Last April, I discussed Enterprise Ireland’s assertion that it is the largest venture capitalist in Europe. At the time, I found this surprising because I had always thought the largest European funds available were in Israel, but Enterprise Ireland presumably excludes Israel as outside of the European Union! More recently, I have heard concerns from the start-up sector that, although Enterprise Ireland has done valuable work to improve the seed and early-stage funding of new ventures, there may be a dearth of funding for follow-on and growth-stage development.

Enterprise Ireland has committed €175million of taxpayers funds into its 2007-2012 Seed and Venture Capital Scheme. As of December 2010, Enterprise Ireland reported that nine new funds had been launched as a result, with a total capacity collectively across all of them of €551million, of which €152million has come from Enterprise Ireland. As of the same date, these nine funds had so far invested in total just €80million.

There are a further 15 funds, with a total capacity of €473million, still operating under the corresponding Enterprise Ireland scheme which concluded in 2006. These funds had invested €345million, as of December 2010.

Thus in total, the Irish indigenous seed and venture capital sector had (as of the end of last year) approximately €1,024million available, of which €425million had been invested.

In the first six months of 2011, the Irish Venture Capital Association has reported further investments of €162million by its member firms. Thus a total of some €587million has now been invested, out of the €1,024million available.

At first sight, it would thus appear that the indigenous venture capital industry is reasonably well positioned to both continue to engage in both early-stage and follow-on financing, with just over 43% of the total funds raised yet to be invested.

These figures are for the domestic seed and venture capital industry, and exclude the Innovation Fund Ireland initiative which targets international venture capital firms to establish an Irish presence. Enterprise Ireland has allocated €125million of taxpayers funds to this additional initiative, with a further €125million of public funds from the National Pension Reserve Fund.

There has been strong interest by Enterprise Ireland in supporting seed and early-stage companies, particularly via its High Performance Start-Up (HPSU) programme. Its 2010 annual report notes that 80 HPSU companies received seed-stage funding during that year (for a total investment of €19million), and a further 17 received follow-on funding of (just!) €2million.

Some of the domestic funds have responded to this emphasis on seed and early-stage funding. As just one example the Equity Fund III LP, a €105million fund run by Delta Partners, had made 31 investments in seed and early-stage companies by the end of last year, investing in total some €25million. The fund thus still had an €80million in reserve for follow-on funding of at least some of these 31, along with any further new investments which the fund may make. However there are industry rumors that some of the other indigenous venture capital funds may not be so well placed: in some cases there are issues with small fund sizes, and in others over-commitment to earlier investments which have yet to exit.

Clearly, managing financing over the life-time of a start-up company requires some careful strategising. A classic funding sequence for an innovative company is first the seed-stage, to build a proof of concept for the venture; then a Series A investment to start to build out the initial revenue; then a series B investment to further grow the company; then a series C investment to prepare the company for an exit by way of a public offering or possible sale to another company; and perhaps a series D or even series E if the company has still not developed sufficiently to be able to exit or to be self-sustaining. Some industries – in particular web, gaming and social software – may require relatively little investment and rapidly proceed to either successfully grow or fail. Others – particularly pharmaceuticals and biosciences – can require substantial investment sums and in general proceed relatively slowly over several years.

The actual size of the various rounds can vary tremendously. US funded rounds tend to be larger than European ones, and capital intensive sectors, like semiconductors and bio-sciences, tend to require higher amounts than other sectors. A Series A round may typically vary from between €1 and €10million, and a Series B from €5million to €50million: although higher Series B are possible – for example the recent €80million Series B transaction for Airbnb (an accommodation service). In general, Series C, D and E tend to be within a similar range, ie €5million to €50million. It is very rare for a single venture capital firm to exclusively fund any particular round, and thus a small syndicate of venture firms typically co-invest for each transaction, sharing the risks and rewards.

When a venture capital or seed fund makes an early-stage investment in such a company, it is clearly important that it can “follow its money” and invest as necessary in the subsequent funding rounds. If it cannot do so, then there is a danger that new investors (such as other venture capital firms which specialize in opportunely picking later-stage, rather than early-stage, investments) will substantially dilute the position of the early-stage fund. Furthermore, it is not unusual for later-stage investors to demand a preferential position over other investors, particularly if they sense that the earlier investors are in a vulnerable or weak position. When a company is eventually sold for some sum, such “preference shares” may result in later-stage investors not only getting their own investment back in full ahead of earlier-stage investors, but also then profiting from the division of any remaining sum even as the earlier-stage investors have yet to recoup their own investment, let alone make a profit. Given the relatively small sizes of some of the Irish venture funds by international standards, and the need for high potential companies to be well funded to be able to globally compete well, clearly there can be challenges in developing the optimal investment strategy for an Irish fund.

While a weak early-stage funding strategy may be damaging for the seed and venture capital firm concerned, it is all the more concerning if Enterprise Ireland funds – taxpayers money! – are involved. Every fund which receives support from Enterprise Ireland has a clear obligation to the Irish taxpayers to ensure that there is the best return for the State. Any fund manager which takes Irish public funds but does not ultimately generate a reasonable return on those funds back to the State, as a consequence of a poor investment strategy, would clearly be failing the national expectation.

In the event,  at lunch time today as I post this it appears, from the preliminary election tallies,  that Michael D. Higgins will be the next President,  and so sincere congratulations to him and his team.

My article below discusses an initiative which I hope the new President may undertake to rejuvenate the Irish economy…

Our new President is about to undertake one of the most critical presidencies in the history of the State. As we collectively shoulder an astronomical sovereign debt burden, the President should play a strong role in nurturing national recovery. Our President must invest substantial effort in promoting our international poise and raising our national confidence.

There is impressive competition, some with echos of our own candidates. Tony Tan, President of Singapore since last month, has a PhD in Applied Mathematics from Adelaide, and an extensive track record of building national research, innovation and enterprise. Shimon Peres, President of Israel, speaks not just Hebrew and Yiddish, but English, French, Russian and Polish. Dilma Rousseff was imprisoned as a guerilla and tortured in the 1970s for her protests against the military dictatorship of that time in Brazil, but now as President leads one of the fastest growing economies in the world. Tarja Halonen, President of Finland, has an extensive track record on human rights, and her work on Gay and Lesbian rights has been internationally recognised. Kompas chart topper and singer Michel Martelly is now leading the reconstruction effort as President of Haiti. Ricardo Martinell, with an MBA, an entrepreneur and a supermarket chief, but now as President has helped Panama emerge as the Singapore of
Latin America.

Our President has to be a serious player on the stage of world public opinion and highly competitive international investment. Not only will a deep appraisal of the Irish economic situation be expected, but also an ability to passionately articulate and defend investment opportunities in the face of persuasive competition. Our President needs not only to be intellectually lucid but also emotionally empathetic with the many new diaspora leaving Ireland for better opportunities abroad.

Presidents Robinson and McAleese have prepared the ground. President Robinson was widely internationally known for her positive impact on Anglo-Irish relations, her high profile visit to Rwanda, her promotion of human rights, and for her promotion of the “Young Irish”. President McAleese is internationally recognised not only for her welcome to Ireland for the Queen of England and President Obama, but also her visit to President Medvedev, the Special Olympics, and her bridge building and reconciliation. Furthermore, our Ambassador and Consular network is generally recognised as world-class. It is probably unfair of me to single out, but I have met foreign executives who were deeply impressed by our Beijing, Berlin, Hanoi, Tokyo, and Washington missions, amongst – I am sure – many others.

Previous Irish Presidents have played a deep role in assisting the IDA attract foreign direct investment into Ireland, and promoting the exports of Irish indigenous companies. But now, our national business model is maturing. No longer do we only seek foreign direct investment from multinational companies, but now also foreign risk capital to invest into the expansion and growth of Irish firms. No longer do we only seek foreign executives to relocate to Ireland to build the European operations for their parent companies, but now also appeal to foreign entrepreneurs to build their next high growth venture from Ireland. No longer do we seek the back office management of foreign treasury funds through the IFSC, but also are pursuing foreign private money to grow indigenous companies.

The national clamor is for jobs, jobs and jobs. The combination of the collapse of the Irish banking sector and its persistent lack of competence in industrial development as opposed to property speculation, means that many established firms in Ireland, as well as new start-up ventures, are finding financing a challenge. And yet, as evidenced by the recent Global Irish Economic Forum held in Dublin Castle, there is certainly a nucleus of high net worth Irish diaspora resident overseas who would invest in the Irish indigenous economy if only appropriate mechanisms were put in place. I believe that were the President to champion an international foundation for investment into Irish economic recovery, then many further diaspora would join this national call. I believe that administration of such a foundation by the Office of the President would carry more tenability than being associated with any specific government department or political party. I suspect that many more entrepreneurs in Ireland would respond to a call to prudently expand their businesses and increase employment, if the call to so do were issued by the President.

The Ireland Funds raise philanthropic funds for peace and reconciliation, arts and culture, and education and community development. In contrast, a Presidential diaspora foundation for the economy would focus on commercial, for-profit, firms. There are several ways in which micro and medial financing of Irish based firms by a Presidential diaspora foundation could operate. Capital could be borrowed with larger sums available as individual companies proved their repayment record. Equity investment could be made into firms for which returns might be reasonably anticipated through share buyback or other liquidation events. Assets could be pooled to stratify and amortize risk profiles across portfolios of projects. However in all cases, the guiding principles should be that the Presidential foundation should be self-sustaining, transparent and professionally administrated.

Our President, Deo volente, Insh’allah, Dia sásta, will celebrate the centenary of the Irish Rising in 2016. By then I sincerely hope we will all also celebrate our economic recovery, the Irish Phoenix.

Originally we conceived of Sophia as a semantic search engine, targeted at the enterprise. Sophia builds its indexes over a given corpus of unstructured data and documents, and then automatically clusters together documents and data on related themes. You can then use the search interface to browse and explore. Sophia will bring to your attention related documents even if they don’t explicitly match your chosen search terms. Sophia is remarkable in that its engine directly works for a range of natural languages and so does not require reconfiguration. There is no external meta-data required: no ontology, no dictionary, no thesaurus, no RDF. It just scans your data corpus and does it all on its own.  I previously blogged an example,  showing the basic search interface.

But as well as offering our own search capability,  we quickly realised that Sophia could work to augment and improve other search engines. Whilst still offering the full search offering, we extended the core engine to automatically build and output tags, categories and themes for a given set of documents. This meta-data generated by the Sophia Digital Librarian can then be used to semantically augment other enterprise search engines and associated tools, including specifically the open source Lucene-Solr;  Google Search Appliance;  Microsoft FAST and Sharepoint; MarkLogic and others.

I’ve been road testing the Digital Librarian against one or two other semantic tagging generators. In particular Thomson Reuters have a very interesting and competent generator in OpenCalais. This was acquired by Reuters from ClearForest in 2007, and has been extended and improved. In particular it added “social tagging” in 2009.  It uses a top-down semantic approach, using natural language processing (currently the website says it supports English, Spanish and French);  Artificial Intelligence techniques, and pretty enormous databases. Based on what I have read on their web-site, the social tagging functionality is so far limited to English and unavailable in French and Spanish.

Anyway, I set up Sophia and OpenCalais side by side to compare and contrast. Sophia does not (yet..) do entity extraction, which OpenCalais does well in identifying specific named individuals, locations, etc.  On the other hand, OpenCalais does behave idiosyncratically from time to time…

OpenCalais is part of the Linked Open-Data cloud. According to its website when analyzing a document, it currently uses DBpedia, Wikipedia, Freebase, Reuters.com, GeoNames, Shopping.com, IMDB and LinkedMDB to help “understand” a given text.

Sophia, by contrast, has to be explicitly built over a corpus. As a test and online demonstration, the New York Times archives annotated corpus (with permission) containing 1.8M documents, from January 1, 1987 and June 19, 2007 are one online example available from Sophia. You need to be registered to login and try out Sophia, but it is free.

As a test case, I chose an article published within the timeline of the NYTimes archives, but not an article directly from the archives themselves. Instead (pretty much at random), I used a 19th July 1983 report from the BBC News service on the unveiling of a skeleton of a new dinosaur species at the Natural History Museum in London.

The intent of my experiment was to test the consistency of the reporting by both tools.  Starting with just a single sentence from the BBC report,  I added further sentences and compared the results as more and more text is given to each tool.   A priori,  I expected the results from each tool to initially present a fairly generic set of generated tags,   and then to improve relative to the text and its contents,  as more and more sentences are added.

The first sentence of the BBC report is “A huge new dinosaur skeleton has been unveiled to the media at the Natural History Museum in London.” Here’s what the (free) OpenCalais Viewer gave back:

The topic returned is “Hospitality Recreation”  which is probably reasonable, based on the London Natural History Museum.   The list of social tags also appears reasonable:  John Gurche is an artist specializing prehistoric life;  and the Naturhistorisches Museum is in Vienna.

As a side-note,  for some reason the OpenCalais Viewer currently only supports the Internet Explorer and Firefox browsers.  I am using Firefox here,  although my normal browser is Safari.   When I try Safari on the same examples here,  OpenCalais appears to work but in fact does give worse results than Firefox.   So,  I’m sticking to Firefox in the remaining examples below.

Anyway,  lets see what happens when we give OpenCalais the second sentence from the BBC article as well (“Plumber and amateur fossil hunter Bill Walker, 55, found a foot-long claw belonging to the flesh-eating beast at a clay pit in Surrey in January”):

As you might expect,  the list of social tags becomes improved and more relevant.

But look what happens when the third sentence (“When he found the rock containing the talon he tapped it and the whole thing cracked”) is added:

Somehow,  “he found the rock” and “he tapped it” have encouraged OpenCalais to believe that the article is something to do with Entertainment (well,  yes,  arguably);  Games,  and Electronic Games in particular!  Primal Rage is a (pretty gruesome) early game involving in dinosaurs:  however I’m not at all certain that finding a rock and tapping it are a part of the game (can anyone clarify ?).   Equally,  OpenCalais has decided to drop the Natural History Museum (even though it is explicitly given in the first sentence),  and the United Kingdom.

Its not at all clear to me at least,  why OpenCalais is behaving in this way.   Certainly it is quirky,  to be polite

Let’s throw in the fourth sentence (“Palaeontologists reconstructed it and dated the remains at 125 million years old, describing them as the find of the century”):

The fourth sentence has caused OpenCalais to return the same set of social tags although, interestingly,  the weighting given to the “Hospitality Recreation” has decreased from the three stars it had been previously given.

Let’s throw in the fifth sentence (“The scientists had to wait for the clay to dry out before they completed a two-week excavation in May when they filled three vans with bones”):

Early on Valentine’s Day in 1876, Elisha Gray, founder of Western Electric, dashed to the patent office in Washington DC to file a notice (a caveat) that he was in the process of inventing a new device called the telephone. His notice was duly registered into the office’s cash ledger at lunch time.

In the interim, however, Alexander Graham Bell’s lawyer had gone to the same office to register Bell’s patent application for a telephone, demanding an immediate entry into the cash ledger. Ten years later and by a single vote, the US Supreme Court upheld Bell’s claims over a case brought against him by Gray and the well-funded Western Union Telegraph Company.

Now the US has another patent war over the telephone. When Steve Jobs introduced the iPhone in January 2007, he noted: “Today, Apple is going to re-invent the phone . . . We’ve filed for over 200 patents for all the inventions in the iPhone and we intend to protect them.”

The iPhone was a revolution, introducing a relatively large touch-screen, keyboard-free, combined phone, music player and internet browser. The industry had to try to respond: Apple does not license its iPhone software to others. In November 2007, Google released its open-source Android smartphone software, and handset manufacturers appeared to be offered a lifeline. Nokia, the then market leader, tried to go its own way but has since stumbled badly. A number of Asian-based handset makers embraced Google’s intervention, however.

Jobs has now acted on his 2007 threat. Last March, Apple sued the Taiwanese handset manufacturer HTC, alleging infringement of numerous iPhone patents in its Android-based handsets. The next month, Apple sued Samsung for “slavishly” copying both iPhone and iPad tablet patents in its Android-based Galaxy smartphone and Galaxy Tab computer.

A few days later, Samsung countersued Apple alleging infringement of a number of its wireless technology patents. Both companies are now lobbying the US International Trade Commission to prohibit sales of each others’ products in the US.

As a backdrop, Google’s development of Android has led to accusations by Oracle of patent infringement relating to Java technology, which Oracle obtained by its acquisition of Sun Microsystems.

Meanwhile, Apple, Microsoft, EMC and Oracle are seeking regulatory approval to buy about 800 wireless-technology patents from Attachmate for $450 million, which the latter now owns as a result of its acquisition of Novell. Microsoft has said Google rejected an invitation to join the consortium in acquiring these patents.

At the same time, Apple has partnered with Ericsson, Microsoft, Oracle, RIM and Sony to buy about 6,000 wireless-technology patents from Nortel (under Chapter 11 restructuring) for $4.5 billion, five times Google’s initial $900 million offer. Google’s chief legal officer David Drummond recently accused its competitors of a waging a campaign against Android, and that “bogus” patents are being used to “strangle” Android. So perhaps we should not be surprised by Google’s audacious purchase of the Motorola Mobility division for $12.5 billion, including 24,000 patents.

What does this all mean for us? Almost certainly, continuing high prices for smartphones, as manufacturers and software companies charge consumers for the costs of the royalty payments they make to patent holders. Some may argue that this is only fair if society is to benefit from continued innovation, and if inventors are to be encouraged.

But let’s consider the contract that society and inventors undertake. Society grants an inventor a patent so that the inventor publicly discloses his invention, thus advancing the state of the art and encouraging learning, and even more innovation. The invention is expected to be novel, useful and not obvious. In return, for a set period, society grants the inventor the right to prohibit others from using the invention in its products. The inventor may use the patent directly, or choose to license the patent to others, and so benefit from royalties, or even sell it to another party.

However, the inventor or patent holder may do nothing at all. Instead of using the patent, the invention stagnates and is kept in reserve as a defence should a competitor ever claim a patent infringement against the owner. Thus, some parties build up patent war-chests, much as the Cold War led to nuclear stockpiles to deter an enemy via a Mutually Assured Destruction response. A “my assets are bigger than yours” accumulation strategy clearly encourages patent mass-production, with many of them being of questionable quality and limited practical value.

Is there an alternative? “Use-it-or-lose-it” provisions and case history appear in trademark legislation in some jurisdictions: if a trademark is stagnant, or incorrectly applied, the trademark holder may lose it in a court challenge by a competitor.

Patent legislation could be extended so that during the period of exclusion offered by a patent, a competitor could bring a court case requiring a patent holder to demonstrate that the associated invention was being used to the benefit of society. The patent holder would then need to show in court that either it was using the patent in goods, services or processes, or that one of its licensees was so doing. A “use-it-or-lose-it” provision would concentrate minds, affect reputations and arguably reduce the number of dubious patent filings.

I am not convinced that the current patent war in smartphone technology is good for the industry, let alone consumers and society at large. New thinking in patent legislation is timely, and is an opportunity to take an international leadership position.

When Steve Jobs introduced the Apple iPhone in January 2007,  he noted: “Today,  Apple is going to re-invent the phone”.  Steve further observed “We’ve filed for over 200 patents for all the inventions in iPhone and we intend to protect them”.

The iPhone was indeed a revolution in the mobile phone industry,  introducing a relatively large touch-screen, keyboard-free, combined phone, music player and internet browser. Steve also made a strong point of his co-operation with Google, announcing that the iPhone would be shipped with optimized versions of both Google Maps and Youtube. He invited Eric Schmidt, then the Google CEO, on to stage at the iPhone launch. Schmidt joked that the two companies should join. “If we merge the companies we can call it AppleGoo,” said Schmidt according to In the Plex. “But we can merge without merging.”

As reported in the book, Steve appears at that time to have considered himself a friend, and even a personal coach and mentor, of the Google cofounders, Larry Page and Sergei Brin. Steve had invited Schmidt onto the Apple board of directors the previous April, and the informal contacts between the two companies were obviously strong.

However, in November 2007, cracks started appearing. Way back in 2004, Schmidt had stated that Google was not going into the mobile phone business. However I suspect that Larry Page disagreed, fervently believing that mobile computing was becoming increasingly important, and would be a growing source of Google search requests. The average smart phone user might run say 50 searches a day from their phone, and click-through on a few ads each day. Each click could earn Google on average about 25 cents. For every 100 million smartphone users clicking away,  advertising revenues could easily approach US$30B in revenues/year. There was a threat to Google that Microsoft might capture the mobile phone operating system market and so drive mobile phone searches and click-throughs away from Google. I believe that probably to keep Larry happy, Schmidt authorized Google’s August 2005 acquisition for an undisclosed sum of a little known 22-person start-up called Android.

With the iPhone announcement, the mobile phone industry had to try and respond, since Apple does not license its iPhone software to others.  I suspect that Larry was almost certainly concerned that Microsoft was being too slow to respond to the iPhone threat. It might therefore only be a matter of time until Apple and not Microsoft captured the smartphone market, and also until Apple rather than Microsoft started to benefit from smartphone originating searches and click-throughs. I would think that at that time Larry did not want to be seen to confront Apple directly, and so convinced Schmidt that the time was opportune to disrupt Microsoft’s plans. And so in November 2007,  Google released its Android smartphone software via its open handset alliance. Google was apparently making a platform play for mobile handsets, trumping Microsoft’s attempt to do so from the latter’s platform play for PCs. But I suspect that perhaps Larry quietly understood that Android was also a counter to the iPhone threat.

In the following summer (2008), Steve visited Google and was shown the Android for the first time. It was suddenly obvious to Steve that Google’s new phone software would not simply be a competitor to Microsoft’s Windows Mobile, as Steve had both thought and been led to believe, but potentially a direct competitor to the iPhone. The Android version shown to Steve apparently had multi-touch frameworks and pinch-to-zoom. Steve went ballistic. He apparently felt betrayed by the two young men whom he had been mentoring. Under pressure from Steve, Schmidt ensured that certain features were then removed from Android, and these did not reappear until two years later, in February 2010.

Schmidt’s position on the board of Apple probably became tenuous as Steve’s mistrust and sense of betrayal intensified,  and as the book suggests. As Google followed Android with the Chrome browser and lite operating system, Schmidt had to recuse himself from certain discussions at the Apple board. Subsequently it transpired that Steve, and the remainder of the Apple board, had kept the development of the iPad secret from Schmidt. Schmidt resigned from the Apple board in August 2009.

In January 2010, Apple launched the iPad. Shortly afterwards an Apple townhall for employees, Steve said: “We did not enter the search business. They entered the phone business. Make no mistake they want to kill the iPhone. We won’t let them.”

I think that Steve had clearly decided Google were an enormous threat to Apple. A counter-strategy was needed. This probably became even more evident as he learnt of Larry’s increasing power and Board support in Google, culminating in Schmidt handing over the CEO role to Larry in April this year. While Schmidt had provided the “adult supervision” at Google, Larry would want to make a big statement and a huge play in the industry, asserting to the world that Larry was a dynamic re-energizing force for Google after Schmidt’s reign. Larry would want to do something big.

Steve had already had key patents relating to iPhone smartphone usage and ergonomics. He had already made it clear to the industry at large at the iPhone launch,  and again to Google after he was given a personal demonstration of the Android, that he intended to go after anyone who infringed them.  I think that he suspected that Larry wanted to morph Google into a smartphone leader as well as web leader. He could go head to head with Larry in patent wars, but that would be time consuming and wouldn’t have an immediate impact on Google.  Maybe there was a better way..

I personally suspect that Steve thought it through. What better way to slow down Larry and immunize the Google threat to iPhone than to encourage Larry to have exactly what Larry wants now that the “adult supervision” was out of the way:  make Google a smartphone player? If Steve re-enforced the patent threat to Android by augmenting the Apple patents for iPhone ergonomics with wireless technology patents, then Larry would be lured into absolutely having to make a response to the growing Apple threat. Larry would therefore want to acquire a handset manufacturer, and would want to beat Steve at Steve’s own game.  Steve was a nice mentor to Larry,  but Larry would want to show the world he could be a better Steve.   Larry would want a handset manufacturer with a patent portfolio to counter Steve’s patent war-chest. And after Larry pulled the acquisition trigger, Google would be saddled with a sudden deep realization that they were no longer in the web game, but now dragged down into the tough business of physical goods and manufacturing.

I believe it was brilliant. I think that Steve went after wireless and other patents from Nortel and Novell.  Steve started going after HTC and Samsung,  alleging that their Android offerings infringed certain Apple patents.  Larry then more than stepped up to the mark to respond,  just as I suspect that Steve had fully expected him to do so.  I wonder did Steve bait Larry to buy a handset manufacturer…  And after all this has transpired,  perhaps Steve has done a far far better job mentoring Larry than Steve actually thought he had when he visited Google in the summer of 2008 and saw Android for the first time..

Larry is paying Motorola Mobility shareholders at 63% premium on their stock. Larry’s headcount is going to jump from 29,000 to 48,000 staff. Larry is going to have to understand manufacturing, supply chain and component sourcing, and physical distribution.  Larry is going to have to (and I believe he fervently aspires to..) transpose Google from a virtual presence on pixel screens to a real physical consumer brand on the high streets of the world.  Anti-trust regulators are going to distract him.  Larry is going to have to work hard to keep other Android handset manufacturers such as HTC and Samsung on-side, even as they now worry about Larry’s intentions and re-consider other mobile operating systems. The re-emergence of Windows Mobile and possibly HP’s webOS can only weaken Android, creating a divide-and-conquer for the iPhone. Larry might try and simplify his new hand by spinning-out the Motorola tough stuff, keeping the Motorola patents but selling the handset business to another Android player like HTC or Samsung: but if Larry does do this, he’ll just strengthen one Android handset player over the others, so driving the others away to Windows Mobile or HP WebOS – yet again divide-and-conquer.

Meanwhile Steve knows that Larry’s investors are trying to understand precisely why Larry just paid over 12.3B$ for patents and a manufacturing operation to support a phone operating system which Larry already gives away for free. If Larry wants to be the new Steve, then Larry’s investors are going to have high expectations that Larry can generate iPhone-like fat margins from his new Android handset business.

I think Larry has an awful lot of explaining to do, and an awful lot of proof to provide.

I was asked to talk about some of my experiences of Silicon Valley and Dublin as regards innovation;  how IONA came about,  and my thoughts on a greater engagement between academia in Ireland and the start-up community…  Given the audience,  I also took the opportunity to observe the opportunity and threat to the third level education system in Ireland posed by the internet..

My first ever trip to Silicon Valley was in 1979 as a young TCD postgraduate student. I visited the Computer Science Laboratory at Stanford University, and was impressed by some young postgraduates who had just founded a company called SUN – “Stanford University Network” – Microsystems. The trip however was torturous: a “direct” flight from Dublin to San Francisco in practice turned out to set down in St Johns, Newfoundland, for a re-fuelling stop; and I then had almost an hour-long line to get through immigration on arrival at SFO. Last week, I visited Silicon Valley for the umpteenth time: I’m chair and an investor of Gridstore which is based in Mountain View; and of Sophia, which has a sales office in San Jose. My flight was with Delta, and indirect via Atlanta; and I experienced over an hour-long queue at Dublin’s expensive bright snazzy new Terminal 2, to get through US immigration. Plus ca change.

I co-founded IONA Technologies along with Sean Baker and Annrai O’Toole in 1991. Sean and I were tenured academics at the Department of Computer Science at TCD, while Annrai was a salaried Research Assistant. One of the motivations for forming the company was my own realisation from my first trip to Silicon Valley over a decade earlier, that those who had co-founded SUN had similar backgrounds to ourselves, and that if they could do something like that, then perhaps so could we. However for me, another very major reason was a feeling that my career path within TCD was effectively blocked: as a junior academic in what I perceived as a department having a low priority for its host faculty of engineering,  which in turn appeared to have a low priority within the university as a whole, meant that promotional prospects were likely to be limited until I grew considerably older. I guess I made the right decision: in 1997, IONA had the then fifth largest IPO in the history of Nasdaq; and later IONA became the tenth largest pure play software company in the world.

Fast forward two decades later to today, and I think that the general economy of Silicon Valley is now somewhat similar to that of Ireland. In Silicon Valley, the technology industry is strongly growing in sectors such as green technology, new semiconductor and nanotechnologies, and software including of course social media. But the general Californian economy, especially the public sector, is under pressure: for those outside of the technology sector, wealth remains a struggle. Homes are being re-possessed and in places, property prices have severely collapsed. Public services, including schools, libraries, parks, local policing and emergency services, are suffering diminishing budgets. In Ireland, our technology sector – both indigenous and multinational – is doing reasonably well. However, outside the technology sector, standards of life are generally falling.

For me, there are differences in culture between Silicon Valley and in Ireland. In Silicon Valley, there is a profound fascination with technology and engineering. Many young kids want to understand how things work, and dabble in building their own. From radios, to engines, to model aircraft and rockets, to web sites, and to smart phone applications, there is a deep excitement about building things. It is not really so much about science, because scientists by their nature are detectives, diagnosing and trying to understand what already exists in our world and universe around us. Rather it is about engineering, because engineers by their nature are inventors, creating things which have never previously existed, and trying to do so safely while applying their understanding of what exists in the world and universe around us.

In Ireland, in general there is not (yet, anyway) the same intense interest in technology and engineering. On the other hand, in my view, Ireland has a stronger backdrop in arts and creativity which in turn results in inquisitive kids experimenting with design and aesthetics. In my view, Dublin has a richer arts scene than San Francisco, including visual arts, theatre, literature, and music. And I guess I’m biased,  in that one of my own pet projects is the TCD Science Gallery, which I believe brings technology and art together in inspirational ways, reminiscent of the great natural philosophers of the 18th and 19th centuries.

Interest in the TCD Science Gallery has developed worldwide, and I believe not least because of our internet presence, including our YouTube channel. Recently we hosted our first ever exhibition outside of TCD, when we took “Biorhythm: Music and the Body” to the Chelsea district of New York. It was amusing to subsequently see on the internet, 1TV – a Moscow based broadcaster – cover the event in Russian. The internet, especially social media and online video, is clearly changing the way in which we discover and learn from the world.

I believe one of the very greatest opportunities, but also the greatest threat, to the continuance of Irish third level sector (ie universities and institutes of technology) is the internet, and especially social media and online video. Many of the top universities world-wide are making much of the teaching course content available online, and frequently free. Go to Youtube, or Vimeo or iTunes, and you can find free videos and podcasts of very many academic courses. Stanford, as but one of many examples, has being doing this for over five years, and has both a dedicated website and iTunes presence.  As you can see there,  Stanford has freely available content for business, engineering, fine arts, health&medicine, history, humanities, language, literature, mathematics, science, social science, society, and teaching&education.

If the world’s top universities increasingly are providing easily accessible world class teaching content and quite possibly in due course some form of full degrees, where does that leave the remaining universities in the world ? This is a critical strategic question which should preoccupy the governing boards and presidents of all involved in the Irish third level sector.   Combined with the reliance of the Irish third level sector on greatly weakening public finances, some deep thinking is required on the future value to be offered by Irish universities.

For me, the main value offered by a university should be the nurturing of enquiring and analytic abilities; the skill to diagnose, identify patterns, and apply previous experiences; and the capability to articulate, explain and motivate. There are thus two key skills for academic staff: to teach, yes; but also to mentor, and so to cultivate minds by guidance, counsel and leadership. As more and more of the world’s very best teaching content becomes easily accessible online, the role of mentorship in many universities will surely take lead over that of teacher. Guidance, advice and consultation come to the fore, ahead of enunciation, edification and illustration.

This change in emphasis from teaching to mentorship and consultation creates an intriguing opportunity for many academics, but also I believe for many young companies founded by graduates and students. Many academics are both great researchers and great teachers, but the Irish public finances severely limit opportunities for both their promotion and salary increases. How can academics earn more in the current very difficult environment ?

One obvious way to improve one’s prospects is to start a spin-out, as Sean, Annrai and I did from TCD. However this is clearly riskful and involves a 100% commitment. I resigned my tenure (and all that that implies for job security) from TCD to focus entirely on my start-up company.  I understand that TCD (and perhaps other Irish universities) no longer require an academic founder of a spin-out to resign tenure:  however,  I believe that others involved in a start-up (not least non academic founders,  investors and even customers) will expect nothing less than 100% commitment to the venture.   Clearly, not every academic will want to start a company, and nor be willing to fully commit to being amongst its founders and promoters.

If you as an academic want to improve your financial prospects, an alternative is to direct your research to create commercially valuable intellectual property; to then license this to outside companies and so benefit from a royalty stream. You remain within your university , and your salary is augmented. This route however implies that your research can really lead to commercially valuable intellectual property, rather than general discovery adding to a common body of knowledge. It also almost certainly implies that you become dependent on the Technology Transfer Office concerned,  to find suitable licensee companies. Your intellectual property in effect competes with all the other intellectual property generated within and owned by your university to try and gain the attention of interested external parties. Creating commercially interesting intellectual property may well work for you, but is by no means easy to achieve.

A third well-proven approach to improving your financial prospects is consulting. I understand (from the TCD TTO) that the current policy in TCD is to allow any academic to spend up to 20% of their time engaging with external companies or other parties for consultancy, provided that there is prior written approval from the Head of Department concerned, and – implicitly – that your personal tax affairs are managed appropriately. Consulting is fine, but many young companies and start-ups frequently do not have sufficient capital to pay reasonable consulting fees for any length of time. Enterprise Ireland does have its Innovation Vouchers scheme which helps young companies pay for consultancy, but the sum is limited to €5,000 per company. I also assume that not all of that money ends up as consultancy fees for the academic concerned.

So, I’ld like to suggest an alternative. If you are an academic, and your students recognise you not only as a great teacher and researcher but even more so as a mentor and valued specialist advisor, then you are well positioned to act as a consultant to them in specialist aspects of their start up companies. For your students who start companies, they may well look to you for consultancy, and you may very well be able to considerably assist them. But rather than seeking payment in cash for your consultancy time – cash of which they will inevitably be short – instead negotiate with them for a small and reasonable amount of equity. This can be a specific number of shares; or an option, at your call, to buy a specific number of shares should you wish to do so at some time in the future, for a price agreed now. Receiving equity may also provide a preferential personal tax treatment over cash paid to you as income.

I think encouraging academics to consult and collaborate with the start-up and young company community, and be remunerated for their time by equity, has many attractions for all concerned. For the academic, over time shares (or options) in a portfolio of different companies are accumulated, some of which could in due course turn out to be extremely valuable. Naturally, the more companies with which you engage, whether or not they involve former students of your own, the larger your equity portfolio becomes, and the more chance you will have to receive a reasonably substantial remuneration. For each company concerned, paying a modest number of shares (or share options) maintains cash in the company whilst still enabling a substantial and meaningful consulting engagement to proceed between the founders and their chosen academics. Further, bringing one or more chosen academics onto your share register enables you to be well positioned to re-engage with them in the future for further advice, should you ever need it.

I think we in Ireland have already learnt much from Silicon Valley and no doubt have even more ahead. However, we have our own strengths too, not least a strong culture of art alongside technology. If we strategise carefully, perhaps we can achieve an ever deeper co-operation between academia and industry whilst still preserving the independence of both.

I really took some artistic license in trying to find a real world analogy,  and anticipated possible flames from one or two in the tech community who doubtless would see flaws in my arguments and metaphors.   None yet however,  but maybe they’ll still come

How do you explain what’s happening in the software industry?

Let me give you an analogy. It used to be as if various software companies made certain sports equipment – like different balls, bats, nets and so on – while some other software companies constructed different arenas, pitches and recreation halls. People could then assemble the requisite equipment together and play their favourite sport.

Then along came Microsoft. Microsoft had vision: it combined things together. Microsoft built and sells integrated multi-purpose stadiums. You can play football, baseball, hockey – most major sports – within their very impressive buildings.

Thus Bill Gates, and other Microsofties, made an awful lot of money.

But then it was as if Google said maybe people would like to find out where the various stadia actually are; what teams are playing; and what are the scores. Pretty soon Google realised that different people follow different teams: when Ross O’Carroll-Kelly asks about “the team” he doesn’t mean Martin Johnson… Thus Google realised that it could deliver precision advertising: e.g. targetting D4 citizens who have malossol for breakfast.

Thus Sergei Brin and Larry Page , and other Googlers, made an awful lot of money.

Then Google decided to take on Microsoft. Google were clever: rather than a head to head confrontation, they instead changed the industry dynamics. In embracing the internet and web much more aggressively than Microsoft, it is as if they went out to the public parks and playing pitches. They said that any sports team, and everyone else, can play here. They encouraged people to develop entirely new sports games, along with the traditional ones played in the Microsoft edifices. Google suggested that there was no longer any need to pay Microsoft in advance to build expensive multi-purpose stadia, but instead come and join everyone else in these wonderful wide open spaces.

Google then said if you really really really want, you can find out what is going on by using personal computer.  But a much better way is to use your Android smart phone. Your phone fits in your pocket,  unlike your PC: not only can you use your phone to call somebody, but we can make it aware of what is hip and happening.

Google re-postioned familiar Microsoft concepts. Google Documents is akin to Microsoft Office, but in the community world-wide cloud. GMail is like Outlook, but in “the cloud”. You need a filing cabinet system, like Windows, but you can have it in the cloud: thus your smart Android phone can access that very same document in Google Docs which you editted from your Windows PC. It is as if Google had said that football needn’t always be played in a stadium; basketball needn’t always be played in a gymnasium; and you can enjoy and participate in any game anywhere even if you don’t have an arena.

Cloud computing changes the dynamics. You pay-as-you-go, rather than the pre-paying to buy software. You can access information from any device – your personal computer, your office computer and your smart phone. Provided you have a modest broadband connection, you can join in from pretty much anywhere on the planet.

But clouds are nebulous, bright and dark. Some businesses and consumers believe that cloud computing is unproven and unsafe. Their fears were dramatically confirmed last April when Amazon’s cloud infrastructure failed for several days, and in so doing badly damaged businesses which had outsourced their computing requirements to Amazon.

Joni Mitchell sang that that she had seen both sides of clouds, up and down, and that she really didn’t know clouds at all. Last week Steve Jobs stepped forward and asserted to all doubters and unbelievers: absolutely no problem, you don’t need to.

It as is if Bill built multi-purpose stadia; Sergie and Larry went for the open public park; and Steve has gone for his own play pen. Steve offers a limited set of Apple toys, and they all work wonderfully together. Steve provides his shop, the App Store, and you can buy more toys there if you want. Now, Steve in effect will offer you your own cupboard (its called “iCloud” but don’t worry about that) which will automatically preserve everything for you. Everything just works as fully as you expect it to.

By building a controlled environment, Apple have cleverly constructed a collection of devices, content and experiences for the consumer masses. Rather than have you google to try and track down information on the world wide web, Apple instead provides a wide range of pre-packaged applications (from both its own developers and third parties) each of which is individually crafted, with easy to understand graphics, to do just a specific task. And now, as you move from your old personal computer (as long as its a Mac!), to your smart phone (as long as its an iPhone!), or even to your new personal tablet (as long as its an iPad!), then everything you use and like will automatically be right in front of you on each device.

Microsoft has been driven by cool dudes. Google has been driven by cool developers. Apple is driven by really cool design: aesthetics matter. Cloud computing may excite the geeks, but Steve has now said you don’t need to worry about it: cloud illusions are totally ignorable.

“Governments don’t create jobs, entrepreneurs do: the risk takers, the business people, the exporters up and down the country who have succeeded often despite, not because of, Government action”.

So stated the May 10th press release from the Minister for Jobs, Enterprise and Innovation, Richard Bruton, on the Government’s new Jobs Initiative. In presenting the initiative to the Dail, his colleague the Minister for Finance, Michael Noonan, used the word “jobs” 43 times; “enterprise” 8 times; and “innovation” just 4 times. In fact the only time he said “innovation” was when he explicitly referred to the “Minister for Enterprise, Jobs and Innovation”. Note too that Minister Bruton thinks his title is jobs first; Minister Noonan thinks his colleague’s title is enterprise first; and both agree that regardless, innovation is last.

What catalysts does the Jobs Initiative give to the innovation economy ? A partial loan guarantee scheme, to be operational by the autumn, certainly should help company debt financing. A micro-finance scheme for loans to start-ups could also be very valuable. All government bodies – except the semi-states – will be required to pay suppliers within 15 days: I would love to believe that this target would be actually be widely achieved. Removing employers’ PRSI from share remuneration is correct and essential. Allowing companies to claim for R&D tax credits either against corporation tax on profits or against the cost of employing researchers is also very attractive. Increasing public procurement from the small and medium enterprise sector would be wonderful: however in general, of course, the public sector should naturally be a conservative buyer of well-proven solutions rather than take risks with new innovations. Public procurement from riskful innovation is an oxymoron.

More recently, Minister Bruton announced a three person review group of copyright legislation for the digital economy, following a similar (for example) UK initiative. At the Irish Internet Association on the 12th May last, he announced some further publicly funded research projects; a modest increase to 100 high potential start ups targeted by Enterprise Ireland; and a 750,000euro Enterprise Ireland seed fund for life science and green technology start-ups. Additional risk capital, rather than just debt and loans, is welcome even if the amount is very modest.

Standing back from all these announcements, the new administration seems to have parts of the jobs engine, but it is unclear to me at least whether they have all the necessary pieces; it appears uncertain whether the pieces fit together so that the engine is working and ticking over, and still less that it can accelerate from first to second to higher gears.

What is the Government’s vision and strategy to rebuild our economy ? Provide hope and confidence ? Get as many as possible back to work ? Grow overseas earnings, and trust that this will spill over to the rest of the domestic economy ? The tourism sector certainly fits these themes: the Jobs Initiative targets the tourism sector with VAT reduction, air travel tax elimination, and holiday visa waiver scheme common to the UK. More could be done of course to improve the national brand and tourist experience: some simple examples are ensuring that queuing at immigration controls for non-EU nationals is drastically reduced; eliminating tourist intimidation in urban areas such as Temple Bar; and providing an arrivals pick-up lane for the glitzy new Dublin Terminal 2.

The holiday visa waiver announcement could have been so much more. President Obama spoke in El Paso, Texas, on May 10th last: “Look at Intel and Google and Yahoo and eBay – these are great American companies that have created countless jobs and helped us lead the world in high-tech industries. Every one was founded by an immigrant.” What are we doing to encourage entrepreneurial immigrants to found their companies and create jobs in Ireland ?

I fervently agree with Minister Bruton: Governments don’t create jobs, entrepreneurs do. In my view, we determinedly need as many entrepreneurs as possible – our own, and immigrants from elsewhere in the EU and also beyond. Each start-up on its own in general is unlikely to make a material impact on our unemployment rate. Collectively, the impact for jobs could be immense.

A very small number of ventures grow into large companies (like Intel and Google and eBay). Many more are sold before they become large: but each such sale yields experienced serial entrepreneurs, business angels and new aspirant entrepreneurs keen to replicate the success. Some ventures fail, but those involved almost inevitably pick themselves up and try again. Each cycle of the engine generates experience, new business angels and even greater pool of entrepreneurs and ventures. More entrepreneurs and more ventures means more jobs, and more spill-over wealth to fuel the rest of the domestic economy. Do everything to oil the engine once built, and it will rotate faster and stronger, accelerating faster up through the gears – and all for an affordable effort.

Despite the woeful state of our domestic company, in my view the Irish innovation economy is in fact steadily building. We are attracting more entrepreneurs, and increasing the interest of our younger generations in entrepreneurship. We at last have a nucleus of experienced entrepreneurs and business angels investing time and personal money in the next cycle. We have a unique multinational sector, which is now keen to stimulate and benefit from indigenous entrepreneurship.

Our Minister for Innovation (which then leads to Jobs and Enterprise), our Minister for Finance and our Taoiseach have all so far been rather mute on the Innovation Economy. There is much they could do catalyse it, and many actions which are cost neutral and simply organisational in nature. There is more they could do to promote the Innovation Economy: not least personally encouraging entrepreneurs to use Ireland as their base. Most of all, they need to understand and believe in the Innovation Economy themselves.

“Governments don’t create jobs, entrepreneurs do: the risk takers, the business people, the exporters up and down the country who have succeeded often despite, not because of, Government action”.

So stated the May 10th press release from the Minister for Jobs, Enterprise and Innovation, Richard Bruton, on the Government’s new Jobs Initiative. In presenting the initiative to the Dail, his colleague the Minister for Finance, Michael Noonan, used the word “jobs” 43 times; “enterprise” 8 times; and “innovation” just 4 times. In fact the only time he said “innovation” was when he explicitly referred four times to the “Minister for Enterprise, Jobs and Innovation”. Note too that Minister Bruton thinks his title is jobs first; Minister Noonan thinks his colleague’s title is enterprise first; and both agree that regardless, innovation is last.

I’m writing separately on what impact the Jobs Initiative gives to the innovation economy in the next edition of the Irish Times Innovation magazine, so I won’t dwell on this topic here. But suffice to say it is very unclear to me whether the new Government has yet constructed a strategy for job creation in the innovation economy. Taoiseach Enda Kenny recently passionately spoke on April 15th last at the Youth Entrepreneurship Strategy Forum at Dublin Castle on the need for a jobs engine for the economy. But it is unclear to me whether he has yet assembled the necessary components into an engine, still less whether all the gears are meshing together, and even more whether it can be accelerated from first to second to higher gears without over-revving the engine or running out of fuel.

I fervently agree with Minister Bruton: Governments don’t create jobs, entrepreneurs do. In my view, we determinedly need as many entrepreneurs as possible – our own, and immigrants from elsewhere in the EU and also beyond. Each start-up on its own in general is unlikely to make a material impact on our unemployment rate. Collectively, the impact for jobs could be immense.

The Jobs Initiative targets the tourism sector. I was initially excited when I heard the headline of the announcement of a visa waiver scheme, but then frankly disappointed that it was not more creative. President Obama spoke in El Paso, Texas, on May 10th last: “Look at Intel and Google and Yahoo and eBay – these are great American companies that have created countless jobs and helped us lead the world in high-tech industries. Every one was founded by an immigrant.” Taoiseach Enda Kelly could do very well to copy an Obama speech for a second time..

I fervently agree with Minister Bruton: Governments don’t create jobs, entrepreneurs do. A very small number of ventures grow into large companies (like Intel and Google and eBay). Many more are sold before they become large: but each such sale yields experienced serial entrepreneurs, business angels and new aspirant entrepreneurs keen to replicate the success. Some ventures fail, but those involved almost inevitably pick themselves up and try again. Each cycle of the engine generates experience, new business angels and an even greater pool of entrepreneurs and ventures. More entrepreneurs and more ventures means more jobs, and more spill-over wealth to fuel the rest of the domestic economy. Do everything to oil the engine once built, and it will rotate faster and stronger, accelerating faster up through the gears – and all for an affordable effort.

How do we encourage our own entrepreneurs to base their ventures in this country and not abroad ? What are we doing to encourage entrepreneurial immigrants to found their companies and create jobs in Ireland ?

Taoiseach Brian Cowen did have a vision for the innovation economy, and was implementing a strategy. The details are contained in his Innovation Taskforce Report and its associated Implementation Group. There are many aspects – an entrepreneur-centric system; catalysing risk capital alongside our current foreign direct investment policies; the role of public service broadcasting in the innovation economy; infrastructure support, including wet laboratories; innovation alongside public procurement; re-targetting Enterprise Ireland, the IDA and Science Foundation Ireland; unification of academic technology transfer; creating world class CFOs as well as CEOs; education policy; taxation policy and so-on. Building a successful jobs engine requires many components, each crafted to mesh with the others, so that the engine not only ticks over but can accelerate and move faster and all using a steady consumption of the necessary fuel.

Are these various tactics the necessary and sufficient components for a successful innovation economy ? Will they collectively encourage entrepreneurs to stay in Ireland and to attract even more to come here ?

In my view, Ireland has a largely unrecognised, under-marketed, and sorely under-exploited resource which ought to be a huge magnet for entrepreneurs; the most compelling reason to chose Ireland; and is the largest competitive advantage which Ireland has over Silicon Valley, Israel, Bangalore, Guangzhou, Cambridge London, Munich or Amsterdam or indeed any other innovation centre in the world.

What is that resource ? No, its not our education system, our great people or our tax system, all of which our politicians and media periodically promote. They’re missing the picture. The resource is: our multinationals.

The IDA has led the world in making Ireland the most densely concentrated location of multinationals, and from very many different sectors. Over 50 years, well over 1,000 companies have established operations here. From pharmaceuticals to medical technologies to information and communication technologies to financial services to entertainment and media to clean technologies to business services, Ireland now leads the world as a multinational hub. Why is this so important to entrepreneurs ?

There are a few reasons. It is easy to network and get an introduction: we are a garrulous nation. When I started IONA as an unknown campus spinout in the early 90s, I went and visited companies in Ireland like HP, IBM, Digital Equipment Corporation, Microsoft, ICL and Lotus Software. I asked the Irish managers there to whom should I talk inside their company: in every case they were able to steer me and give me an introduction to the appropriate team, frequently back in their corporate headquarters. In 1993 Sun Microsystems invested in IONA, assisted our global reach and channels, and gave us the initial credibility we needed to gain access to Fortune 1000 customers.

But although incredibly valuable, introductions, access to corporate finance, access to channels and markets, and general industry intelligence are all probably no longer the biggest attraction to working with a multinational. In my view, the largest opportunity today for entrepreneurs is access to under-utilised intellectual property.

A large number of multinationals, but not all, have substantial reserves of dormant intellectual property. In some cases this is for defensive reasons against potential future alleged patent infringements by others. In some cases, the IP is judged to be premature for commercial exploitation, but held in reserve in case the core market changes or evolves. In many cases the IP is the result of interesting work carried out by engineers and scientists within the corporation, but ultimately judged (or sometimes even unknown and unrecognised) by corporate strategists as insufficiently significant to create a new market which would have a material impact on the business and revenues of the corporation.

Several multinational corporations are now quietly – and one or two not so quietly – seeking to identify appropriate entrepreneurs who can work with them by licensing very interesting intellectual property. The resulting market opportunity might initially be moderate or small for the multinational, but large for a start-up, and perhaps ultimately grow to be material for the multinational. Creating a new commercial initiative can be easier outside of the corporation since the existing corporate sales, marketing and channel organisations are focussed on the core products and services. Investing technology, and indeed both finance and corporate brand credibility, in a start-up, can create a win-win situation.

Governments don’t create jobs, entrepreneurs do. The new Government, the Minister for Innovation (and then Enterprise and Jobs) and especially the Taoiseach already have the necessary components sitting right in front of them, the blueprints for a great design and they really could build a world leading engine for the innovation economy.

I was asked to discuss applying technology for innovation in the public service in the current fiscal environment.  Difficult to generalise,  so I talked about some of the thinking on this topic from my work in the Innovation Taskforce.

The Taoiseach takes a personal initiative to advance research in Ireland. There is criticism, since some believe that the scarce public finances for education should be devoted to improving primary education nationwide, and perhaps also secondary. The Taoiseach indicates that world class research would encourage the Irish universities to more proactively collaborate, particularly TCD and UCD. He also believes that world class research conducted in Ireland would greatly enhance Ireland’s international reputation, and possibly further encourage world class companies to engage with Ireland. He believes that the best way to catalyse a world class standard in Ireland is to invite world class researchers to come here: he personally makes an approach to a renowned Austrian physicist and theoretical biologist.

Two years later, a very well known journalist ridicules the work of the Taoiseach’s “notorious institute” – “Lord, what I would give for a chair in it with me thousand good-lookin’ pounds a year for doing ‘work’ that most people regard as an interesting recreation….The propagation of heresy and unbelief has nothing to do with polite learning, and unless we are careful, this Institute of ours will make us the laughing stock of the world”.

And so de Valera founded the Dublin Institute of Advanced Studies in 1940, seeding it with Erwin Schroedinger (of cat fame ), and Myles na Gopaleen took a slightly jaundiced view.

Research and innovation generally seemed to languish in the Irish economy throughout the 50s, 60s, 70s, and 80s and it was not until end of the 90s that the Tanaiste of the time, personally led an initiative to advance research in Ireland. There is much criticism, since some believe that scarce public finances for education should be devoted to improving primary education nationwide, and also secondary. The Tanaiste indicates that one reason to do so is to encourage the Irish universities to more proactively collaborate, particularly TCD and UCD. She also believes that world class research conducted in Ireland would greatly enhance Ireland’s international reputation, and possibly further encourage world class companies to engage with Ireland. She believes that the best way to catalyse a world class standard in Ireland is to invite world class researchers to come here: she personally makes an approach to several, and invites a former director of the US National Science Foundation to lead the new initiative.

And so Mary Harney founded Science Foundation Ireland (SFI) in 2000, seeding it with Bill Harris. So far,  to my knowledge, Joe Duffy’s Liveline hasn’t commented: but one wonders at what point public funding of research relative to social needs and support will become a public discussion topic..

Eolas magazine is the media partner for this forum today. On 31st March last it published an interesting commentary on “The crisis in Irish innovation policy”, written by Aidan Kane. The article summarises Irish innovation policy, including how SFI came to be: “coalitions of academic scientists, public servants and industrialists understood that the only language to which policy makers would respond was that of economics.” Today, policy makers are now seeking explicit economic returns, which were promised 11 years ago when SFI was founded. “Thus the boosterish and literally incredible ‘jobs creation’ targets for innovation initiatives at all scales, and the enormous recent emphasis on the production of commercialisable intellectual property as a measurable outcome from publicly funded research.” “Visible spin-offs and the attraction of foreign direct investment are the tangible returns which policy makers will seek; they are not the same as the broader “public goods” rationale for innovation policy as originally understood.” Economic accountability “is now, by definition and by design, privileging the production of private, not public goods.”

If we are to create public good from publicly funded research; if we are to avoid only private goods and private benefit; if we are to innovate public services through technology in the current economic environment – one theme of this forum and the title of my talk – should we then adopt and exploit research results from Irish research organisations into the public service ? Would this not then provide test cases to validate the Irish research work, and provide feedback ? Is there not a substantial public procurement budget taken as a whole across the entire public service, and should therefore not some be used to apply Irish research results ?

I have heard others articulate this line of thinking, and I am afraid I disagree. Stimulation of our economy should require innovation:   creating new services and new products which have never previously existed. If we are going to drive foreign earnings, we need to create new products and services in Ireland targetted at the global market. On the other hand, if we are going to use taxpayers money to acquire and build technology solutions in the public service, then almost the very last thing we want to do is to procure new products and services which have never previously existed. On the contrary, to prudently and efficiently use taxpayers money, we want to adopt “off-the-shelf” pre-existing solutions already well-tried from elsewhere. Our build-out policies for technology procurement and systems should rightly re-invigorate and re-energise the Irish public service, but almost certainly are unlikely to result in a new innovation for export from Ireland to the global market.

The innovation economy is about risk taking, to create new products and services for the global market. Risk-taking in public systems procurement by contrast is unwise. Almost everyone in our public service is only all too well aware of the Dail Public Accounts Committee.  Brave is the public servant who risks procuring a novel but un-proven solution over a less ambitious but well tested and well tried solution from elsewhere.   Finally of course,  we have had very visible failures of public procurement,  including in IT systems,  which have in many cases severely dampened political and public enthusiasm for some projects.

The dichotomy of stimulating innovation for the export-driven economy, and simultaneously safely and efficiently enhancing the public sector by wisely deploying technology, pre-occupied several of us on last year’s Innovation Taskforce. We strongly believed that altering the mandate and goals of public procurement would be unwise: public procurement should in general reduce risk, whereas innovation is inherently riskful.

So, the Innovation Taskforce took a different approach. We asked whether there are specific challenges which would have an obvious direct benefit to the Irish economy,  and indeed to Irish society at large ?   These may be riskful challenges, but have enormous potential benefit if they can be delivered. If they are to stimulate innovation,   then such challenges should not already have a solution.   That is,  they would be different from normal Irish procurement projects: there would be no pre-existing solution anywhere on the planet, and R&D would be needed to build a solution.

But further,  one of the main goals of an Irish innovation economy is that it should be foreign earnings driven.  Thus any of these new category of challenges should have an export potential.  Thus,  they should be such that not only is R&D needed to derive a solution in the Irish context,   but that that solution should have a foreign earnings potential and ideally represent a global opportunity.

Finally,  a key strategy for the Irish innovation economy is collaboration:  between academia and industry,  within industry itself including in particular the interplay between indigenous and multinational companies,   and across industry sectors by converging technologies.    Thus any of these new categories of challenges should also create an opportunity for clusters of companies to collaborate together,  with academic involvement as appropriate.

The Innovation Taskforce called these new category of challenges “Flagships“.   The Taskforce recommended that each Flagship should have a clearly identifiable direct societal impact in Ireland;   should not have an existing solution anywhere on the planet;   should have global export potential since many other jurisdictions as well as Ireland may have very similar challenges;  should enable an open collaborative cluster to form,  in which different companies can all add value to a common technology platform so as to build a solution;  and would be funded in part by the Irish State to provide a demonstrable use-case and verifiable proof of concept.

Let me summarise. World class research conducted in Ireland attracts overseas companies, raises our level of education attainment, and provides opportunities for private commercial exploitation. After 11 years, those who were told in 2000 that world class research undertaken in Ireland would significantly improve our economy, are naturally expecting identifiable results. There is opportunity to prudently deploy even more technology in the public service, but public systems sourced via public procurement will, and should, avoid the risk inherent in unproven solutions. Nevertheless publicly funded research should not just lead to the production of private goods and private wealth. There are initiatives which can allow risk-averse public projects to complement the riskful innovation economy through risk-sharing projects. The Innovation Taskforce “flagship” challenges are one possibility.