Here are some of my reactions to Paul Graham’s latest article, The Future of Web Startups. Pardon the lack of a creative title. All quotes below are from the article. Read his article before this post.
It’s so cheap to start web startups that orders of magnitudes more will be started. If the pattern holds true, that should cause dramatic changes.
Money-wise it may be cheaper in the Philippines IF talent is available. The common industry wisdom seems to be, from my point of view: the talent is available but needs to be tapped. At the moment, much of the talent that is available and productive is so because of outsourcing+offshoring. So, the Pinoy talents are put to use building Other People’s Products. But that is not a total loss since the skills picked up there can be used for Genuine Filipino products later on.
In the last batch of startups we funded, we had several founders who said they’d thought of applying before, but weren’t sure and got jobs instead. It was only after hearing reports of friends who’d done it that they decided to try it themselves.
Note “we funded.” There is no Paul Graham/Y Combinator in the Philippines who will fund $50K + (number of founders) x $50K – which is a lot of money in the Philippines. Let’s say the biggest expense is labor, and, software architects/developers are a factor of 5x cheaper in the Philippines. Bring down the figure down to $10K, and still you will be hard pressed to find anyone in the Philippines to put down half a million pesos (or less, at the moment). And if they do, it would be for the entire company, not for Y Combinator’s 6%. Why? No venture capital market for the investors to recoup their money with. And it boils down to the reason that it’s difficult for the Filipino web startup to make huge amounts of revenue, or to to sell to a huge company, either a Google/Yahoo/Microsoft or a more traditional company.
If startups become a cheap commodity, more people will be able to have them, just as more people could have computers once microprocessors made them cheap. And in particular, younger and more technical founders will be able to start startups than could before.
I think more young Filipinos are becoming aware that putting up a startup is a viable option. They just need to find the means. I just don’t know what formal programs are in place in computer science/IT education to help the students get started. (However, the quality of computer science education is another topic altogether.)
It’s true that you can now start a startup anywhere. But you have to do more with a startup than just start it. You have to make it succeed. And that is more likely to happen in a startup hub … This is not a nationalistic idea, incidentally. It’s cities that compete, not countries.
First thing, is it possible to build startup hub in the Philippines? Even if it’s Metro Manila, not all the pieces are in place. The university/industry/capital equation is not complete. Right now folks based in other cities and towns outside Manila or Cebu often have to move to find real tech jobs. On the other hand, one man startups working from their home broadband can put up a startup from anywhere in the Philippines with broadband access – but they won’t get the startup hub benefits.
Second, can Filipinos with startups in the Philippines move to tech hubs? Not quite. Filipinos don’t have mobility to relocate to Silicon Valley for legal and financial reasons. Legal because it is difficult to get a work visa unless you already have a US employer. (Can you work on your startup on a visitor’s visa? I don’t know. And even that is difficult to get for the typical person, “as we all know.” Financial because rent and living expenses in in the US is too expensive for somebody who just saved up startup money from their day job. To make it worse, Silicon Valley is even more expensive than the average US location.
As well as mattering less whether students get degrees, it will also start to matter less where they go to college. In a startup you’re judged by users, and they don’t care where you went to college.
This is a good thing in the Philippine university degree vs US university degree scenario. Filipinos who attended university in the US naturally have a benefit in getting hired in a Big Web Company. However, if joining the Big Web Company is done through acquisition, then the metric is not the degree or where it came from, but performance. That said, I’m still waiting for a Filipino startup to be acquired by a Big Web Company.
The greatest value of universities is not the brand name or perhaps even the classes so much as the people you meet. If it becomes common to start a startup after college, students may start trying to maximize this. Instead of focusing on getting internships at companies they want to work for, they may start to focus on working with other students they want as cofounders.
Filipino universities can already do this. “Cofounders” can be the people you work with for school projects, for instance.
This might seem a depressing scenario for Filipino web startups, but at least some things are happening that can make it easier. I hope this is a starting point for discussion.