8 lessons from Filipino tech billionaire and angel investor Nix Nolledo

Ask anyone in the Philippine tech startup community who they think has the most inspiring success story and chances are many of them will tell you it’s Nix Nolledo.

A business management graduate, Nolledo felt like the odd man out in a family of lawyers and doctors. He couldn’t land a job at big corporations in the aftermath of the Asian financial crisis, so he ended up joining a fast-food chain company as assistant branch manager.

He has come a long way since those days. Nolledo now often hears the word “billionaire” attached to his name after Xurpas, the mobile content provider he co-founded, held one of the most successful IPOs on the Philippine Stock Exchange to date.

In a forum organized by The Founder Institute in Manila, in cooperation with Freelancer.com, Nolledo shares his startup journey with the audience. Before creating Xurpas, he says he tried several businesses — all of which failed.

However, as the cliche goes, failures are nothing but stepping stones to success. And there are lessons to learn. Here are eight valuable ones from Nolledo that young startups must take to heart:

1. Know that your real product is innovation, not the product you’re currently selling

Nolledo advises startups to be willing to disrupt themselves. “Whatever you’re selling today may have nothing to do with what you’re selling five years from now.”

He says from ideas comes innovation, which is crucial in a business. “It’s two things previously known combined to form something,” he notes.

To illustrate his point, he cites Elon Musk of Tesla Motors who months ago open-sourced much of the company’s technology, except its battery. Nolledo recalls how Musk’s cousin runs the largest publicly-listed solar company in the US, and together they’re disrupting the utilities industry. “Can you imagine the combination of a very reliable high-storage battery and the more affordable solar power?” Nolledo asks the audience.

Hundreds of attendees listen to Nolledo’s presentation during a recent forum sponsored by The Founder Institute in Manila. Photo courtesy of Xurpas.

2. When you set up your business, ask yourself, ‘Am I a vitamin or a painkiller?’

“If you want to quickly scale, solve a real pain point,” he says. Nolledo believes messaging app Line did just that following the devastating earthquake and tsunami that hit Japan in 2008. He says Line solved a need that anonymous messaging platform Nixle didn’t. “The citizens of Japan who needed to support each other during those trying times wanted to do it knowing each other’s identity.” So Line grew not just because it’s fun and entertaining, he says, but because it addressed a real pain point.

Nolledo then quips, “Build something people will jump through hoops for then take out the hoop.”

He’s for a product that’s easy to use. “Solving a pain point doesn’t mean it should be difficult for people to understand.”

3. Get an investor or a platform you can leverage

One such startup that was able to do this in the Philippines is online pawnshop PawnHero, which Nolledo, in his capacity as angel investor, invested in.

PawnHero essentially turns mobile phones into pawnshops: you take a picture of a valuable you wish to pawn and in minutes, you’ll receive an estimate for your item. Because it uses technology, it’s able to offer way lower interest rates than traditional physical pawnshops in the market. The startup, founded by David Margendorff, tapped logistics leader 2GO, with over 900 outlets nationwide, for pick-up or drop-off of pawned items.

“All 2GO branches turned into pawnshops… Suddenly, they (PawnHero) have nearly as many branches as the number one player,” Nolledo notes. “Getting the right partner gives you a strong competitive advantage. If you find the right investor or partner, you will scale much faster.”

4. Be an ecosystem or a platform yourself, not just a product

The most valuable tech companies in the world don’t make money from their own content, according to Nolledo. “Of the 1.6 million apps on Apple’s App Store, probably only 20 are made by Apple. Of all the search results you see on Google, maybe only 20 or 50 or a hundred of them are owned by Google. Of all of the posts you see on Facebook, probably less than one percent are made by people who are employees of Facebook. You get the drift. If you’re an ecosystem, you will scale beyond the size of your team. You don’t need a lot of people.”

Building a platform gives one the ability to scale beyond the original business model, he says. Take for instance, Airbnb. Nolledo says Airbnb partner homes are now starting to upload menus as enticements, turning a part of the home into a restaurant. “There are other parts of the home — the garage, the storage room. Airbnb can be a logistics company, they can even partner with Uber.”

5. The biggest mistake people make about the internet is think of it as a form of media

The internet is an economy, not a medium, Nolledo stresses. He points out that the gap between consumer interest and purchases has become infinitely shorter and smaller on the internet.

“All elements of the consumer purchase cycle can happen in a device you carry with you. You discover a game, you decide to buy it, you start playing the game directly on your phone, and if you like it, you’ll share it on Facebook.”

Nolledo shares useful tips for startups looking to scale their businesses. Photo courtesy of Xurpas.

6. Another mistake entrepreneurs make is they themselves become their businesses

“Never chase fame, chase the vision,” he says. This is also part and parcel of his earlier advice to build an ecosystem for your business. “Don’t think that your business has to be you,” he says. “To be efficient, outsource portions of your business that you don’t need to keep in house. More and more software will allow you to do magical things. More and more business processes are going to happen in the cloud, not necessarily with a warm body paid for.”

7. Don’t think of traction in terms of number of users, think — ‘am I really building a business that’s monetizable?’

Venture capital firms are usually always looking for user growth, says Nolledo, that’s why you have success stories like Snapchat. But in Southeast Asia, where you don’t have as many VCs, he notes startups must find a way to make money early on.

He says that his firm Xurpas employs an iterative approach to building things. “When we have an idea, we test the idea, we define the test metrics, then we create the MVP. We measure, if it doesn’t hit what you thought it would hit, you optimize. Then ultimately, you decide if it’s a dumb idea — do we kill it?”

8. Don’t be afraid if you’re sometimes smaller than your competition

When Xurpas was just starting, Nolledo says their competitors were raising millions of dollars in venture capital. On the contrary, Xurpas started with a paid-up capital of PHP62,500 (US$1,400) and it bootstrapped all the way to its IPO.

“If people had to make a bet back then who would win the game 10 years later, very few would have made a bet on us.”

But he says they believed in themselves, managed their costs, invested only in products that would give them fast returns, and scaled slowly but surely. “We were grittier than anyone else.”

To be a successful entrepreneur, he continues, “Sometimes, ambition outstrips resources. It forces you to think differently.”

Originally published at www.techinasia.com on March 11, 2015.