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Silicon Valley in the Philippines?




There’s this three-year itch about the idea of having our own version of the Silicon Valley in the Philippines. Migs started the discussion just over 2 years ago and has been revived by Marie of Pinoy Web StartUp.

This reminds me of my discussions with the guys who ran Pinoy Web 2.0 about a couple of years ago and the ensuing discussions on whether ad-driven local Web 2.0 sites will actually work.

The idea of having a Silicon Valley in the Philippines may have been dreamt way longer than that I think. I even thought that in the early 2000’s, we had it going — Andersen Consulting became Accenture and grew rapidly (with most of the consultants are based in the Philippines), Canon Philippines has tons of hard-core Filipino hardware programmers (still is until now), Trend Micro and its pool of geeky Filipino anti-virus engineers and Intel Philippines doing research on flash technology locally.

Instead, the Philippine Government focused on a related but more lucrative, higher job hiring industry — the call centers. And true enough, Bangalore aside, Makati City can be called the BPO Silicon Valley of the Philippines.

But why did we really lost track of the more nerdy industry? Intel moving its plant to China and selling its Flash Plant, Accenture employees being constantly hawked by its foreign clients, and top Filipino SAP and .NET developers flying off to Singapore in droves. Oh yes, we’ve practically exhausted most of the real-world reasons in our discussion over Google going for a Malaysian Data Center and totally ignoring the Philippines on their list.

On the other hand, the other end of the spectrum for a Silicon Valley mindset is an independent entrepreneurial inspiration. These are the people who have great ideas needing VC support. If there’s a minuscule chance we can revive that enthusiasm among Filipinos then that’s the ticket.

  • Get the right people who have the bright ideas and the necessary skills and match them with a VC or an Angel.
  • Change people’s mind-set on the existing business models — the Advertising Model is already diluted and the local market is still small to even accommodate more players (not to mention Friendster and Multiply inventories alone can eat up all CPM budgets).
  • Avoid the usual pitfalls — leveraging your business model from someone else’s business. Sometimes it’s ok, especially if you can grab a multi-year lock-in deal. This is what happened to over half of the content providers (CPs) during the upstart of the SMS boom. Now, most of them have closed shop (after exclusive contracts have expired) or the telcos themselves got too greedy and bought out the players.
  • Get them started at school. The younger crowd are more ambitious, have fresh skills and are not that too excited to join the corporate world. The idea of a start-up is more enticing to them.
  • Avoid the “me-too” mentality. Not all hip and hot stuff that the real Silicon Valley spits out will be as hot in our own climate. Let’s play on our own strengths and creativity but bear in mind the culture-factor. Ideas need not be “eureka moments”, oftentimes these are simple ideas that meet an undiscovered market demands.

Need to get my ass back and revive that “What happened to …” series of mine.



Abe is the founder and Editor-in-Chief of YugaTech. You Can follow him on Twitter @abeolandres.

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34 Responses

  1. jhay says:

    Funding for R&D in Science, Technology and IT from the gov’t would give this initiative a huge boost. If not, and since our gov’t is more inclined to spend the taxpayers’ money on BPOs, tax incentives could also do the trick.

    Scholarships and study grants would easily hook in the young ones. Our tech-savvy youth are not purely gamers or friendster-rats, some among them are the brightest and most creative minds, who taught themselves CSS and html in the quest of pimping their Friendster profiles but without crashing everyone else’ browsers. If that’s not potential and creativity, I don’t know what is.

  2. hip2b2 says:

    Let us not forget an important ingredient in the Venture Capital ecosystem:

    http://hip2b2.yutivo.org/2007/06/01/need-for-venture-capital/

    This is what makes Silicon Valley tick. The thought of a company buying you is also an incentive to push move VC funding. Who buys PH companies? Moolah!

  3. BrianB says:

    Abe, we’re a decade too late. The word is passe, and so is the idea most likely. Not good inspiration, in other words.

  4. yuga says:

    @jhay – I was thinking of self-funding. Developers could work on their pet projects on their own time while doing an 8-5.

    @hip2b2 – ahh, the exit strategy.

    @brianb – I know, it’s kinda late but it’s still possible. Spill-overs maybe?

    @rogerd – if and when that niche presents itself, someone else might have thought of it already.

  5. berlin says:

    no one has experience when it comes to scaling and who will pay for the servers once the site gain traction? who has $10K to burn every week? you also need a cdn and a dc.

  6. Miguel says:

    Not something that big. A CDN would be for something like a video sharing site.

    A simple step: Pinoy probloggers using their earnings to hire developers (or do the code themselves!) for apps.

  7. ChrisMo says:

    Another common case of brain drain in the PH, I hope some venture capitalists start sharing their resources as I many Filipinos have killer start-up ideas and good plans with no funding…

  8. Miguel says:

    If it’s about E-Learning, E-Health or E-Government, these guys want to fund you: Morph Code.

  9. Roger D says:

    niche always present itself. if you tell something to your friends and replied back something like these,

    1. what’s that?
    2. puwede ba yun?
    3. no, it can’t be done

    there, you could have a niche product or service. No one knows it pa eh.

    1995 I setup an ISP, my friends told me, what’s a modem? what’s Internet?

    1997 Setup a Network Security company, I sell firewall, businesses says what’s a firewall?

    1999 I co-founded a pioneering company that develops mobile content. Some of our contemporary laughs at us, from security to ringtones and wallpaper daw.

    Also, there could be parallel thinking but what matters is the execution.

  10. ChrisMo says:

    @Miguel: Thanks for sharing that… Did it work for someone, I hope theres a project currently benefiting from them.

  11. Miguel says:

    The company is still pretty new, so I don’t know if they have customers or partners.

  12. Ian says:

    We need success stories. Are there any from the Brain Gain Network, for example? Whatever happened to the UP-Ateneo ‘Silicon Alley’ (aka Ayala-funded incubator)?

  13. Gian Paolo says:

    Have you heard of the UP-Ayala Science and Technology Park? I hope this will start the change of focus we are waiting for. :)

  14. Jerome says:

    @Miguel: Morph Code is entirely separate operation (although related in ecosystem) to Morph Labs. Let’s just say it’s Winston’s playground.

  15. Berlin says:

    It’s still cheaper to outsource to Russian or Vietnamese programmers. I have prototype being built for $2,500. I tried shopping around for freelancers in Pinas but the average cost is $1,300 and that only for the template. LOL

  16. Vadim Berman says:

    A foreigner’s view:

    I think the Philippines have most of the necessary ingridients, but these ones get me:

    * horrible infrastructure. Yes, I know that there are places with their own generators, that will survive a nuclear attack; but having routine brownouts and electrical spikes that can bust a toaster is, as you understand, very discouraging.
    * developers are frequently treated as “computer guys” who do everything from administration of the local network to system programming. For serious development one needs specialists who spend 100% of their time programming or administrating, not jacks of all trades.
    * Some of the software infrastructure, which doesn’t really require a lot of investment, simply doesn’t work. How difficult is it to make sure that emails on a website work? If after 3 attempts all of the emails to a huge telco’s return with “account doesn’t exist” errors, what kind of impression does it make about the company? And why everybody insists on using Yahoo and GMail as their work emails?

    However, on the positive side:
    * people are extremely accommodating, and willing to learn
    * the senior execs are more approachable than in other countries
    * the skill level is reasonably high
    * people are willing to tinker with things, when it’s not in the books. They don’t have it in India nor in China, and this is IMHO what has primarily built Israeli hi-tech.

  17. erwin castro says:

    Filipino It lack the necessary skills and funding to launch those startup. there also don’t have enough courage to launch a startup. There are garage innovators across this country some of them working lone wolf, some are collaborating, working like wolf pack. But they can’t do it because this country is still in young when it comes to launching an startup, people are too afraid to take a risk. No one take a moonshot project of their own. The real factor here is the Funding, tools and the passions to take a moonshot. Philippines don’t have VC who scout the country for future Facebook or youtube. Maybe someday who knows?

  18. Kyle says:

    I have 4 very talented friends who are programmers. All of them were given very good offers in places like Canada, Europe and Singapore.

    I can’t blame them though. Earning a sure 4000+ USD for them is much better then literally betting on the “house and farm” on a Start-up venture that might fail and melt away their time and money investment with it.

    Also Silicon Valley have ADVENTUROUS venture capitalist who are willing to bet millions/billions on startups. I don’t think the Rich in the Philippines would be so daring as they would rather put their money in more traditional businesses.

  19. raymund says:

    I hope that our own version of the silicon valley will uplift our Philippine economy….

    However another problem came….the recession.

  20. al says:

    I think Baguio is a very good place, specifically on the PEZA and loakan area. The place is nice and still not that crowded compared to central baguio. It only takes around half an hour to commute. Apartments there are also cheaper. The internet backbone is also good as what I experienced when I was working for texas instrument. I had to connect through a VPN to dallas texas most of the time but I seldom had any problem. The loakan airport is also within the vicinity. Some prominent call centers like sitel have an office there. And the climate is also friendly to big servers.

  21. More than just BPOs to fill up a local version of silicon valley, we need legit IT incubators that can generate home grown tech services and products.

    Peace!

  22. rick says:

    efforts here to start is much greater than other rich countries, why?
    1. poverty-you need to feed your family first before tackling your passion and thats requires lots of effort compared to other countries, inventing something requires real time and financing. skills and talents is not an issue, financing? we have lots of it in DOST(dami nila funding kaso ala naman nag aaply) so we have lots of it! but we need to feed our family first now! you needs lots and lots of effort to support your family and at the same time inventing/developing something, it drains lots of energy until you gave up!. if we could just focused our time and effort to our passion not worrying with our family, we can do more! so i need to work muna for my family

  23. rick says:

    efforts here to start is much greater than other rich countries, why?
    1. poverty-you need to feed your family first before tackling your passion and thats requires lots of effort compared to other countries, inventing something requires real time and financing. skills and talents is not an issue, financing? we have lots of it in DOST(dami nila funding kaso ala naman nag aaply) so we have lots of it! but we need to feed our family first now! you needs lots and lots of effort to support your family and at the same time inventing/developing something, it drains lots of energy until you gave up!. if we could just focused our time and effort to our passion not worrying with our family, we can do more! so i need to work muna for my family…..

  24. jonharules says:

    I’d be thrilled to see a Silicon Valley or at least a collaboration of talented tech geeks in the Philippines. Amidst all the “buts” and limitations, it could still be possible through proper collaboration

  25. Tim Hawkins says:

    The costs of starting up are now very much lower that many would think, Using Amazon EC2 services you can bring up a complete multi server hosting system, with CDN and data backup for less than $500 a month.

    Whilst this is still high relatively, you can bring up a single server system for about $70, collaboration tools such as google apps for domains, google docs and project hosting services like unfuddle, base-camp etc all mean that for virtually nothing you can put the collaborative infrastructure for a project together for almost nothing, having engineers and product folks spread around the globe is now pretty common, skype and email takes the sting out of the cost of keeping co-ordinated.

  26. rbruce says:

    magbigay muna kayo ng magandang idea, then pakita nyo theories ng ideas nyo, then magbigay kayo ng prototype. pag meron na kayo nun, sigurado maraming VCs or even big companies ang lalapit sa inyo. example of a good idea: a rechargeable battery charger using ambient sound as power source; or an IP core for fast data encryption and decryption using AES. ganyan ang mga ideas na dapat ibigay.

  27. reply to rbruce says:

    You know, there’s a lifetime of difference between an idea and its implementation.

  28. Someone who cares says:

    Puro kayo problema.problema. Kaia nga matatalino kayo para magisip at gumawa ng paraan. Hindi lang puro salita. Puro Negative pa mga sinasabi niyo. E kung ganyan pala e. talagang wala na tayong pag-asa niyan.

  29. I hope that it will change the filipino perception of having a job. Making a business is always at risk, at least they should try.

  30. rob jaw says:

    silicon valley – not a good company to desl with. they get awards for being good to customers, thats bull s***t. i bought a emachines and its still in the shop for manufactures defect. it was only after my wife went there to silicon valley sm that they decided to follow up.

    lousy company and lousy acer

  31. Vic says:

    Yes, we should have our own silicon valley in the Philippines to boost the IT and technology industry here. But of course it would be better if we can come up with our own Pinoy term for Silicon Valley, like … any idea?

  32. 1wzw9axov says:

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