Technology entrepreneurship: Hope for young Filipinos

Trapos! Everywhere we go nowadays there is a loud rumbling growl of disgust aimed at the traditional politicians and crony business oligarchs who have mismanaged our country for decades. At times, this rumbling even bursts into loud applause and cries of approval when some less fearful folk speak out in public against the trapos. As chronicles indicate a worsening situation, this unhappiness results in despair among our more brilliant young professionals and students. A very serious effect is the Brain Drain, which to me is not defined as the departure of brilliant and idealistic minds but, more, as their continuing decision to stay away or, at least, not get involved with the mess that goes on in their home country. If they returned instead after some or many years, then we would enjoy a Brain Gain which is worth much more than the original Brain Drain since these people can bring with them experience, state-of-the-art training/technology, good work ethic and significant money.

However, we can’t give up. With the entrepreneurial attitude of a good engineer and scientist, we must all seek solutions to this malaise and we obviously cannot rely solely on the usual suspects to fix things for us. In this spirit, Techie Palooza V.05 (as in the year 2005) was celebrated on Dec. 1, 2005 by almost 200 professionals engaged in engineering/science businesses or related activities that deal with or service these businesses. The news articles in this paper and the buzz generated by this business networking event for these  "technopreneurs" resulted in more than 700 individuals registering on the Brain Gain Network website at www.BGN.org. Many people went to the BGN.org website and enjoyed the pictures of the party – or particularly of Mocha and her dancers – but the question often asked is, "What is "technology entrepreneurship," or what we fondly call "technopreneurship"?

Most people have a good sense of what entrepreneurship means at least in terms of people they might consider as entrepreneurs, e.g. people who refused to work for large, stable companies like Ayala Corp. But is an entrepreneur a rich Chinese young man who doesn’t work for Ayala or Intel and instead uses P10 million of excess change from his father to start a little high-end shoe store in one of his mom’s malls?  Yes and no?! Maybe?!

To be more general, I’d propose that being an entrepreneur means possessing the spirit or good habit of calculated risk-taking when it comes to one’s professional career and/or financial future. One might possibly say that even a professional at a government trade office is entrepreneurial if she regularly takes the risk of losing her job by proposing new investment directives for areas that her bosses don’t understand nor appreciate as future trends. In businesses, employees can also behave the same way. Revolutionaries like the ilustrados were social entrepreneurs. Nonetheless, the degree of entrepreneurial spirit is at its fullest when a professional figuratively "bets the farm" (or takes a loan against all his earthly possessions) to fund a new company based on an idea that is yet unproven. 

Note: There is a fine line between being an entrepreneur and a fool. That is why one must emphasize the use of the adjective "calculated" for the risk-taking of an entrepreneur. A good entrepreneur is one who is an expert in what she plans to embark on. Likely, not all experience resides in one person and thus entrepreneurs of the best kind are normally found in packs of two to five. Solo fliers are often those who crossed the line to foolhardiness – but there are, of course, exceptions. To avoid being called a fool by users of the BGN.org (they are experts now since they read these kinds of articles there), one must train well and become close to the world’s best at building or designing products and/or services that customers will want. Only if you do this better or cheaper than your competitors will you be able to profit from your products.

This leads me to the reason for the emphasis on technology entrepreneurship. While the most boring stuff one can find at www.BGN.org might be things like calculating risk, NPVs, preparing a business plan, talking to investors, etc., one of the three most important things that venture capitalists like me look for in business proposals is barriers to entry (the other two are large markets and a great experienced team of entrepreneurs). The reason why venture capital has been so successful in Silicon Valley (the world’s largest concentration of venture capital) is that venture capital there has been invested in start-ups that relied on superior technology to create barriers to entry that people like Dado Banatao call "unfair advantage."  Why almost unfair? Because technologies are normally patentable and competitors can’t copy the same device or use the same manufacturing process, as the case may be. For example, Dolby Labs in California doesn’t make products itself but has intellectual property that helps reduce noise in audio recordings and playback. Their patented techniques are so good and so expensive to replicate that most audio equipment manufacturers don’t even compete with their own algorithms and instead just pay Dolby Labs royalty and licensing fees to use their technology. And even in the cases where patents or other forms of intellectual property protection can’t be used, creating products that are differentiated by high technology (either by the way they are made, delivered or packaged) is a better business because there are simply less competitors that can do the same thing. In simpler words, think of the number of people who actually know how to program their VCR to tape Big Brother and then divide that by 100 thousand and you have the number of people that will know how to build a competitive product to yours.

One final note: Being a technopreneur is a habit. An entrepreneur finds opportunities every day and his practice makes perfect.  Today, you might not have enough training or experience to start your own techie company but you can prepare for that day.  You might join one of the start-ups and learn there or behave as an entrepreneur within your large organization. Volunteer for the new project team to learn a new standard for wireless communications and figure out how to exploit it within your telco. Or even in mundane matters, challenge your colleagues from other countries that they should outsource engineering to us in the Philippines. There are drills, too: in the next party or wedding you attend, be an entrepreneur and practice asking out the prettiest girl there. If you are married like me, think of another practice drill! Like I said, an entrepreneur, not a fool!

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The author is the managing partner of Narra Venture Capital.