Innovation
Global Tech Clusters: Dublin's Silicon Docks - - marketing label or cluster? - Part 2
By Michael Hennigan, Finfacts founder and editor
Mar 26, 2014 - 6:21 AM

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Updated April report: Europe's top ICT Hubs: Munich, London, Paris in lead; Dublin with rank of 16

Global Tech Clusters:  In Part 1 of this series, we looked at the global rush to develop tech clusters that would ideally clone California's Silicon Valley with tech companies and support services located in close proximity giving rise to opportunities for collaboration - - we also noted recent US research, which shows that proximity to research universities is not an important factor. In the rest of the series, we first look at Dublin, and we explore if 'Silicon Docks' is an actual cluster or marketing label just like terming Ireland the "capital of digital world" and then we continue with London and Berlin in further installments.

Hype, which is usually a more polite term for bullshit, is a handmaiden of high tech and last October at the Dublin Web Summit, Enda Kenny, taoiseach/ prime minister, bizarrely declared Ireland the new "capital of digital world."

Blarney or reality?

The companies that win big are not usually the pioneers but uneasy is the head that wears the crown. As we noted in Part 1, Europe has few winners.

Media Lab Europe

Media Lab Europe (MLE) was the first high tech cluster in Dublin and it was a disaster.

The project was a collaboration between the Irish Government and the Massachusetts Institute of Technology (MIT) and at the announcement in 1999, Bertie Ahern, then taoiseach, commented: "We are delighted to work in partnership with MIT to develop a new research and development institute, modelled on and inspired by the MIT Media Lab. The fusion of MIT's proven expertise with the youth, energy and creative talent in Ireland will create a world-class institute. And by locating Media Lab Europe at the heart of an exciting new multimedia village in Dublin, we will reinforce our message that as a small country Ireland can nonetheless make giant progress on the world economic stage."

The project began operations in 2000 in a former Guinness brewery warehouse in central Dublin and the focus was on university level blue-sky research in telecommunications and information and multimedia technologies, including the Internet and digital commerce.

The revenue model was dependent on collaboration with private sector companies and the MLE needed about €10m a year from corporate sponsors to survive.

Dot-com hysteria was at its peak and more than 30 small firms were attracted to the area but in 2003 alone, €8.16m was spent but revenue was at only €2.56m.

A report by the Comptroller & Auditor General showed that payments totalling €24.9m and €10.6m were made from the Exchequer to MLE  and MIT respectively between 2000 and 2003. In addition the State leased property that had cost €22.5m to MLE at a nominal rent and undertook to pay €1.27m per annum for seven years to the Higher Education Authority (HEA) in respect of collaborative research projects between MLE and Irish universities.

The MLE was shut in January 2005.

A March 2005 report in The Tech, MIT's newspaper, painted a picture of chaos rather than collaboration:

Among the recently released papers was a Strategic Plan from May 2004, which described working conditions at Media Lab Europe as 'hell' and 'chaos,' with 'inmates running the asylum,' poor management, and conflicts between MIT and the Irish government, according to the article.

Media Lab Europe was founded in 2000 as the European arm of the MIT Media Lab, specializing in digital technologies, according to the Media Lab Europe web site. It was closed on Jan. 14 because the Irish government and MIT could not come to an “agreement on a new funding model for the organization,” per the Web site.

The lab was initially funded by the Irish government and was intended to become financially independent through funding from corporations. The failure of this to happen led to the generation of the Strategic Plan to the government and MIT last May, according to the web site.

Media Lab Asia, located in India, was created in 2001 and closed in 2003."

The Irish Government paid most of the costs and a decade later when it comes to collaboration projects, nothing has changed.

Digital Hub

The Digital Hub Development Agency (DHDA) was established in 2003 by the Irish Government, with responsibility for the management of the Digital Hub.

Media Lab Europe was its flagship tenant  and its focus was to develop a cluster using restored Guinness brewery buildings and others within the old town Liberties/Coombe area in Dublin's city centre. The core development, of some nine acres, was focused on either side of Thomas Street  -- just a short distance from Dublin landmarks - - Dublin Castle, the former seat of English power in Ireland, and the cathedrals, Christ Church and St. Patrick's where Jonathan Swift was dean.

The plan was that the cluster would have about 3,000 employees in 2012.

On Monday this week, the Digital Hub announced that Knightsbridge Student Housing will invest an estimated €40m in developing facilities which will consist of 125,000 square feet catering to almost 500 third-level students.

As part of the project, Knightsbridge will also refurbish a 19th Century Grainstore building on the Digital Hub campus. It is believed the building was originally part of the historic Marshalsea debtors’ prison located in The Liberties. It subsequently served as a grainstore for the Roe Distillery. The refurbishment will require an investment of €3.51m, and will provide the Digital Hub with an additional 10,650 square feet of enterprise office space. Work on the refurbishment will commence in May, and is expected to be completed within a year.

The Hub hosts about 70 companies employing more than 800 people and it claims that 170 companies (survival rate not known) have progressed through the enterprise cluster at the Digital Hub, including some well-established names such as Distilled Media Group (Daft.ie), Havok, Houghton Mifflin (Riverdeep), Amazon, Gala Networks Europe and Kavaleer.

The agency has about 14 staff and in 2012 it had an accumulated deficit of €42m.

Leonard Donnelly, chairman of the DHDA, said in the 2012 annual report [pdf] that "the opportunity for SMEs in the tech sector to innovate with the big-spending public service departments and banks is very limited, given that their IT spend in the main is channelled into the large tech multinationals located in Ireland. This experience puts a gifted indigenous tech sector at a material disadvantage. There are exceptions, but there are innumerable areas where public procurement can be used to stimulate innovation in SMEs, alongside the major international tech corporates currently supplying IT software and services. "

Donnelly added:

Ireland is inherently a conservative culture, which seems amazing given the explosion of credit that led to the economic bust. Things are very much back to the old days, and austerity covers a multitude of sins in the process. A phrase often heard in the Irish public service is ‘festina lente’ (hasten slowly). At one level, this attitude promotes a sense of caution but, unfortunately, it does not work in digital and technology-based industries anywhere else in the world. You certainly won’t hear that in Mumbai! Therefore, the preparation of the National Digital Strategy announced by Minister Rabbitte is an exciting development, well overdue, and should at all costs not be impregnated with unproductive conservatism."

Most high tech firms remain small and a small number are acquired by bigger overseas firms.

Havok, the maker of the middleware software for games, was acquired by Intel, the chip giant, in 2007.

The number of people working in the Digital Hub is 0.04% of the Irish workforce.

Silicon Docks

In recent times, the area of the south inner city Dublin around the Grand Canal Dock - - near the confluence of the Grand Canal, and the rivers, Liffey and Dodder -- has been developed and several American companies, led by Google on Barrow Street and Facebook, Twitter, LinkedIn, Dropbox, venture capital companies and others, in other office buildings in the area.

The use of the tag 'silicon' to evoke Silicon Valley is more a marketing label than reflecting a tech cluster.

The companies do not generally do any research.

Their main functions are sales, customer support, general administration and data infrastructure. Most of the employees are from outside Ireland because of the demand for fluency in European languages.

According to an interview feature with John Herlihy, Google Ireland's chief, in The Sunday Independent, 71 nationalities are employed in Barrow Street and about 30% of the 2,500 total are Irish.

Capital of digital world?

No.

Finfacts:

Dublin Web Summit 2014: Separating hype and reality - Paddy Cosgrave, co-founder of the Web Summit commented in a tweet: "Phenomenal level of research + info in this post about Irish tech policy & startups in general"

Global Tech Cluster Rush: More failures than successes likely - Part 1

Irish Innovation: Startup fever and Ireland's dumb enterprise policy - Part 1

Irish Innovation: Israel as Startup Nation, why not Ireland? - Part 2


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