Startups in the Philippines and their ever growing challenges
It has been 4 years since I came back here and now situated in Cebu. I have been very active in the startup scene often helping, mentoring, and even investing into local startups. Last year I wrote a blog post talking about why Filipino startups fail in the Philippines. It was an observation of local startups with local founders and our startup ecosystem. Let’s say it had a mixed bag of comments which ironically proved one of my points…on maturity.
I wanted to post again more about startups and a lot of people wanted me to do so because although sometimes controversial, people needed to hear it. Especially Filipinos. So I decided to move my writings to medium (that and I forgot my password to my previous blog and the forgot password was not working properly). So here we go…
Our ecosystem is also pivoting and growing along the way
Over the past couple of years, our biggest supporters like Ideaspace and Kickstart also has changed their models and definitely for the better. I made a comment before that in reality, they were startups themselves in the business of helping startups.
The changes has definitely been for the better. It has helped flourish our startup ecosystem and really put us in the mainstream in the startup world.
So it has been a year of great change and achievements in the philippine startup ecosystem but we still have a long way to go. We still have huge challenges and that is what I want to talk about.
Challenge #1 — The Filipino Mentality on Status Symbol
It is just unfortunate that most of the local startups dont stay long enough to see their ideas really materialize to something great. They just want to be part of the hype of startups. Those people that are always at the startup weekend events. To think about it, startup weekend exists to spread the experience of starting a company in the compressed time of 54 hours. So why are the same people always coming back to the same startup weekend events? Unless if you are doing this as a status symbol or something. To be that “startup rockstar”. In the Philippines, we put too much emphasis on startups and make being a founder a status symbol. How many times have I been introduced to this founder and that founder but really they haven’t really done anything. A simple landing page seems to be enough to buy-in a founder status and everyone is buying in like this is a poker tournament.
In order to be successful, especially in startups, you have to have drive. You have to have focus. You have to be eager to learn. Hopes and dreams are not enough. Startups are hard. It will really test who you are.
Unfortunately, Filipinos tend to be a little “happy-go-lucky” and try what is currently “in”, but are they are in it for the long haul? Well, most of them bail out pretty early. A perfect example are startup weekend winners. I have been mentoring startup weekend for the last 4 years. Every winner never followed through. But the ironic part are the startups who didn’t win, they pursued their dreams and eventually actually rolled something out and is still pursuant to their dreams.
I really commend those startups that really stay true to the startup mindset. The ones that don’t give up. Kudos to you guys.
Challenge #2 — Filipino Mentality on Pride
“My brothers, we have a bigger enemy than the americans, Ourselves.” — General Antonio Luna
Startups especially when following Eric Ries’ Lean Startup methodology, is all about validated learning. This is kind of counter-intuitive to how Filipinos are. I am not sure if it is a culture thing but Filipinos do not like to be told or feel that they need to be corrected. I am sure that this is probably most people and not just Filipinos. But as a Filipino raised in Canada, I have witnessed this first hand and have a basis of comparison. This pride issue is very strong with Filipinos.
Have you ever tried to correct someone older than you in the Philippines? Oh man, your asking for it. Here in the Philippines, age equates to intelligence and not necessarily wisdom.
A perfect example, would be last week when I spoke at Ateneo University (one of, if not, the best school in the Philippines) during their health hackathon. My topic was interoperability so I decided to talk about building Enterprise Software with Service Oriented Architecture. The host platform used obviously was not of SOA but instead of asking and discussing SOA since I am already there, we talked about traffic, new malls in the area, and food. They would have benefited on just discussing the pros and cons of SOA and evaluate reasons on why and why not to adapt it for their platform.
Another example, was 2 years ago during the silver anniversary of the Philippines Software Industry Association (PSIA) . I was introduced to a startup that would have benefitted in a possible partnership and collaboration with another startup which I was mentoring. This startup was advised not just by myself but one of the directors of PSIA to work with the other startup so they grow their user base. They basically shrug off the advice. “We are OK already sir. We are OK.” The following year, I saw them at the coffee shop near the office. I asked how they were doing and they said that they are good. They just finished the incubator program of the PSIA and now entering another incubation program. Last year, I heard that they finished another incubator program and hoping to get into an accelerator. But lets see. The term incubator came about because startups are like eggs. We need to nurture and take care of them so they can hatch and grow. If the egg has problems hatching, you dont keep putting it in different incubator hoping it will hatch.
One characteristic of startups is the ability to grow quickly. You don’t do that by jumping incubators. So how can you do validated learning when you think your always right?
As a piece of advice, when you can get advice, especially FREE advice, take it. It doesn’t mean you need to use it. Use your own experiences and understanding to evaluate if the advice fits your situation. In the professional world, professional advice is expensive. Trust me. If you can get it for free, TAKE IT. (This is from a couple of years paying a six sigma advisor from Microsoft, professional fees to help us grow our company. It is bloody expensive!! I could’ve funded several startups with it.)
Challenge #3 — Not putting their “skin in the game”
One of the biggest thing that I have noticed in the Philippines is that accountability and responsibility is something a lot of Filipinos don’t take seriously. It is almost part of the culture. You see it in families (my wife’s side..oh geez), in your co-workers, in our organizations, and our government. (the “laglag bala” issue).
“Passing the buck “ seems to have become an olympic sport here in the Philippines. No one wants to take responsibility or accountability about anything. Now you take that mentality and put it in the context of startups…
I’m a firm believer of bootstrapping your startup until you have an MVP and traction. It is easier to get investors on-board with your vision with something they can see, touch, and feel. A big part of VC investments is not just the product idea but the founders behind the idea. If the founders are not at all committed, determined, or motivated, that is the fastest way to turn off an investor. Whats the easiest and fastest way to detect that in a founder? Simply, how much has he invested in his own idea. Im not talking about time and effort. Im talking about hard earned money. How much has the founders invested into their idea? That speaks volumes.
My 4 years here and I have met so many founders in our startup communities. Very excited “eager beavers”, fresh out of a startup weekend or Ideaspace event, really wanting to be the next Zuckerberg or Dorsey with a lot of unique and crazy ideas. However, when it comes to getting down to the nitty gritty of it all, they are not willing to put in the money to even get something started. I brought this up with one of our tech community leaders during one of the events and all they can say is, “This is the Philippines, Mike. No one has the money. What can you expect?” What can I expect….hmm… how about:
- Finding ways to raise funds. Look for grants, sponsorship, ask friends and families, get a damn job and save….
- Simply saying “I don’t have money” is the easiest excuse and shows the level of commitment. In a startup, you will need to do fund raising and its a different level of fundraising. If you are not willing to do fund raising at the most basic level, what does that say for later on?
- It is ok if you do not have the money. What is NOT ok is when you accept that you do not have the money but also you do not want to do anything about it but just accept it.
Not having startup capital is the first initial challenge. Overcome it. Find a solution. Invest it on yourself and your idea. It will go a long way later on.
Challenge #4 — Exposure vs Talent
When I started my business 10 years ago, I used my savings, I had small business loans, and constantly looked for grants. I had to be creative and not let myself give up to go after my dreams. My savings were from several years of working. And I did everything. From gas boy to bookkeeper to delivery driver to technical support to QA to developer and so forth.
I don’t expect that everyone has the same path as me but I think experience working for someone else teaches you so much. All these startup kids from the events don’t want to work but they want to talk and listen to a mentor. A mentor is basically someone who has done startups before and can teach these newbies a thing or two. Anyone ever stopped and wonder how these mentors started? I can pretty much bet that they worked and learned from someone else.
Like what I have been advising everyone who asked me whats the best way to start, I say “Get a job” as it will prepare you in so many ways. You might not see it right away but you are learning something very important. How can you expect to hand out paychecks when you never earned a paycheck yourself. Do you even know all those deductions on your paycheck?
Working at a burger joint doesn’t just teach you just how to cook burgers. In the outside, thats what you might see and think. But it teaches you responsibility and accountability because you have to take ownership of your actions. It teaches you how to work with other people even if you don’t want to. You learn so much. It is these soft skills that will propel you closer to your dream. Its kind of like Mr Miyagi’s teaching style in “The Karate Kid”. Daneil-san wants to learn karate and Mr Miyagi tells him to wax the cars. The actions used in waxing the car was actually the foundation to the block that Mr Miyagi was eventually going to teach Daniel-san. We should not judge too early on anything. There will always be more than meets the eye. You just have to be keen enough to notice it.
Filipinos are brilliant people. We have that uncanny talent of finding loopholes and exploiting it. This is a double-edged sword though. This talent is also the main reason why our government and our people are the way they are.
Personally, what I have seen is that there are many talented individuals but their only shortfall is that they don’t have the exposure to the right technology, problem, challenges, and environment.
In my company, 3AG Business Solutions Inc., I ended up overhauling how we hire people here in the Philippines opposed to how we do it back home in Canada. Over the past 4 years and having gone through hundreds of interviews it is clear as day that filipinos are handicapped when it comes to competency levels. I don’t think it is their fault. I still blame the educational institutions and government (see my previous post from last year). Filipinos are smart people, they just lack the exposure to certain things.
Challenge #5 — ”Putting on the big boy underpants”and taking responsibility
A word to local founders, you already know that you are behind, do yourself a favor, take the responsibility to improve thyself. There are so many books, blogs, videos, webinars, and events. Fill in the gaps and show the world what you can offer. Do not fall into the blame game as described in challenge #3. Take the responsibility. Take control of your life. Along the way you will unlock many things…one of those will be happiness. Trust me.
So what now?..
So, moving forward, I hope more and more people, local founders and anyone involved in Philippine startups read this and be more aware. I want to encourage founders to not give up. The road ahead is HARD. But it is supposed to be hard. If it was not, everyone would be doing it. I think of it as nature’s way of natural selection, weeding out the wannabes from the real grinders. Be a grinder.
Moving to Medium
On a side note, I will be continuing my writings on medium. I wanted to move my previous blog over but then if i copied and pasted the blog, the comments would be lost.
Till next time…keep grindin’.
