On Tuesday, Ireland's minister for international trade, Tom Kitt, opened the "Startup Factory" in Campbell in the heart of Silicon Valley. Here, Enterprise Ireland, the Irish trade organization, will help newly established Irish high-tech companies launch their US operations.

"There are over 600 Irish-owned software companies and every year there are 50-60 new startups," Kitt told Wired News. "The Irish government wants to help these companies get established in the US market."

Ireland, like Israel, is fertile ground for technology. Ireland's success in attracting US high-tech companies -- such as Seagate Technology, Intel, Microsoft, and Sun Microsystems -- earned it the title of the Silicon Isle. With a population of only 3.5 million, the country is now the second-largest exporter of software in the world after the United States.

What's more, the Irish tech worker has learned a thing or two about entrepreneurship from the likes of Intel and Microsoft. Ireland now has a bevy of home-grown tech shops.

These companies, like their US counterparts, are experiencing explosive growth rates. For example, software vendor Iona Technologies reported revenues of US$48.6 million in 1997, and expects this figure to grow by 69 percent in 1998. Software encryption and security company Baltimore Technologies has grown sales from $150,000 to over $10 million in two years. And new Irish companies such as Internet security vendor Trintech and smart-card vendor Card Services International are poised to take off.

But to succeed long term, these companies need to be tapped into the US market, the largest for high-tech products. In addition, capital is easier to obtain from US investors than from European ones.

"The message was very clear to us. If we were to grow our company, we needed to establish a US presence," said Ed Ryan, vice president of marketing for Clockworks International, a company that produces international versions of software for the likes of Lotus, Symantec, and Disney Interactive.

Ireland, of course, hasn't been an overnight tech success. While the Irish recognized 20 years ago that they needed to focus on brains instead of brawn for economic growth, the government was too eager to appease international investors.

In 1982, a young consultant named Ira Magaziner -- later to become the White House technology advisor -- was commissioned by the Irish government to conduct a survey of the country's competitiveness in the international marketplace.

Magaziner produced the "Telesis Report (1)", which harshly criticized the Irish government for spending too much money attracting foreign companies and investing too little in home-grown concerns. As a result, multinationals were taking government grants to set up their Irish operations, staying 10 years for tax incentives, and pulling out as soon as the pot was empty.

"The Irish government's industrial policy needed to change," said Magaziner. "The country had to support indigenous Irish industry rather than handing out money to foreign companies who were too willing to take the money and run."
Ireland was also too dependent on England for its trade, Magaziner said. But times have changed.
"In a couple of years, the Irish government followed all our recommendations," Magaziner said. "I am very impressed with the country's willingness to enter into the information age."
Times are changing for the Irish tech industry, as well. One clear sign of this is how salaries have improved for the Irish tech worker. A software developer with three to five years experience can earn between US$50,000 to $80,000 -– small potatoes to Silicon Valley, but good money in a low-wage economy.
Irish companies are also becoming savvy enought to set up US offices and even list their stock on the Nasdaq, as Iona and Computer Based Training Systems have done.
Just like their Silicon Valley counterparts, Irish tech companies are having trouble finding enough qualified workers. To combat this, the Irish government is working to free up its labor laws so that Irish companies can hire foreign nationals.
"We have realized that companies, especially high-tech companies, need to be able to freely move their employees around their organizations," Kitt said. "So we are trying to facilitate this."
In fact, Baltimore Technology needed to go outside the European Union to find top-level developers.
"In the last two months we have employed American, Australian, and Indian developers and technical sales personnel," said Paddy Holahan, Baltimore's vice president for business development.
Magaziner, for one, is impressed by Ireland's progress.
"Since the early 1980s, Ireland has come up from a poor nation to the European standard," he said. "If it can grow its own business then I believe it will become a wealthy nation."

(1) The Telesis Report
This report, known as the Telesis Report, contained information so devastating that publication was delayed for over a year. A few of the main points were:
Only about 30% of the jobs announced by the IDA ever actually materialised.
Jobs created by foreign industries at great public expense failed to make up for jobs being lost in traditional Irish industries, so that despite continued large-scale emigration unemployment continued to rise.
It had been expected that the multinationals would use Irish firms as suppliers and sub-contractors. This had not happened, in fact they imported their raw materials and exported their products and the country got only the rather low wages of their employees.
The foreign firms did not engage in research and development work in Ireland, despite inducements to do so.
The report was the subject of lengthy but inconclusive public debate. On item three, the multinationals made the reasonable response that they had found native Irish firms incapable of working to the standards required by a modern enterprise.