Entrepreneurs, Entrepreneurship, Philippines, Startups

Unsolicited Career Advice Ateneans Will Ignore

Unsolicited Career Advice Ateneans will Ignore

Photo credit: Marty Ilagan

By now, you might have seen the infamous post about an Atenean’s ranting about his/her less than favorable job prospects.

Actual quote: “We’re more worried about the fact that Ateneo is a top university, so why aren’t its graduates getting snapped up like lechon at a fiesta?”

Maybe because everyone knows lechon isn’t always good for you?

It’s an open secret among entrepreneur friends that the typical Atenean fresh grad – by temperament and skill set – is woefully ill-suited to startup jobs.

This leads us to concoct non-standard interview questions to tease out clues for entitlement and a poor attitude – questions such as: “How did you find your way to our office?” (Commute? Driver?), “What’s the best gift Daddy ever gave you?” (A Prada bag?), or “Run this pivot table to filter out subs in this segment and create a Facebook custom audience out of the results” (Less than 5% get it).

My sister graduated from college this year too, so I have a big incentive to distill no-BS advice to fresh graduates, seeing that I also wasn’t there for much of her teenage years.

So in the spirit of Prof. Scott Galloway’s unsolicited career advice, I boiled down my version to 5 lessons below. You probably didn’t hear this in the commencement speeches this year. And it’s not the speaker’s fault. Graduation speakers are wired to extract an applause, not give you hard truths.

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One: Leave. And Don’t Come Back Until You Are in the Top 10% of What You Do

When I was in college in Ateneo, the debating team took up a lot of my time. I loved it not because of the constant practice and research work, but because of the travel. Over the course of 3 years, I must have visited more than 10 cities to compete in local and international tournaments (there was a lot of funding from MVP during those years).

As a Management Engineering student, my life was mostly calculus, statistics, operations research, and finance. The travel was a great counter balance. We were away for almost 30 days each academic year, not an insignificant amount of time. I missed exams and papers. My grades took a hit. But who cares. The Philippines is an island nation, naturally insular and closed off. Travel + debate was an education in the real world.

It was only when we were competing against the best teams from around the world that we got better. We were punching above our weight class. If you’re a boxer, you want to be sparring with Manny Pacquiao.

When we joined the Cambridge Intervarsity in the UK, the level of competition was insane. How can we – these prepubescent-looking brown Asian kids – debate about the European welfare state against British law students? I loved every minute of it. We made to the finals, but lost.

The following week, we flew from London to Kuala Lumpur to join the Asian Championships. I was teammates with two of the smartest people I know: Bobby Benedicto and Camille Ng (I was clearly the weakest link). Ateneo went on to win that year.

That experience made me realize that if I wanted to be the best at something, there was no way I could do so staying in the Philippines: the market was too small, the competition limited, the bosses & supervisors at local companies were mediocre at best (because of the tryouts & selection process in Ateneo, promising young debaters are incentivized to pair up with senior, more accomplished debaters to increase their chances of winning in tournaments – so my thinking was that I needed to find the right boss when I graduated – more on this later).

So that’s the first piece of unsolicited advice I’d share: leave and don’t come back until you’re in the top 10% of what you do.

When I graduated, I was optimizing for one thing: independence. I wanted to move out, get my own place, live my own life.

So I ran the numbers. No way I can afford to do that with a Manila salary. So after almost a year of trying, I worked my way to a job in Singapore.

Here’s the reality: if you’re optimizing for high compensation, you won’t get it in the Philippines. There are too many structural reasons keeping wages low (a topic for another post). Taxes are high. You can try to get that McKinsey job, the only role that pays in six digits. But good luck. The firm only takes in 1-2 analysts each year.

But here’s another reality: nobody outside the Philippines gives a damn who the Arneo is. I realized this early on. You should too. So I spent another 6 months after graduation studying, doing volunteer work and expanding my network in Singapore through a fellowship with the Singapore International Foundation. That was how I hacked my way to my first job.

Nobody from the career office will teach you that. The whole narrative is about staying and helping the country. But the best way to help the country is to be the best at what you do. And one way is to leave, compete, and collaborate with the world’s best.

I know that’s not a feasible option for everyone. You have family. You have friends. There are probably a few ways to replicate the experience of working for a top global company in Manila. Working for a Google or an Accenture is one.

Working with a local startup with an amazing founder is another. If I were a fresh graduate today, I would definitely want to work for guys like Paul Rivera, Gian Dela Rama, Dustin Cheng, Terence Lok, Jerome Uy, Mikko Perez, or Henry Munoz. You should be optimizing for a boss, not a company.

Two: realize that the ‘job’ is dead.

There’s no such thing as a job anymore. What you’ll be doing is a collection of pursuits that compound over time, each teaching you new stuff.

When my sister graduated, she didn’t let the job hunt frustrate her. Instead, she got to work: via a small project renovating an office. Doing so made her realize quickly how much shit they don’t teach in architecture school, from budgeting how much paint to use to the difference between a purchase order and a sales invoice.

The Atenean ranter mentioned how s/he was on the 40th interview. Instead of spending too much time on the job-hunt, you can spend more time gaining experience that will make you more valuable to employers: starting a side business, getting Google certified, or building an NGO’s website.

Three: spend LESS time with your friends.

The distribution of your friends probably looks like this:

– 50-60% are in your high school or college batch

– 20-30% are from outside school,

– Then maybe 10-20% who are older than you.

After college, you need to flip those ratios: spend less time with your friends and more time getting to know older people.

Older people are more interesting. They know more things and more people than you. They’re your future partners, customers, investors, and generally open up more doors for you in the workplace.

I thought I knew a lot, then I met guys like Jerome Uy, Nix Nolledo, and Richard Eldridge. And then I realized I knew so little.

Spending too much time with your college friends is an exercise in diminishing marginal returns. Besides, if they’re really your friends, you’ll still be good friends even if you see each other once or twice a year.

And while you’re at it, re-assess your relationship with your boy/girlfriend. S/he is probably slowing you down and taking up too much of your time. The best way to attract the right partner is to be the best at something, and to be the best at something, you need to have the right partner.

Four: figure out what you’re willing to do that your peers won’t.

I found my first job chatting up the lead recruiter of Procter & Gamble during my graduation year’s Loyola Schools Student Awards at the Henry Lee Irwin Theater. I did this by sitting next to him at the front row of the theater, which was reserved for sponsors.

I knew: 1) that he was recruiting for Singapore jobs (because older people told me – see above), and that 2) he would be chatting with lots of students that night, and I had to get to him before the others did. It worked. By the end of the night, he handed me his card and asked for my resume. It took several more months, but that opening gave me an advantage.

Five: accept that you were disastrously miseducated, so you need to find the right boss.

By the time you graduate, you would’ve spent 4 years reading the same books, working on the same tests, and listening to basically the same teachers.

That produces 2 things:

1) You are more or less the same as your batch mates, and

2) Because the world is moving so fast, the material you’ve ingested is already outdated by the time you graduate.

Thus, only experience will differentiate you. The most optimal way to find the right experience is to find the right boss.

Your bosses in the first 5 years of your career will teach you skills and attitudes that you’ll take for the next 40 years.

My first two bosses were strategy and analytics guys in P&G. They’ve worked in India, Singapore, and the US. Another boss was a British General Manager who started stocking shelves in the UK, went on to Africa (where he was once held at gunpoint), and to Malaysia. Another boss started Airbnb in Southeast Asia. Imagine the wealth of their collective experience.

There was literally one skill that was useful in my first job: Excel. And that was only because an M.E. professor decided to teach an advanced elective class about it (it wasn’t in the required curriculum then). Everything else, I had to learn from scratch. Python, R, and SQL should be required skills in Operations Research and Marketing classes in the M.E. program today – if not, the curriculum is dangerously outdated.

So one of the things I’m proud of doing is advising an educational program to help Filipino students experience entrepreneurship in Silicon Valley. Call it the great reset. How do we slowly recalibrate the mis-education of a Filipino college degree and re-align a generation to the real world? The idea is simple: with what I know now, what would I have taught my 22-year old self?

Bonus advice, and the hardest: figure out what you’re willing to give up

When I graduated, all I really wanted was to be independent, to work abroad, get an MBA, and start a company. I got to do all 4 before I hit 30. It cost me a relationship, being far from my family, losing touch with friends, sleeping on a lot of couches, losing my savings, failing and embarrassing myself many times.

And it was worth it. What are you willing to give up?

******

Naked plug: If you or anyone you know feel like they can really benefit from a “great re-set” in their education, do check out Reach Labs. Reach Labs is an educational travel program for college students and recent graduates in the Philippines to experience entrepreneurship in Silicon Valley.

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This Valentine’s, Skip the Roses. Pay Your Damn Child Support Instead.

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Daddy, you owe Mommy.

Dear ladies: chances are, you’re gonna get pregnant tonight. Actually, the data shows that your chances of getting pregnant remain disproportionately high compared to your Singaporean or Malaysian friends.

That’s because 1 out of 3 pregnancies in the the Philippines is unplanned. 1 out 10 teenage  girls between 15 and 19 is already a mother. In fact, we have the highest teenage pregnancy rate in Asia. And that figure is growing, in spite of teenage pregnancy rates going down around the world. There’s even a list of local celebrity moms.

You can probably count at least more than five women among your circle of friends who are single moms. I have so much respect for them. In my experience, they tend to be the hardest-working and most resilient people I know.

Though unplanned pregnancies are public health (lack of contraceptives keeps HIV rates high) and social justice (unwanted pregnancies hurt the poor the most) concerns, there’s something I don’t think the public data captures adequately: the cultural predisposition of Filipino men to avoid paying child support.

How many men involved in unplanned pregnancies actually pay for child support? I don’t know. But based on anecdotal evidence, I’m guessing not much. There’s even a House Bill seeking to criminalize this.

Maybe these men can’t afford it. There are more women college graduates than men, after all. Maybe they just want to break ties completely. Maybe it’s baggage that blocks out prospects of being with another woman. Maybe they don’t feel as responsible, since it’s a sunk cost: you’ve partaken in the short-term upside, but don’t bear the cost of the long term downside. Or siguro macho ka lang.

I got into an argument with a buddy of mine over this sometime back. “It’s not entirely the guy’s fault, you know,” was his consensus response.

And in my head, I’m like, “What a fucking cop out.” We all know which party usually initiates the sexual advance.

And we all know the classic Pinoy Bro trick: using unprotected sex to hold a woman emotionally hostage by demanding proof of her devoted, unconditional love.

“If you really love me, you’ll make me happy.”

Fuck that. So for all the ladies out there, I propose the following: do what whatever fits your lifestyle and values. It’s not my place to tell you how to live your life or treat your partners. But as downside protection, I suggest:

  1. If you are unmarried and he insists on unprotected sex, ask him to set up an escrow account in your name.
  2. Ask him to deposit 10% of his pre-tax income for every act. Naturally, verify his pay slip.
  3. Write an options contract requiring him to pay, in the event of an unwanted pregnancy, 50% of his income on the first trimester, 50% on the second, and so on, with 20% of his income going to ongoing support until your child’s 21st year.
  4. Ask some ex-Oplan Tokhang thugs to help enforce this contract. A better use of their time and killing drug addicts. I promise.
  5. And most of all, do not ever contemplate marriage just because you have a child together.

Happy Valentine’s Day!

 

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Jollibee Broke the Internet by Breaking Millions of Hearts. Here’s an Inside Look into the Playbook.

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Seriously, Pure Evil.

I fucking hate that bride. “Thank you,” she whispers at the end.

I’m gonna take your tears, turn them into a crystal dagger, shove it into your friend-zoned heart, and turn the fragments into nails to hammer into your coffin. Oh, and yes, Father, I do,” was probably what was going on inside her head.

On the evening of Thursday, February 9, Jollibee posted two short films on Facebook, 4 hours apart. Both are killing it and breaking hearts everywhere.

I don’t eat at Jollibee. I don’t even like Jollibee. The Yum Burger tastes like I mixed ketchup, mayonnaise, and two spoons of sugar. Yeah I know, that’s blasphemous for a Filipino to say.

But today, Jollibee is winning with a series of short films about, well, love. The first one is about a boy who meets a girl at a Jollibee counter. The other is about a geek competing for a girl’s affection. And as folksy as those plot lines might sound, the ending won’t disappoint. Neither would I spoil them. Do check them out yourself, if you haven’t already.

As of 3:10pm on Friday, February 10, “Crush” has racked up 6.2 million views, while “Vow” has garnered a whopping 8.2 million views both in less than 24 hours. And it’s all organic. That’s insane.

The past few years have seen Filipino brands jumping on the content marketing bandwagon. The typical approach is to take a piece of film meant for TV advertising, and slap it on to Facebook. Spend several million to amplify its reach, then voila! Nestea did this and likely paid Facebook a ton of cash to get Liza Soberano plastered all over Pinoy feeds. I never thought I’d say this, but one can actually get tired of seeing Liza’s face everyday.

Jollibee’s rewriting the playbook with a native approach: story-driven, genre-defying, meme-friendly, and self-replicating.

It takes a new kind of intuition into the Facebook platform to dream all this up, and arguably a skill set traditional ad account managers will find quite alien.

Here are 5 clues into how that playbook works:

1. The story is not a slave to the product. Instead of the focus on the endorser, it’s all about the story, the progression, and the dramatic ending. You’ve probably don’t even recognize the actors in either films. You won’t have the same effect with Anne or Liza starring in these films; the audience gets too transfixed by the celebrity, instead of immersing into the story.

The products are slaves to the story, not the other way around. In fact, the products push the story forward for the audience: in “Crush”, the vintage cup places the setting in the 70s. In “Vow”, the store scene establishes that the characters love the same meal. And because brands aren’t constrained by the 30-second TV limit on Facebook, they can tell more substantial stories.

2. Disobey the genre. “Vow” breaks the standard Pinoy love story trope by going for the unexpected, heart-crunching ending (and sets up a possible sequel). In doing so, it turns the protagonist’s love interest into the film’s villain, sparking the fires of protest of friend-zoned boys everywhere.

3. Use a story’s iconography to replicate itself online. The plot device of the Post-It + the Yum-Burger not only serves the story, but makes it meme-friendly on Facebook. Now you’re starting to see people posting random notes on Yum Burgers. This is a genius move in making the story replicable and sticky.

4. Understand how Facebook amplifies video, past and present. Because of Facebook’s desire to keep you on your feed, it automatically streams you related videos, making this a potent discovery tool. As a result, another similar Jollibee film, “Almusal”, is getting new viewers, even if it was posted last year.

But that was also the key: Jollibee has been experimenting with videos for a long time. Winning with content takes time and investment to discover what works. This is not a traditional three-month campaign. It takes patience and commitment from brands to stumble upon the winning formula.

5. Put your traditional media channel on notice. I think the biggest loser here isn’t actually McDonald’s. It’s likely ABS-CBN and GMA. Jollibee has now uncovered strategic leverage to gain bargaining power over the media duopoly to lower their rate cards. And that’s fucking great. Digital provides all brands such an insanely flexible format to tell new stories, reach a bigger audience at a speed and scale never seen before.

In the few minutes I took to write this post, both films have added more than 300,000 views. You’ll never see that speed to scale on TV, and certainly not have the real-time data. If I were a CPG brand, I would just continuously run experiments on different treatments on social, uncover a hit, and use that data to ask my traditional media to hand over lower rates, with the underhanded threat of moving all my ad spend to digital. When Globe shifted its outdoor and print spending to digital, it’s already demonstrated it can grow its business without relying on legacy media.

What else do you think drives this success? What can brands do better?

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Entrepreneurs, Entrepreneurship, Founders, Government, Philippines, Startups

Why Would Anyone Invest in Rappler if it’s Losing Money?

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Pierre Omidyar’s fund invested in Rappler. Is he trying to destabilize the PH? Uhm, no.

 

A blogger posed this question, and posited that the reason anyone would is to achieve devious ends, in this case, to destabilize the government.

The blogger had three problems about Rappler’s financial affairs: its disclosures in its GIS and financial statements, its issuance of Philippine Depository Receipts to foreign investors, and the reasons why these investors would invest in a media company that was losing money.

Oscar Tan adequately addressed the first two in his Inquirer column. I want to talk about the third. According to the blogger, it was obviously irrational for savvy foreign investors to invest in Rappler if it generated a cumulative loss of PHP 163 million from 2011 to 2015.

Thus, there must be some other non-economic reason why these investors keep infusing their capital – to destabilize the government perhaps?

Believing this sends the wrong message to Filipino founders and is bad for promoting entrepreneurship. Full disclosure: some of Rappler’s founders have also invested in one of my businesses.   

The blogger makes a ridiculously inappropriate comparison to a sari-sari store that is losing money. Why would the store owner keep injecting cash to fund an unprofitable operation?

And therein lies the problem. Rappler is not just a media company, it’s also a technology startup. And early stage venture capital investing in the technology industry works differently.

What makes Rappler a technology company? It’s not just because it’s online or it has an app. Rappler’s built it own  infrastructure to manage and process its content, via a proprietary content management system, its mood meter, and its own data science operation.

Unfortunately, the sari-sari store analogy doesn’t capture the fundamental nature of how Rappler does business.

So why would two big foreign investors infuse capital in a money-losing technology startup?

Since people are fond of easy analogies, let me offer a more apt one.

Let’s say Ramon and Joey decide to start a company to launch a news app. They put in PHP 100,000 each of their own money. Their total capital is Php 200,000. They incorporate with 200,000 shares and a par value of Php 1 per share. So Ramon and Joey each own 100,000 shares, for a total of 200,000 shares.

Thus, their ownership split is 50-50. Ramon has 50% ownership. Joey has 50% ownership.

They use the Php 200,000 in 6 months to fund development of their app, and by the 7th month, they enter into a deal with Alibaba’s Jack Ma. Jack likes media investments. Previously, he also acquired a stake in the South China Morning Post.

At month 6, Ramon and Joey’s company is losing money.

Jack Ma’s offer is to give Ramon and Joey’s company Php 1 million in exchange for a 20% ownership of the company.

To do this, the company issues 50,000 new shares to Jack. Why 50,000? Because 50,000 shares is the equivalent of Jack’s desired 20% ownership stake in the company.

Thus, the total number of outstanding shares in now 250,000 shares, broken down into:

Joey = 100,000 shares (40% of the company = 100,000 shares / 250,000 total shares)

Ramon = 100,000 shares (40% of the company)

Jack = 50,000 shares (20% of the company)

Why would Ramon and Joey accept a deal wherein their ownership stake in the business is reduced from 50% to 40%? (We call this “dilution”).

Because the value of Ramon and Joey’s shares went up 20x. Twenty times.

WTF OLIVERSEGOVIA, how did this alchemy happen???” you might say. “In just 6 months??? For a company that is losing money??? That is magic. Or deception. Or both. You are destabilizing the stock market. I will report you to SEC Chairperson Teresita Herbosa. You must also be on drugs???”

Well, I can tell you if you aren’t so angry. (I’ve actually had reactions like this when I run my Startup Valuation workshops. The concept of equity value is so abstract for most people to understand!)

This is why. Recall that Ramon and Joey started the company by incorporating with PHP 200,000 in capital, 200,000 shares and thus, a value of P1 per share.

When Jack Ma invested his Php 1 million, he is buying new shares at a price of PHP 20 per share (P1 million divided by 50,000 shares). And because all shares in the same class must have the same value at any point in time, Jack’s investment implies that Ramon and Joey’s shares are also worth PHP 20.

Note that Ramon and Joey personally did NOT receive PHP 20 for each of their shares. Jack’s money goes to the company, not to Ramon and Joey. But Ramon and Joey each increased their net worth by PHP 2,000,000, at least on paper.

Where does the value come from? In simple terms: it comes from the past, the present, and the future.

The company created an app in the past 6 months. A customer can buy the app for a certain price. Jack is implicitly saying that the app is worth PHP 4 million.

Why? By investing PHP 1 million for 20% of the company, Jack is saying that the whole company (100% of it) is worth PHP 5 million. Minus his PHP 1 million cash infusion, their app is worth the residual: PHP 4 million.

It also comes from some estimate of the future value. Because of Jack’s investment, the app can grow its user base. It can start to sell advertising, or sell premium reports in its app. If all of these revenue streams resulted in the Ramon and Joey’s company being acquired by a bigger media company (say, ABS-CBN or GMA) for PHP 100 million in 5 years time, then Jack’s stake will be worth PHP 20 million at that point. Jack grew his PHP 1 million investment by 20x in 5 years. You can’t get a deal like this investing your savings in a bank.

At its core, borrowing money or investing money is all about forecasting the future value of something and estimating what price one has to pay for that future value, at the present time. This is what enables a bank to give you an auto loan or a housing loan – because you can continue to grow your salary and thus pay down the loan, or the house can appreciate in value in the future. This is also why the state invests in public education. Because the collective output of the iskolars ng bayan will be worth a lot to the country one day.

You might be wondering, why would Jack only invest in a minority stake? Because he knows that for the company to be worth more in the future, Ramon and Joey need to feel that they are true owners in the business, and not just employees. To achieve that, Ramon and Joey must retain a majority stake. Investors call this an alignment of interests. Otherwise, why would Ramon and Joey continue to work hard when majority of the gains go to Jack?

So, back to the original question: why would two big foreign investors infuse capital in a money-losing technology startup?

Because they believe their stake in Rappler will be worth more in the future. Plain and simple.

And like ABS-CBN and GMA – media companies with foreign investors – Rappler opted to use PDRs as the financial instrument rather than common shares.

*****

The heart of the blogger’s dilemma is that most people do not understand how venture capital valuation works.

Now you might say: the analogy of Ramon and Joey assumes a venture that’s been around for only 6 months. Rappler has been losing money for 5 years!

Guess what?

It will likely continue to lose money for the next 5 years. And that’s what could actually make it a good investment.

Amazon first registered an annual profit in 2004, a full 10 years after it was founded. It continued to lose money for the next 10 years after that. It’s only today that Amazon’s started generating profits.

Why? Because Amazon continues to reinvest its operating cash-flows into new technology, platforms, products, and services. That’s brought us affordable cloud computing, Prime delivery, video streaming, the Kindle, the Amazon Echo, and more. And I don’t doubt for a second that anyone would turn down a deal to invest in Amazon circa 1995.

That’s because profit isn’t the only measure of value. In technology, it’s actually a very poor measure of value as startups need to keep re-investing its cash flows to fund the best talent and to launch new products. So rather than profits, venture capital investors also look for milestones over the long term to measure value.

For anyone in the know, digital media is also a particularly hard business to monetize. From my understanding, other media sites like Tech in Asia, e27, and Vox are also unprofitable. So Rappler isn’t doing anything out of the ordinary, investment-wise. If Maria Ressa pushed Rappler to be profitable by Year 2 – she is actually not doing her job right!

Now that is something very hard for you to fathom, if your model of entrepreneurial success has been Henry Sy, John Gokongwei, or Lucio tan.

In the 1970s, Xerox funded a lab in California, called the Palo Alto Research Center – or PARC. For many years, PARC lost huge amounts of money doing research on information systems. One early result was the Alto: an integrated desktop workstation, with a keyboard, memory, processing power, and connected to a laser printer and other workstations via an ethernet.

If that sounds familiar, that’s because it is: the Alto was the early prototype of the personal computer and the rest, as we know, is history. If Xerox purely focused on PARC’s bottom-line, you wouldn’t be reading this post in your PC, Mac, or smartphone.

Measured within this frame, the correct question is not “Why invest in Rappler when it is losing money?” but “Why can’t Rappler be investing more to build new products, acquire the best editorial talent, and expand to other countries?

Will Rappler turn out to have as big an impact on Philippine media? We don’t know yet. That uncertainty is what makes technology investing fun.

But singly them out for issuing PDRs when it is a perfectly legal financial instrument and imputing some nefarious motive on the part of its investors without first understanding how venture capital investing works or the broader nature of technological revolutions is just hilariously foolish.

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E-Commerce, Founders, Government, Philippines, Startups

Who Should Be DICT Secretary? 5 Pegs for your Consideration.

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Aside from an acronym that can be the basis of a whole generation of Facebook memes, one thing that is worth pointing out about the Philippines’ new Department of Information and Communications Technology is that it’s a startup.

And like any startup, the founding team will play a crucial role. The DICT’s founding team needs a secretary, 3 under secretaries, and 4 assistant secretaries.

Who should they be?

Let’s start with the DICT is supposed to do. Section 6 of Republic Act 10844 – the law that created the department – lists the following powers and functions as its mandate:

1. Policy and planning: creating national ICT programs, promote ICT in education along with the DepED, CHED, and TESDA, and optimize all government ICT resources.

2. Public access:  creating rules for the establishment of ICT services in underserved areas; provide for free internet access in government offices and public areas.

3. Resource sharing and capacity-building: harmonize and coordinate ICT initiatives across government agencies, develop an integrated government ICT infrastructure, and assist in providing technical expertise to government agencies.

4. Consumer protection and industry development: ensure privacy rights, support investment promotion in ICT, and form international and local partnerships to drive ICT.

These are huge tasks. #3 alone hurts my brain, just thinking of the amount of work involved. The sheer magnitude of bureaucracy, national and local needs, vested interests, fragmented technical resources, and a technology landscape moving at hyper speed make failure intrinsically built into the job.

And this is why we need only the best to be leading the DICT. Though it would be hard to pin down exactly who the best person for the job is, I can wager a bet on who should NOT be even considered.

First, no lawyers. We have enough lawyers in government. If you look at the details of the DICT’s mandate, a huge portion of its success relies on strong collaboration and coordination with a multitude of organizations: telcos, technology providers, service providers, other executive departments, local government units, quasi-judicial agencies, and international bodies.

The DICT secretary will have to balance the competing tensions of a tech environment moving faster than the starship Enterprise traveling at warp 9.9 and the slow, lackadaisical way the average local leader makes decisions. Any entrepreneur who tried to selling to Filipino organizations knows this.

I have a lot of smart lawyer friends. The smartest ones play to their strengths and know what they are not: effective managers at scale. The DICT secretary should essentially be a manager who knows how to get things done through people. His output is the output of other people.

Also: the fine print. The DICT involves the reorganization and merger of existing agencies from the DOTC (which will be subsequently renamed simply as the Department of Transportation). The DICT needs manager who has done post-merger integration work. And as any human resources chief can attest, this is no small feat.

Second, should it be a telco person? I’m torn. Though it may be tempting to think that an alum from any of the two telcos could do the job, I’m leaning that the DICT secretary probably shouldn’t be a telco alum. Providing free internet access in government offices is a tremendous and expensive initiative alone. We wouldn’t want even the slightest perception of a conflict of interest. See the rabid reaction to Mark Villar’s appointment to the DPWH as a case in point.

Also, the NTC will become an attached agency of the DICT. And with the President’s drive to force the local providers to speed up the internet, we’d probably need a DICT secretary who can be tougher, more provocative, and more strong-willed to get things done.

Gerry Ablaza and Polly Nazareno, for instance, are both genuinely nice guys; the former is the ex-CEO of Globe (and currently runs Manila Water) while the latter just retired from Smart. But since both are above 60, I wouldn’t wish on them the grueling grind of working 80-hour weeks to get the DICT established and fully functional. They’ve both had stellar careers and they deserve an easier life. Let’s simply get them as advisory board members.

Which leads me to this part of the negative list – the DICT secretary shouldn’t be a sunset leader in his 60s who thinks this is a just a ceremonial post. At the risk of sounding ageist, we wouldn’t someone who can’t routinely work 15-hour days. There’s gonna be a lot of intense shit going to get this job done that it’s gotta be taken as seriously as a first year associate entering McKinsey or Goldman Sachs does.

But seriously, it should be someone who intuitively understands the innovation economy.

S/he must speak the language of the internet’s infrastructure, platform economics, net neutrality, cloud computing, and big data, among others.

S/he must be student of technology history, and how nations made the leap through technological advancement.

S/he must have spent time in the Valley. Or studied the technology trajectories of Japan, Singapore, Korea, or Taiwan. S/he must have witnessed the dawn of the internet in the Philippines. S/he must know the reasons why the future of the digital economy in the country rests with small businesses, not the big conglomerates. S/he must know who Ada Lovelace is.

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The local fashion industry likes to use the word “peg” as a term to describe a look, style, or palette to imitate. So in a nutshell, here are 5 quick pegs on which kind of leaders we’ll need at the DICT founding team.

The Operator

Think Facebook’s Sheryl Sandberg. This is the uber-manager who is both a captain and soldier, a strategist and tactician, a general and a diplomat. The Operator gets things done not just within a small team, but with a vast array of often conflicting constituents in pursuit of a common mission.

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The Product Visionary

This is the young gun who boldly goes where no one has gone before. That is my 2nd second Star Trek reference in this post, so I’ll just stop right there. But seriously, this is someone like Chris Hughes, who helped create the technology backbone of the Obama campaign (and a Facebook co-founder).

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The Product Visionary gets digital media and has an intuitive understanding of how users interact with technology to make their lives better. S/he has a design & user experience background, and can for instance, design easier ways to file taxes online, or renew drivers’ licenses, or apply for passports.

The Platform Builder

Think Google CEO Sundar Pichai, who spent a more than decade building platforms such as Maps, Gmail, Chrome, and Android.

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A Platform Builder running the DICT would bring a step-change in how e-government works. For instance, imagine a one-stop Singapore-style online portal for business registration. Doing so would require integrating the back-ends of various agencies involved in the process, from the SEC, BIR, and DTI to LGUs, PhilHealth and SSS.

The Data Guy

This is the country’s chief data scientist, tying together all the data-related initiatives of the government such as Data.gov.ph,  or helping Comelec prevent another data leak. Think someone like DJ Patil, the chief data scientist of the United States.  S/he can help predict and counter emerging cyber security threats.

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The Insider

This is the career executive who has spent decades working in tech. S/he started in engineering, then moved up the ranks in management to lead teams with an ever increasing scope and complexity, and eventually becoming responsible for an entire platform.

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Someone like Minerva Tantoco – the Filipino American CTO of New York City and who spent many years in the technology side of financial services – would be perfect for this. The incoming DICT team should definitely have her on their advisory board.

Bonus: An army of Bertram GilfoylesYeah, the DICT would likely also need an army of guys who can get shit done without caring for the politics-induced BS that comes with the territory. And guys like that won’t work for the kind of guy rumored to be angling for the post.

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What kind of leader should be DICT secretary? Chime in below.

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Who Should Withdraw, Mar or Grace? The Data Says Mar Should.

As of May 7, Rodrigo Duterte is about to win the presidency.

When Duterte first announced his candidacy,  I seriously considered him because of his policy of making it fast and easy to register businesses in Davao. As a startup founder scarred by red tape, bribe attempts from the SEC and Makati City Hall, and the despotic tax system, I was genuinely intrigued.

But based on all the evidence I’ve come across, I’ve come to the conclusion that Mar Roxas is a better fit for the job.

My emotions and grievances want me to support Duterte. But reason dictates that my vote goes to Mar.

I’ve weighed any potential benefits with the greater risks that a Duterte presidency can bring. The cussing and womanizing I can personally live with. But the extra-judicial killings, his treasonous and idiotic approach to China, and this lack of understanding of the economic & technological forces that can sink the BPO industry and our OFW remittances – all these are existential threats to the very idea of a “Philippines”.

Nations fail all the time. And we almost always underestimate how fragile our way of life is. This is the 30th year of our little democracy project in these islands. Duterte could push us to the precipice.

Winning in the Home Stretch

SWS and Pulse Asia show that he is number one, with a 30-33% lead. And contrary to what people say about the 2010 vice-president race, the surveys have always gotten the presidential race right. They may have been mistaken on the 3rd ranked candidates in the past, but that hardly matters right?

Rodrigo Duterte’s Facebook engagement numbers are off the roof. Even Google thinks he’s won already.

Can he be stopped? Unlikely. Given that both Mar and Grace have split 40-45% of the vote, and the last minute momentum that make the undecided vote gravitate to the frontrunner.

So it’s with the same rationality that made me conclude that Mar is right for the job that makes me realize that the best chance for stopping a Duterte presidency is for Mar to withdraw and back Grace. Not the other way around.

I’m writing this because at this point, Mar and Grace are probably trapped in an echo chamber of supporters, where the voice of reason and the triple threats of the confirmation bias, the availability bias, and loss aversion are amplified by group think and the fatalism of Filipino culture. We will win. Good will prevail. We will fight, are all shades of the same fatalism.

So I’m going to write this as objectively as possible. And if you feel queasy confronting data & evidence, I’m sorry but this is what the numbers bear out.

Pulse Asia’s Vote Diffusion Question

What most people don’t realize is that Pulse Asia asks a second choice question and then breaks down this preference within specific voting groups. So for instance, we can see among Duterte supporters, what % prefers Grace, Mar, etc as a second choice.

Pulse Asia calls this 1st to 2nd choice diffusion and it is useful in understanding where votes go if either Grace or Mar withdraws. I averaged out the diffusion percentages of three Pulse Asia surveys, March 8-12, April 19-24, and April 26-29.

* The way this question was asked is: “If your chosen candidate does not pursue his/her candidacy for whatever reason, whom among the remaining people would you for as President if the elections were held today?” The question also doesn’t prevent respondents from naming their 1st choice as their 2nd choice too – “Si Duterte talaga eh, wala nang iba”, is an answer that approximates this.

Across all voting groups, Grace is the dominant 2nd choice. For example:

  • 38% of Duterte supporters have Grace as a 2nd choice (an important consideration – and I’ll get back to this later).
  • 45% of Binay supporters have Grace as a 2nd choice, and
  • 41% of Mar supporters pick Grace as a 2nd choice.

Elections PostIf you zero in to Grace vs Mar, you’ll clearly see that more Mar voters will be attracted to Grace, rather than the other way around. 41% of Roxas voters pick Grace as 2nd choice. Only 24% of Grace voters pick Mar as 2nd choice.

Elections Post-1

Who are the other picks of Grace voters? Binay (27%) and Duterte (19%). This gives credence to the argument that Duterte’s base will get even stronger if Grace was the one who pulled out.

Now if you assume 54.4 million registered voters, a 75% voter turnout (like the previous election), you get a base of 40.8 million votes up for grabs. (Hey, that could’ve been a PR campaign of GrabTaxi, yes? GRABVOTE = click on this app and a vote buyer will appear where you are to bid for your vote. Wait sorry, my ADHD kicked-in. Back to the math).

If you then average out the previous 3 Pulse Asia Surveys, Duterte ends up with 30% of the votes, equivalent to more than 12 million votes. This ignores any last minute momentum effects that could push his lead to more than 35%.

Elections Post-2

If Mar pulls out, asks his base to consolidate support for Grace, where could it go? Based on his diffusion numbers, Grace could gain more than 3 million votes.

Elections Post-3

This could be higher (if Mar is convincing enough and people rally to Grace) or lower (if the limited time prevents him from getting the message across).

The effect of this brings Grace ~9 million votes to within striking distance of Duterte’s 12 million. Duterte of course will gain some votes from Mar, approximate 1 million+ based on the diffusion numbers.

Elections Post-4

What will turn the tide?

Enter the most powerful group of people in this election: the roughly 2 million Undecided voters.

What  the press also seemed to miss is that the Pulse Asia survey also had a question buried deep that allowed us to get clues on where the 5% of Undecideds could go.

After someone says that in the 1st choice question that they are “undecided”, they are also asked the 2nd choice question. In that question, around 20% gave an answer. And among this 20%, the split are: 43% Grace, 19% Binay, 16% Duterte, 11% Roxas.

43% of ~2 million people gives Grace another 800,000+ votes, enough to turn the tide into a narrow Grace victory. In addition, the opposition rallying around Grace would matter to the close to 40% of Duterte supporters (4 million+ people) who picked Grace as their 2nd choice. Even if just 10% of these people switch last minute (400,000) gives Grace a clear 1.2 million vote lead (800k + 400k) over Duterte.

Elections Post-5

A lot of things need to happen in so short a time for this scenario to come true.

But if Mar, Grace, Jojo, and Miriam truly believe Duterte is a threat to our democracy, they have the power to make this happen – if they just need to remove their ego out of the equation and listen to the evidence.

They should try because the alternative – a Leni VP victory leading to an LP-initiated impeachment against Duterte – does more damage to our institutions than this last-minute rally.

On a personal note, I think the conversations between Mar and Grace would be completely different if they had  top-notch data science teams instead of PR motherfuckers surrounding them. It’s the data guys who would keep them honest, by not only keeping close track of the surveys, but complimenting this with other big data sources from the internet and social media. If someone from the LP for instance, was doing sentiment analysis, they wouldn’t have to wait till the last minute to sense the grassroots grievance of FIlipinos. And maybe the predominately male LP inner circle would’ve seen that Leni would’ve been the more viable presidential candidate. I have a friend who said late last year that Leni should’ve been fielded as President instead. I doubted it at the time. But how prescient he was. Leni’s the direct anti-thesis of Digong.

Whoever thought democracy could die because people couldn’t understand the data.

PS – this was a quick analysis done in 2 hours – I apologize for any errors. 

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The COMELEC Data Breach is the Philippine National Disaster We Should Be Talking About

In the 2002 film Red Dragon, Francis Dolarhyde (Ralph Fiennes) is a serial killer who murders his victims as they sleep in their homes, at the behest of an alternate personality whom he calls the Great Red Dragon.

Dolarhyde proceeds to engage in necrophilic acts with the mothers’ corpses, while embedding shards of broken mirror glass into their eyes to watch himself.

FBI agent Will Graham (Edward Norton) deduces that Dolarhyde has very personal information about this victims – who they are, where they live, how many children they have, the layout of their homes, where to enter, and when best to attack. Dolarhyde knows this because he is a home video technician: he works for a lab that converts home video into VHS tapes. The hours of footage give him an intimate look into this victims’ lives.

He just had analog information. Imagine the damage if he had all the digital information about his victims.

Today, countless of Francis Dolarhydes have access to your private information, thanks to the Commission on Elections. And if you’re not outraged because you can’t visualize what 338 gigabytes of data are, maybe you can visualize what it can do:

Imagine someone opening a bank account under your name, using a fake driver’s license and passport. For years, your fake account is used to launder money, without your knowledge. Imagine your residential address easily accessed in one database. Imagine your email being targeted by phising scams. Or being the target of scams and extortion. Imagine a rogue politician using millions of voter data to keep track of his constituents in his municipality, creating detailed voter records and using this for political gain. All of this data is now out in the open.

And the worst part? We don’t even know how exactly it happened or what steps are being done to make sure it doesn’t happen again. The COMELEC even downplayed it. Incredibly, COMELEC wasn’t event transparent enough to disclose what exactly what kind of data was leaked. Only Rappler did an in-depth report on what was actually in the  data that was released.

The rest of local media has largely ignored this; it never made it to the headlines in the same way Kidapawan or the campaign trail did. It only received follow-up articles after Trend Micro, an IT security firm, released a blog post admonishing the government’s responses. None of the presidential candidates think this is a serious concern.

As a result, not only are we not seriously talking about it, most people don’t even know the breach happened. And there could be more breaches we don’t know about – according to security firm Mandiant, data breaches remains undiscovered for more than 6 months.

Make no mistake about it: the COMELEC breach is a disaster of national proportions: it’ll open the floodgates to more attacks and leave our institutions and economy vulnerable for years to come.

Gizmodo is now calling this one of the biggest government data breaches in history.

Blog - Data Breaches

Sources:  data compiled from Rappler.com, MIT Technology Review

The hackers posted the database online on March 27, more than two weeks ago. The fact that it is taking our collective brains so long to appreciate the gravity of this situation is a tragedy. It’s like a different parts of Philippine society got into a car pissed drunk, the driver falls asleep on/behind/in the wheel, and we are blissfully laughing (or arguing over which candidate performed best in the last debate) all the way to the car crash.

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Dancing our way to the elections…

Why does this matter?

It matters because we have a $25 billion business process outsourcing industry that employs more than a million Filipinos. This industry survives on the trust of tens of thousands of corporate clients that their data would be handled securely.

It matters because the tension in the West Philippine Sea is leading to the most destabilizing geopolitical conflict of our generation. In this conflict, it’s been documented that one of our adversary’s potent weapons is cyber warfare and espionage. Can China bring the country to its knees by remotely shutting key telecommunications infrastructure, the internet, the electrical grid, and the water supply? Theoretically, it can. In this context, we should be grateful to Filipino hackers for pointing our vulnerabilities.

This conversation matters because the amount of data the government will capture about us will only grow exponentially in the next several years. By 2020, humanity will be producing 40 zettabytes of data. If that’s hard to imagine, picture this: if 1 gigabyte is equivalent to a cup of Starbucks coffee, 1 zettabyte is equivalent to enough Starbucks cups to fill the entire Great Wall of China.

And lastly, it matters because although the COMELEC’s automated election system is run as a separate network, the perception of legitimacy will be the most crucial outcome of a tight race like this (yes, Duterte Bros, it is still anyone’s bet).  Didn’t a great rebel once say that “Revolution, as you know, is like gravity. All it takes is just a little push…

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Oh wait, I think he meant “madness”, not revolution. Just the same.

Why doesn’t COMELEC “get” the problem?

One clue is that none of the COMELEC commissioners has anything that remotely resembles a background in computer science, engineering, or data science. In an age of automated elections and biometric voter data, isn’t this very very strange?

Blog - Data Breaches-1

Now, since our commissioners are esteemed legal luminaries, you might expect that they would have at least set in place the right institutional and legal framework to enable the COMELEC to protect its data. On this front, it seems there is more damning evidence.

For example, here’s the text of Republic Act 10367 – the law that requires mandatory biometric voter registration. Scroll down to Section 9 on database security and you’ll see this broadly articulated sentence: “The database generated by biometric registration shall be secured by the Commission and shall not be used, under any circumstance, for any purpose other than for electoral exercises.”

Now that sounds cool and sensible enough. After all, it’s not the job of the legislator to get into the practical, implemention-related details. That would fall under the jurisdiction of the COMELEC when it issues the Implementing Rules and Regulation for Republic Act 10367. It’s in the Implementing Rules and Regulations you would expect the COMELEC to at least spell out how it would provide for database security, who would be responsible, the milestones and steps involved, and the costs. Basis management stuff, right?

Here’s a copy of the IRR. Scroll to the relevant section on database security and you’ll notice the glaring fact that the IRR simply copied the text of the Republic Act. In short, there was neither a plan nor a framework from the COMELEC to secure it’s biometrics database (which according to Rappler, was part of the breach).

Another clue is the hard question on institutional checks and balances. As a separate constitutionally mandated commission, the COMELEC’s tech isn’t subject to the oversight of the DOST nor is its website part of the government’s web hosting service. As a result, nobody in its leadership team or its IT department are asking the right questions or providing a check and balance. This is admittedly a tough question to crack – how do you ensure the commission’s independence while ensuring that it’s tech adheres to global best practices? This is another case of technology development outpacing the ability of our laws to keep up.

Why has the media under-reported this story?

There are many obvious reasons for this. In an election cycle where journalists are spread out across the campaign trail and many more equally important stories coming up (Kidapawan, the RCBC-Bangladesh hearings, Poe’s disqualification, which candidate is which celebrity endorsing, etc), it’s easy for journalists and editors to fall into the trap of writing about stories where it is easy to get and verify primary sources (a campaign rally, a Senate hearing, a Supreme Court ruling, etc).

To understand the COMELEC data breach, journalists not only have to comb through the leaked data (which is exactly what Michael Bueza and Wayne Manuel did at Rappler), they have to get a crash course on database architecture, data warehousing, encryption, and network security.

Bring all of these together under an environment where news outlets prioritize speed, clicks, and eyeballs, and you’ll see the underreporting as a another case of market failure. And in every market failure, there’s an opportunity.

If you are a smart journalist, you’ll realize that the world is changing far faster than what seems to be apparent in your daily beats. You’ll realize that fundamentally, we are an island nation and an island people cut off from the world. And there are so many things out there that we don’t even know we don’t know.

You’ll realize that – due to no fault of your own – our educational system and current employers left us woefully unprepared for what is to come. And as a result, you’ll be taking steps to learn new stuff, from platform thinking to network effects.

You’ll be studying R, Python, and D3 on the side because this gives you a skill set that your peers (and editors!) won’t be able to match and makes you incredibly more valuable in the long run.

In Red Dragon, Will Graham had to break the rules to catch Francis Dolarhyde. He had to seek Hannibal Lecter’s counsel. He dug deep into the tragic pathology of his adversary. He had to stretch himself, learn completely  new things, and find his own Great Red Dragon.

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