07 June 2008

Of Filipino Tech Startup and Filipino Silicone Valley

Java is getting boring. We're getting multinational projects of vintage proportions, web frameworks with gazillion of configurations (Java developers are still webbies). The value of Open Source is really more on cutting down costs and not really about generating profits, still, Open Source revolves around the Cost Center, a great force for saving money, but still unproven for generating it consistently (hey, tech support is the only solid business model for open source).

But before I go wayward with my topic, I'm really interested in the Filipino Tech Startup scene as there is too little discussion about its unique characteristics, its life cycle, how it is coping up and moving along. There's so many Filipino Tech Startup today that grow out from dream and passion with very little thought on plans and risks. There's also a mythical fear of involvement with angel investors and venture capitalists, which is quite regretful as there's just so much cash in the country at this time of the great global crisis and it is funneled in the wrong directions which these Pinoy Startuppers should be taking advantage of.

So what are these Filipino tech startups have in common? There are several items that may tell us:

  • They are mostly self-funded
  • They are mostly web-centric
  • They are mostly software-based
  • They hold no or little patent under their names
  • They lightly consider patent as their key asset
  • They are heavily dependent on Open Source
The industrial culture of Filipino Tech Startup is analogous to other Philippine-grown cottage industries, just like the days of Lechon Manok (Roasted Chicken) boom, everyone is in this business or the Nata de Coco (Coco Jelly) craze where a lot cashed in and gone and a only a handful survived. In the Filipino Tech startup scene, when mobile messaging was still hot there are a lot who came and gone and few stayed. That is typical Pinoy (slang for Filipino), where there's easy money, there is bandwagon. There is little or no diversity just like in the real Silicone Valley in which an angel or VC can have a lot of options to put their money in.

Patents. The primary reason for having a patent is to protect an intellectual property (IP), second is to make money from IP through licensing. Most Filipino Tech startup may have one [but mediocre] patent in their belt which earns little or no royalties at all. Patent is important to any business because it helps generate revenue without moving an inventory or doing mind-numbing projects until wee hours of the morning. This is the problem of too much dependency on Open Source. Open Source, if utilized properly can save a lot on someone's business but it's not a product or service that is worth selling to a paying customer. In fact, if a Filipino Tech startup does not hold a patent and multiply it by ten folds then we don't really have an industry and this largely contributes to our Brain Drain as most of our best people will simply fly away to patent-rich valleys in which their cerebral contents are more protected and notable.

Too much web-centricity, your web application maybe 24/7 but your user is not. There's a product that sleeps with a user and comes in millions of varieties and guess what it is? It's a timepiece. It's offline and always "there". During the "iBoom" and before the "iBurst", Silicone Valley was mushroomed with a lot of web-base tech startups, they came and gone and never ruled(Google is not in Cupertino, by the way). Silicone Valley is still reigned by "offline" but "on-demand" companies just like Apple and Intel, their core business is not about the Internet, it's about driving the Internet. These companies don't make money from the Web, they make it through compelling, tangible products and licensing of IPs. So here's a hard fact, Filipino Silicone Valley will never grow without solid, tangible products churning out of it.

The Silicone Valley is an ecosystem of brave technopreneurs with solid products (hardware and software in one roof) and comprehensive business plans (forget about the Tissue Paper Myth), angel investors and venture capitalists. One cannot live without the other. In the Philippines, we have all these components, we have the money (that goes nowhere), the talents (that goes anywhere) but we don't have an ecosystem. In order for us to achieve this, we have to do away with risk-intolerant technopreneur wannabes, people who just want to be on the rap sheet but is not willing to put their names on it. We need small shop R&D as well that will cater to bigger fishes, it will going to be impossible to put up a thousand-team scientist and engineers in one ship. But a multi-company team can help.

The Funding. There are some Pinoy startuppers or technopreneurs who are eager to get funding but is not willing to put their names on it. They are mostly opinionated but never really took responsibility on something with a just a few hyped achievements to show. Again, Tech Startup, just like any other business, has its own shares of risks and responsibility. In the Philippines, we don't lack funds, we lack people on how to multiply these funds.

2 comments:

sxy_shandy said...

I think there are still too few tech startups in the Philippines. Some would-be angels don't always know how tech startups work so you have to explain to them FIRST what SaaS is or how they can profit.
It takes longer too because instead of external funding, we have to take on client work (bootstrap) to survive and to pay the bills. It's relatively tougher to get good talent too.
Which startups are you referring to? So I can also research them for PinoyWebStartup

Jared said...

Correct, which means we have to explain to them in the "language" they can understand, not in the "language" that we used to understand.

What makes you think that PinoyWebStartup is a good source for research? :D But you can always ask yourself, how many in those companies in PinoyWebStartup holds a patent? Understands that "technology" and "web" is not the same? That "Tech Startup" is not the same as "Web Startup" :D

Thanks for the reply. :)