Putting the Start in Start-Up
/Valencia talks about technopreneurship at the Mapua Bootcamp. (Photo courtesy of Earl Valencia)
Valencia recalls one of his latest finds. “You know, in the Philippines, the career-minded shoot for the big three – University of the Philippines, De La Salle University and Ateneo de Manila University,” he says.
“I first met Gian Scottie Javelona when he was 20, and he graduated, not from any of the A-list schools but from Polytechnic University of the Philippines, a sort of Philippine version of Cal Poly, San Luis Obispo. Javelona is a Department of Science and Technology scholar. What can I say, the guy’s a genius.”
When he was 19, Javelona launched the first mobile portal for a school. Javelona is now president and CEO of his own company, OrangeApps, Inc. It was a start-up that didn’t escape Valencia’s eyes.
“We don’t look at last names and names in general. We initially screen for ideas. If your idea is good, I wanna meet you.”
Valencia is president and co-founder of the IdeaSpace Foundation, the largest industry-led incubator and accelerator for technology start-ups in the Philippines. He is also head of corporate development at Smart Communications.
Valencia examined closely the Philippine education system and got a shock. “There’s actually no shortage of students interested in science and technology when we talked to the secondary level (high school). The disconnect is in their perception that there’s no opportunity in science and technology.”
He went to high schools and asked students what they wanted to do in life. Many replied that they wanted career paths to health care because there’s a global demand for healthcare professionals. The practical minded who took their parents’ counsel said they wanted to get into business. Medicine and law are the traditional choices. But health care is the default, because this is what they see people take if they are into making money.
“So the career potential in science and technology is being killed early and quickly,” Valencia observes. “At the university level, some students wanted to get into entrepreneurship. Some wanted to go into mobile app or market something with a specific app. Their professors came to us for advice, saying, ‘Some of our students have technical projects and we don’t know how to read them.’”
No More Fishball Vendor
Valencia explains that the fishball vendor is no longer an apt business model. “It’s different now. You have to get developers, code it yourself, scale it, you need input from a couple of thousand users and then there’s validation. In the Philippines, people’s dreams of success are stunted because of the lack of knowing the possibilities.”
Valencia (left) with IdeaSpace co-founder Marthyn Cuan (Photo courtesy of Earl Valencia)
That’s why Valencia is in the catbird seat, ready to pounce on talent the moment he sees it. Before he moved to the Philippines in 2011, Valencia was business incubator manager at Cisco’s Emerging Technologies Group. He also worked as a senior systems engineer at Raytheon Space and Airborne Systems – the classified R&D projects for the US Defense Department.
He earned a BSc in electrical engineering, Summa Cum Laude from Boston University, a master’s in systems engineering from Cornell and an MBA from Stanford Graduate School of Business. (“Funny thing about (grad students in) Stanford Business School is that about a third of them have engineering degrees. But very few of them turn out to be engineers. Instead, they become investors, go into banking or put up their own business.”)
For Valencia, splitting himself between IdeaSpace and Smart means “I spend 20 percent of my time with Smart, looking where the world will be in three to five years. The 80 percent with IdeaSpace puts me in touch with start-ups. So the jobs complement each other.”
Valencia recently brokered a deal between Apple and Stanford Business School, bringing in interns. “One girl from India who worked in Russia and a guy from Japan with McKenzie Consulting and another finance guy from New York. They’re all in the Philippines because I want to expose my country to global culture.”
Last Names Don’t Count
But before IdeaSpace, there was a void. “Fewer than ten corporations actually control the Philippine economy. Sometimes the family that owns the corporation trains its kids to take on the business. The family business just makes profit and the family pockets it. No thought about putting the 20 or 30 percent to invest in upgrading the company.”
Once, Valencia was speaking at the Ateneo Business School “and some guy asked me because I’m an innovation guy from Cisco, ‘How can you talk about innovation when you don’t have the incentive to innovate?’ He’s right. It doesn’t make sense.”
He says every business must think about how it can survive the next 10 to 20 years, perhaps by doing something different every year. “Instead, some of the managers think, ‘What’s the incentive for me in the company if I can’t be CEO unless I have the same last name as the owners?’ Quite frustrating for a lot of people in the Philippines. That’s why we’re trying to redefine professionalism as not having family affiliation as a qualification.”
Members of IdeaSpace start-ups visit Cisco Philippines office. (Photo courtesy of Earl Valencia)
When Valencia’s firm bought Meralco (and its subsidiaries) and First Pacific (a Hong Kong-based investment management and holding company), they put in professional managers to run the businesses. (“People from Wharton — the famed business school with an unmatched MBA program in Philadelphia and San Francisco — people who run Shell, experienced people from all over the world. And stocks went up by 50 per cent a year after we bought them.”)
“This is the type of disruptive mindset we want, especially for start-ups. We don’t look at last names and names in general. We initially screen for ideas. If your idea is good, I wanna meet you.”
Incubating
Valencia actually thought about how to create an incubator for Filipino entrepreneurs for a long time -- a support network where they can think up an idea and scale it to potentially billions of dollars in revenue.
Further talks in the Philippines with Hong Kong Investor and Chairman of Meralco, PLDT, TV5 and other companies, Manny Pangilinan, refined it to: “How do we create a culture in the Philippines that is like, not in, Silicon Valley?” This was in May 2011.
Meralco CIO and VP Marthyn Cuan took over from Pangilinan and decided to attend a Cisco conference in the US. Valencia took him around. By October, Cuan and Valencia decided to move forward with the concept.
At the same time, Valencia was offered the plum job by Smart Phone. It took a while to convince his wife to go back to the Philippines. But they agreed to try it for a few years. By this time, a plan was developed to create an incubator to invest in proto-types. But almost everywhere, they were discouraged “because the risk was so high and the return, little.”
STAC-Silicon Valley, PhilDev and other partners already identified the gap. Valencia was still president of the Filipino Entrepreneurs Network (FEN) when the gap analysis crystallized: “In the Philippines, nobody gives money at the proto-type or early stage. What’s more, they give capital only to people they know.”
So they put together competitions to draw out the best ideas for tech investment. They even advocated in schools, telling anyone who would listen that “there is a better way to make money and that the equalizers were one’s own brain and technology, that if successful, they can build a global company.”
Valencia with innovation leaders from across APEC (Photo courtesy of Earl Valencia)
Changing Scene
“Cuan and I were among the young, working the mindset. We told the board we needed a couple of hundred billion pesos. In the end, they gave us half a billion pesos (about $12 million). It was funded by Meralco, PLDT. Smart, Sun Digital, Indofood Indonesia, First Pacific, Maynilad Waters and others. We put money to hopefully change the old mindset.”
Today, young entrepreneurs with ingenious apps are the hallmarks of some promising Filipino websites. According to Valencia, a 30-year-old RJ David launched Sulit.com, the number one website in the Philippines by browser visits. (“It is like the Philippines’ Craig’s List.”)
Forty-year-old Winston Damarillo early in his a career sold apps to IBM and is co-founder and CEO of Exist Global (a software development company).
Twenty-year-old Ralph Munch’s (his dad is Austrian) Metrodeal is an online shopping site “that is like groupon.com.” Former CNN Bureau Chief Maria Ressa is easily the most popular personality in Philippine social media with her rappler.com (“like a digitalized CNN”).
While it was the original intent to bring the Silicon Valley mindset to the Philippines, visits from Silicon Valley expats may have imbued some local hot spots with the Silicon Valley aura.
“There are lots of developers in Cebu,” Valencia notes, “but if you’re talking about a block that’s the equivalent of Silicon Valley, I would say that would be Makati and Fort Bonifacio. The main HQs of the big corporations are mostly the Greenbelt Mall “here most of the future deals will be made in terms of a casual Starbucks Wi-Fi atmosphere.”
He de-stresses by watching movies (“The Life of Pi” is a favorite), hanging out, shooting hoops (though he hasn’t done that in a while) and reading business books.
And of course, his appetites are eclectic or global Silicon Valley. He picked up a yen for Europop in Spain and pigs out on charbroiled Texas T-bone, but make his shrimp tempura, please. “This is surf and turf my way.”
Harvey Barkin
Harvey Barkin is a freelance general assignment reporter who covers community, features and technology. He is also a tech writer and copywriter.