Every Friday, we’ll endeavour to publish (or direct you to) the finest writing concerning Dublin tech, innovation and design. Kicking us off is an illuminating profile of Silicon Valley-based Dubliner John O’Farrell by Tom Lyons, Business Editor of The Sunday Business Post.
John O’Farrell sits where the future begins. He is at the top of Andreessen Horowitz, the backers of Skype, Facebook and AirBnB.
The reception of Andreessen Horowitz is like a country club. One wall of the room is crammed with books about the history of Silicon Valley, while the other is full of books about coding. I pick a few of them up: all are well-thumbed with corners turned over to mark important pages. It’s all designed to be calming – you can hear clearly the sound of the artificial stream that runs around the complex of this multibillion dollar venture capital fund.
Inside this building, the partners of Andreessen Horowitz have backed the biggest names on the internet: Skype, Groupon, Instagram, Lyft, Oculus, GitHub, Box, Facebook, Airbnb and Twitter. This is where the future begins.
From social networks to cryptocurrency to the sharing economy, Andreessen Horowitz has invested ahead of the curve. It has had its failures too, but its multibillion dollar exits have more than made up for this. As I wait, a Russian pores over his laptop, reviewing his pitch one more time before he is called inside. Two double-height doors swing open electronically, John O’Farrell’s personal assistant tells me to follow her inside, and leads me to O’Farrell’s corner office.
O’Farrell, from Stillorgan in south Dublin, is standing by his Apple computer with an exercise ball behind him when I enter. The location of his office says much about his importance here: adjacent to the two legendary founders of Andreessen Horowitz: Marc Andreessen, the co-creator of the world’s first popular web browser Mosaic and co-founder of Netscape, and Ben Horowitz, another Netscape veteran and inspiring tech leader. O’Farrell has worked closely with both men. He helped them first run companies and then back winners in venture capital as the third general partner to join Andreessen Horowitz, after its two co-founders.
Intelligent and polite, O’Farrell explains he has just 30 minutes between meetings to tell his story and give advice to Irish start-ups eager to break into Silicon Valley. Andreessen Horowitz prides itself on being different to other venture capital firms in the valley. “They are often a collection of general partners who, in many cases, have long investing backgrounds but don’t have much operating experience,” O’Farrell said. “They haven’t been in the entrepreneurs’ shoes.”
“We felt the most helpful VCs and board members to us when we were running our companies were the guys who had built companies themselves. Who knew it wasn’t easy and knew how to contribute and when to contribute, instead of just saying, “I have seen this movie before because I have been on ten other boards as an investor’,” O’Farrell said.
Today, the VC employs 100 people and has investments in between 80 and 90 companies. It is not always easy. “You are spreading your risk across a tremendous amount of companies and you get tremendous stimulus and variance. Those are all nice things,” O’Farrell said. “The hard part is that you don’t control anything.”
Andreessen Horowitz takes minority stakes in firms, he explained, while the investment approach is to look at people more than themes. “There are certainly broad themes that we invest in but for us it is all about finding the right entrepreneur. “The right entrepreneur for us is typically an engineer or a computer scientist, a scientist of some kind,” he said. “Our belief is technologists make the best founders and chief executives for technology companies.”
Areas that Andreessen Horowitz was interested in, he said, included food, bitcoin, drones, ecommerce, cloud computing and the internet of things. “It is all about the entrepreneurs for us. They come in with the weirdest ideas and the wackiest things, but the entrepreneur we like to invest in has a secret,” he explained. “It is someone with a unique insight into a problem that the world might not know we have yet, but that was in retrospect totally obvious.” O’Farrell picks up his smartphone: “Who knew that we would all be carrying one of these around? Now everyone has one.”
Ireland could never compete with Silicon Valley, but it could complement it. “Silicon Valley is just absolutely unique. I don’t see that changing anytime soon. You will see the rise of massive Chinese internet companies for example, but I don’t see that fundamentally changing the source of innovation in the world in software and technology,” he said. “Ireland is a home for technology. It is a very, very powerful advantage. Nearly every company I talk to in San Francisco – when they talk about overseas locations it is Dublin or Ireland. I don’t think tax is the primary motivator at least for the start-ups we work with. I think it is a more interesting opportunity and issue for big corporations – the Apples of the world, the Microsofts. [Start-ups] are much more interested in talent, time zone, business climate, language, culture.”
Events like the Web Summit and the success of the IDA also helped. Asked what advice he would give to Irish start-ups, he said: “I would say aim higher. Nearly every Irish start-up pitch I see talks about the exit, which is something you should never talk about in a pitch. “The page on the backgrounds of the founders, they all say, ‘Sold X company for €15 million to some other company’ which is a great win for them – don’t get me wrong. But it says, ‘We have small objectives and not big objectives’,” O’Farrell added. “They are not trying to build a $1 billion company or $10 billion. It says, ‘We are looking to build something and flip it’.
It might be okay if you want to make a bit of money, but you won’t appeal to US VCs that’s for sure. US VCs are going to be very important to you if you want to build a real company because they have much larger capital resources and they have a much larger time horizon than an Irish VC would have. If you are serious about building a real high-tech company that has global impact you have to be here. That doesn’t mean you can’t put your R&D in Ireland and customer service and all kinds of other things in Ireland. But I think like Eoghan [McCabe] at Intercom you have to make the move. This is a unique place to build a tech company. Absolutely you can try to stimulate Irish start-ups, but if you really want to build highly valuable Irish start-ups you should build them here. I would encourage start-ups to come here and leverage what Ireland is great at like R&D. But it is just too hard to build a really big company from there. Look at the Collison brothers and Stripe, PCH – there is a lot to be proud of but they are here.”
Thirty minutes are up. O’Farrell shows me to the door. He needs to get ready for his next pitch.
Originally published in The Sunday Business Post.