Not Not Not Starting a Startup

Paul Graham wrote a new thought-provoking essay. Why to Not Not Start a Startup. Yes, a double negative. He’s coming from a venture company that invests in startups. It’s a long read but do take some time out to go through it.

Unfortunately, as much as I’d like to take his advice, I can’t do it at the moment. I’m not not not starting a startup.

Know nothing about business – Unfortunately this is not true in the Philippines.

Paul says, “I get a fair amount of flak for telling founders just to make something great and not worry too much about making money. And yet all the empirical evidence points that way: pretty much 100% of startups that make something popular manage to make money from it.” We know that the opportunity to do this are limited: for software products, nobody wants to pay for software and if you want to sell it abroad, payment options are limited. The same e-commerce limitations for for websites.

He continues, “And acquirers tell me privately that revenue is not what they buy startups for, but their strategic value. Which means, because they made something people want.” Acquirers or venture investors/capitalists in the Philippines are also few and far between. I don’t know the nature or scope of their activities today. How about selling your company to foreign companies? I’m sure there are a lot of legal issues there that a couple of Pinoy geeks in a garage couldn’t handle.

Conclusion: You need to know about business because you’re going to run the whole thing yourself. No exit strategy. I don’t have experience there. I’m not even sure whether I have the interest.

The Independently wealthy reason is an interesting contrast. In Paul Graham’s world, having reached wealth would be a reason not work. But in the Philippines, where startups have to fund themselves and there is no angel investor community to be found, it’s the independently wealthy (or, those who have wealthy parents/relatives) who can join the startup game. Even if I got started and put up a one-man team, I don’t have the cash to live for months while building the product.

Finally, No idea. I’ve had lots of ideas that are doable solo, but have no commercial viability. I have lots of ideas now, and am working on them, but they need a team to execute and money to fund and test the market. These, I get from employment. Product development is expensive. I guess one reason I have a job is that the ideas I can potentially produce something for the stakeholders.

I think having no idea is a reason why a number of people work on solo outsourced jobs as freelancers. The idea and the direction come from abroad, and the local folks implement it. They can earn this way due to the salary differences between the Philippines and the hiring country. But, they don’t get the multiplier effect that a successful product brings – after the initial R&D, they can sell additional copies of the software product, or get additional users for the web service.

To put this in context, here’s a TechCrunch interview with Paul Graham. I would also like the congratulate the Ernst & Young Philippine Entrepreneurs of the Year – they overcame these obstacles.

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19 Responses

  1. Aha! Thinking entrepreneurial thoughts eh? .. or at least reading entrepreneurial articles.

  2. I read this article too – Paul Graham’s essays are always thought-provoking, especially How to Make Wealth and a few others.

    I agree with you that the case for a startup is not as rosy in the Philippines; in fact, it’s probably not so in 90% of the world, which is why Graham requires all of the startups he funds in Y Combinator to move to Silicon Valley.

    So, how to start a startup in the Philippines? You don’t need your own money per se; but you do need to be smart enough to know how to raise money. If you have relatives willing to lend you money, that’s great. If not, you will probably start a service business, hoping to be a product business someday (in fact, the Silicon Valley people do not consider a new service business a startup).

    This is why I love reading about the stories of our great entrepreneurs (Ramos, Gokongwei, Sy, etc.) – they didn’t have money to start with, they didn’t have technology, they had a powerful will and determination to succeed. I think that, more than any amount of money you start with, is what will make us ultimately successful.

  3. To be an Entrepreneur one has to think out of the box, create new rules or break or bend existing rules. It all begins in the mind. Silicon Valley is no longer just a Dionne Warwick song. The latest Fortune Mag (Terminator on the cover) has Siberia as a new Silicon Valley. Mr. Posadas wants to turn QC into a Silicon Valley. And one more thing, anyone who hates Bill Gates will fail miserably as an Entrepreneur.

  4. Jozzua,
    I’ve been thinking entrepreneurial thoughts since… 1995?

    Gabby,
    Here’s hoping for real venture capitalists willing to invest (or spend!) locally. And, the next generation of the entrepreneurs you mentioned.

    Anonymouz,
    Sorry I don’t understand the hating Bill Gates part?

  5. […] say you did start a startup in the Philippines. Would Google buy you out? How about Yahoo, Microsoft, Amazon, or eBay (like […]

  6. […] told me in reaction to Paul Graham’s Why to Not Not Start a Startup that one requirement missing was “passion close to absolute obsession.” Graham does […]

  7. Problem with filipinos is that they are waiting for others to give it to them rather than going to get it for themselves. If filipinos pull together to create startups and have the support of their filipino citizens to support that product service or idea than it would come to fruition. Unfortunately, too often filipinos destroy other filipinos to get themselves ahead, crab-mentality, for lack of a better term. I would love to come to the philippines and generate buzz for a startup but if the filipino people know I’m filipino, they will unfortunately not support me because they would rather get handouts and/or work for other ethnic people other than their own kind for the simple reason of seeing other filipinos get ahead just doesn’t sit well with filipinos.

  8. I think Rommel is just hanging out with the wrong Filipinos.

  9. When you have something that makes a loud buzz, be assured there will be loud critics too. IMHO its relative to the person how he/she views negative criticism.

    For me, I always see it as a good opportunity to make things better.

    You may also check an old topic PTB: http://www.pinoytechblog.com/archives/philippine-emerging-startups-open-founder-featured

    This shows not all have the “crab mentality”.

    For the record, I have worked alot on startup companies for the same reason like FAPPS, Megamobile, KayaMoney, Helpster, and recently TechBiz (we dont even have an office yet!) — its not a 100% Filipino company but IMHO it still fits my _i wanna work with an exciting startup company_ profile.

  10. The Gates part is about having an “Anti-Business” mindset.

    One has to take into account what one can and cannot control, fraud, competitors, suppliers, infrastructure and other dependencies. Like the lack of payment gateways and our local telcos unpredictable level of service.

  11. may sumikat ba na mga pinoy local startups? i think all big companies lang naman ang mga biggie websites natin eh

  12. Thanks for the info on “good Pinoy startups.”

    About anti-business mindset, suppliers and infrastructure, that’s a good reason (which can be overcome I guess) for not starting a local startup.

    But if your startup is pure Intellectual Property or code (e.g. a shrinkwrap software product you can offer for download from the US) then I think you’re OK?

    Now for ecommerce. If you’re running a hosted system, even if your server is in the US you’ll still have trouble with the legal stuff if your company is in the Philippines. Not just ecommerce, but data privacy, and maybe even security/antiterrorist stuff?

    Well, I guess that leaves the Google Adsense-Funded Business! But that can only go so far.

    About Pinoy local startups… well there are a few still running that aren’t “Big Company.” Perhaps there should be more written about them. (Calling pro writers and probloggers!)

  13. Don’t get me wrong, I would love to partner up with trustworthy filipinos who are willing to commit their money, time, and efforts along with myself and get a startup going. I’ve traveled 5 times to the Philippines in 8 months looking at every opportunity and sadly most are just asking for handouts or looking for a quick payday and run. Here’s a challenge, I have a great idea and I’m looking for partners. If you are willing to commit time, efforts, and money than I too am willing to do so as well. I’ve been looking and looking but keep hitting a brick wall. The idea is simple. We incorporate and split finances and profits evenly. I have more of an expense because I’ll be traveling to and from the US and Philippines. So Mr. Jose De La Cruz, if I’ve been hanging out with the wrong filipinos than this is an opportunity for you to prove that you are also trustworthy. I’m willing to partner up but don’t expect me to pay for everything that’s why it’s a partnership.

  14. I think Rommel has made his point. “waiting for others to give it to them rather than go get it by themselves” is not just a fact but a testament ๐Ÿ™‚

    But that is not a problem with Filipinos, because not all are like that. I am also a witness to this kind of attitude some just don’t get it, no matter how many times they attended post-graduate schools.

    There are various instances of a common mindset that “one should fund and one will work”. I hear this a lot of times and it irritates me. Then why don’t find a day job instead of running a startup? That is not a startup mindset. In startup you produce value from whatever you can get even if it means getting from your own pocket.

    Now I have self-funded startup (which has been stagnated for 2 years). I’m self-funding everything for now while building its value piece-by-piece while keeping my day job until I can really go full-steam ahead. Because right now, I don’t think I can get help from VCs or angel investors.

    Rommel, you might be the person we’re looking for or we might be the people you’re looking at ๐Ÿ™‚ But we really need to prove each other’s trustworthiness before we can work together. Just let me know so I can go back to Philippines and run this thing full-time.

  15. Very well said Jared. In any rate, if you got what it takes to take an idea from inception to completion, be resourceful and grow a pile of dirt into a mountain, leveraging what you can with a can do attitude, then definitely I am open to communications. An idea, whether it be a product or service, only comes alive by the people who can make it materialize otherwise, it’s just simply an idea in the minds of whoever imagined it. As for trust, it’s mutual, it has to be earned. In time, from when we 1st speak to where we will be in the next several months and look back, we’ll know whether we can trust each other. With the combined efforts of people that come together for a common goal is beneficial for the parties involved in the venture, it would be a dire mistake for anyone or any partner to screw anyone over because, the combined time, efforts, and money to put a startup together requires alot of resources and if everyone sticks to the plan, everyone will benefit from it. Unfortunately, the foundation has to be strong, otherwise it will collapse so it would be to the interest of the parties to ensure that we pull together for a common goal or simply fail and nothing becomes of it and go back to whatever you were doing. I think it’s best to pull together and make something happen so all can benefit. Agree! Are you in the US or Philippines? I’m on yahoo messenger. My email is rommelforonda@yahoo.com I’m invisible to everyone but I only respond to serious inquiries. So let’s chat.

    • Do not disturb

  16. I definitely agree with Miguel here (on working to sustain daily expenses / independently wealthy). I also think that itโ€™s unfair to label Filipinos as having crab mentality – don’t you think Americans do the same to each other?

    Regarding successful startups in the Philippines, can someone give a list? This should be an interesting topic. Should ClickTheCity, Level Up, Information Gateway, Pinoy Exchange, Yehey be considered as startups who succeeded? I don’t know much about their histories or if they are homegrown but it seems they are profitable.

  17. Nice post! I think it’s possible for Filipinos to start from a ‘small’ startup (i.e. fishball biz, or foodcart), and then grow from there.

  18. Talk about crapiolaaaa.

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