I love SF and I'm
happy to move back but sad to leave London and my life here too. However I too
have come to the conclusion that it simply doesn't make sense to be outside
the valley, you just set the odds too far against yourself.

~~~
grey-area
If you're not planning on trying to sell your company early, it doesn't matter
whether there are companies nearby who might buy it. I agree it's still going
to be harder to do elsewhere at present as getting funding for further
expansion might be harder, but it is possible to bootstrap to success, and
going for an early exit is not the only route startups can take.

~~~
petenixey
Nobody plans to crash when they travel on a plane but that doesn't mean it's
not worth knowing where the exits are ;)

~~~
grey-area
Yes of course, I just think it's unhealthy to focus on selling a company
early, when the ideal result would be to be a grow to a point where you have a
choice of selling or expanding. I'm sure in your case this wouldn't apply, but
focus on an exit at all costs can distort perspectives and encourages
companies like color which spend a lot of money without bothering to produce
anything people want.

~~~
pg
In practice, either can work. We consciously built Viaweb to sell.

~~~
YuriNiyazov
Could you describe in detail some of the "We can do either X or Y, but because
we are building this to sell, we will do Y" situations, for specific values of
X and Y?

~~~
pg
The first that comes to mind is raising a series A. You should not do that if
you want to sell early.

------
kirian
Domestic market size is also a huge factor. The market in Ireland and indeed
many other countries is simply too small for a startup like Stripe to be
viable. It would have to target international markets/the US from the get go
with all the complications (regulatory and otherwise) that go with that.

~~~
DVassallo
The domestic market of any company in the European Union is, in theory, the
entire EU population: ~503 million people[1].

[1] <http://en.wikipedia.org/wiki/European_Union>

~~~
kirian
In theory yes but not really in practice. The market is not nearly as
integrated as the US market, still regulatory differences, language
differences, cultural differences.

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sigsergv
I really don't understand. What will stop “tech giants” from buying startup in
Ireland? What the difference? All majors are international corps and it's
really doesn't matter where the promising company located, moreother Ireland
is an english speaking country that's a huge bonus.

~~~
btilly
The people at the "tech giants" who would be involved in such a buying
decision are by and large located in Silicon Valley, and by and by likely to
hear about things happening in Silicon Valley.

Furthermore if a tech giant buys you, they are hoping that you will grow. This
requires making hires that are easier if you are in Silicon Valley. Questions
about your prospects for making those hires somewhere else limit the top-line
growth that they can hope for.

Moreover if they wind up buying something away from Silicon Valley, they know
that there is likely to be less competition for the company, so they can
probably get a better price for the same prospects.

~~~
pbiggar
In addition, talent acquisitions rely on the high cost of getting engineers.
That means there has to be high demand relative to supply. In SV there is high
demand right now even with a large supply, allowing talent acquisitions of
$1.5m per dev.

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netcan
_But I’m not sure that asking whether Stripe could have been started in
Ireland is the right question. Most technology start-ups don’t have to
convince banks to work with them._

Then again.. difficulty getting banks to work with them is itself am instance
of something. Confidence & interest potential partners, customers, employees
and such have in startups may be one of the factors making a place favourable.

------
stygianguest
Having never been there. Are silicon valley hires really that much better than
those found elsewhere? The most ambitious surely. Perhaps very hard working
(as a consequence perhaps). But really significantly more able?

~~~
herge
Well, the issue is not hiring one or two good people, which is completely
possible in Dublin. It's how to go from a team of 5 to a team of 40 or 50
within a year. Silicon Valley is one of the few places that have the depth of
talent to do that.

~~~
petercooper
It's also worth remembering that this article and discussion is all about
engineer-heavy tech businesses. Silicon Valley is the nexus for that industry
but if you were trying to launch a magazine, say, SV would be as pointless a
place to start as Ireland, when instead New York or London would be the
equivalent of SV.

------
zerostar07
The usual reasons, although i suspect the real stopper is #1 , regulations and
having to work with banks. Don't forget paypal been established as a bank in
europe and often has to walk though regulatory mazes.

~~~
herge
The banks in Ireland are another affair entirely, but in terms of government
regulations, things are surprisingly light weight for a country in the euro
zone, and are probably better than the US in many domains.

As I heard a startup founder say recently: "One of the strengths of Ireland is
that we will happily adopt the business practices of any foreigner in
replacement of whatever use to stand for business practices the country had in
the '80s."

~~~
lucaspiller
Also the commercial taxes here are ridiculously low for the EU, which is why a
lot of multinationals have their EU operations here:

[http://en.wikipedia.org/wiki/Corporation_tax_in_the_Republic...](http://en.wikipedia.org/wiki/Corporation_tax_in_the_Republic_of_Ireland)

And:

<http://en.wikipedia.org/wiki/Double_Irish_arrangement>

~~~
raverbashing
On the other side, income tax is one of the largest in Europe.

[http://en.wikipedia.org/wiki/Taxation_in_the_Republic_of_Ire...](http://en.wikipedia.org/wiki/Taxation_in_the_Republic_of_Ireland#Rates_of_income_tax)

~~~
qwerta
Income tax is actually very low.

In many countries tax is masked various ways. For example there is 'social
insurance' and 'health insurance' calculated from income and de-facto is
income tax. Also your employer has to pay 'contributions' which also depends
on your income.

Real income taxation in country like Germany is typically between 50% to 80%
for any decent software developer.

~~~
raverbashing
You're right, several things can be considered 'income tax' even though not
called that way.

Didn't know that for Germany, interesting.

I guess the point is: compare cost of life and take away salary rather than
raw salary figures.

Still, lower take away salary may be a handcap in attracting talent.

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dmoo
I guess that the size of the country and the talent pool would be an issue but
it's worth remembering that Ireland also has state help for new firms with
Enterprise Ireland. The banks are pretty conservative organisations but their
current woes may lead to a rethink of how they are going to do business in the
future.

