Entrepreneurship, Founders, Philippines, Startups, Uncategorized

Top 10 People to Meet in the Philippines Startup Scene in 2014

On a Sunday morning in early January, I got a text from Manila Angels‘ Christian Besler. Nope, it wasn’t a drunk message sent at 3am. It was about grabbing coffee at the Pen with two Bay Area executives vacationing in Manila. Both got a hold of Christian via Twitter.

"Dirty Kitty" is a fixture at the parking lot of the Peninsula Hotel, a centrally-located meeting spot for intros and deals

“Dirty Kitty” is a fixture at the parking lot of the Peninsula Hotel, a centrally-located meeting spot for intros and deals

Despite the booming local scene, there’ still a lot information asymmetry between what’s going on-the-ground, and what entrepreneurs and investors from Silicon Valley know. After all, the Philippines really isn’t a mainstay on Techcrunch or Mashable. When I met a partner from Kleiner Perkins, her first question was “What’s going on out there? I’ve never visited, but all the social networking and digital media startups we’ve looked at always gets a ton of traffic from the Philippines.”

The country’s startup scene has generous servings of good news: 7.2% GDP growth, double digit internet + mobile user growth, investment grade ratings, and growing cohort of tech entrepreneurs.

So how do we bridge the gap? In a lunch forum hosted by the Harvard Business School Club, Sheila Lirio Marcelo, the Filipino founder of recently IPOed Care.com (which popped 43% on its first day), mentioned that the key is always through PEOPLE.

The goal is to make Manila a social hub for tech startups in the region – an alternative launchpad into Southeast Asia vs expensive, big brother, and tiny Singapore.

So…. for investors and founders who are likely to first discover the Philippines as a.) tourists, and b.) as relatives (a Filipino spouse or in-law), we’d like you to stay a few days, fall in love with the country, and in the process, also discover the vast potential of its nascent innovation economy.

The goal of this post is to make it easy for you to get seamlessly plugged-in into the local scene. So, on this Sunday afternoon, I sat down for 20 minutes and scribbled the top 10 people you should meet based on:

  • Execution: A track record of getting things done. No talking heads on this list!
  • Immersed in the local community: Understands local dynamics and gives back through their time and resources
  • Well-connected: Has a quality network across different stacks.
  • Accessible: Responsive, and generous with their time

There are players, of course, like ICCP Ventures, but none of them have demonstrated serious interest in high-risk, early-stage startups and preferred to stick with more mature plays. There are a ton of successful entrepreneurs, of course, more than this list can handle, but 99% of them are either focused on brick-and-mortar or may not be as accessible.

So if you’re new to the scene, these are the top 10 people to meet in the Philippines tech scene, in alphabetical order:

1. Amazon Web Services: The ASEAN team led by Anne Salada-Chauffaille and Franco Eisma has been quite active in evangelizing across the technology spectrum, providing not just cloud computing infrastructure but educational events for local conglomerates and seed-funded startups. Check out the next AWSome Day this February.

2. Ayannah: Mikko Perez and Dicky Alikpala. Ayannah is a digital platform play focusing on the unbanked in emerging markets. Mikko and Dicky are the funniest couple-preneur in the country. They’ll probably kill me for saying that. But I’m sure they secretly enjoy it. Times with these guys are never boring. Lose the serious face and prepare for a one-hour meeting to turn into a four-hour laugh fest.

3. Hatchd: Manny Ayala & Nix Nolledo. Hatchd is a startup studio that builds companies “from ideation to operation.” Its portfolio includes Rappler, the leading social news network in the country, and Purple Click, a digital advertising firm. (Disclosure: Hatchd is an investor in my company). Manny is an experienced media and tech executive, while Nix founded Xurpas, a leading mobile content provider. Both are pretty active in Entrepreneurs’ Organization.

4. Ideaspace: Earl Valencia. The incubator of the Metro-Pacific / PLDT Group is led by former Silicon Valley executive Earl Valencia and has invested in a number of small, mostly pre-revenue ventures. Shucks, you just missed the application for the 2014 cohort so stay tuned for the next one.

5. Kickstart Ventures: Minette Navarrete. Structured as a 100% subsidiary of Globe Telecom, Kickstart is a seed capital fund that “enables startups to achieve a faster launch and a better business trajectory through a combination of funding, infrastructure and facilities, mentoring, and market access.” Though launched less than two years ago, Kickstart now has the biggest portfolio (close to 20?) among local startup investors.  Minette and her team are experienced investors, operators and community builders, and are plugged in to the broader Singtel Regional Seed Network. (Disclosure: Kickstart is the lead investor in my company)

6. Manila Angels: Christian Besler & Paul Rivera. Launched just this January, the country’s first angel network now boasts of close to 50 angels and is currently screening its first cohort of 25 pitches. If you’re popping by Kickstart, make sure to check in with Christian (who is also VP Community at Kickstart) and Paul (Co-founder of Y-Combinator backed Kalibrr), whose company is co-located at Kickstart HQ. .

7. New Leaf Ventures: David Bonifacio. NLV regularly hosts Better Business Brunches in the Bonifacio Global City and is positioning itself as a hub for B2B investments and technologies. David is an energetic entrepreneur and storyteller who handles multiple roles for CBTL Holdings – the local franchise owner of the Coffee Bean and Tea Leaf. And no, BGC wasn’t named after him.

8. PhilDev:  Phildev is a foundation of US-based Filipinos who are passionate about creating linkages between local entrepreneurs and the world. Chaired by Tallwood’s Dado Banatao, some of its trustees include Eric Manlunas of Siemer Ventures (who has invested in a few local companies) and Sheila Lirio Marcelo.

9. SGV: Winston Chan. Winnie runs the advisory group for SGV, the country’s largest professional services firm. Winnie’s been key to helping several multinational clients establish BPO operations in the country. There are valuable synergies between tech startups in the BPO space – from US-based companies setting up outsourced operations (TripAdvisor, Amazon, etc) to well-funded startups staffed with local, talented engineers (Bright.com, Lenddo, etc) to startups focusing on BPO clients (Kalibrr).

10. Sulit.com.ph: RJ & Ariane David. The biggest classifieds player is run by the friendly husband+wife team of RJ and Ariane. RJ’s a wonderful supporter and mentor to younger founders throughout the country, and maintains a regular presence in local entrepreneurship and tech conferences. Make sure you’re updated with your gadgets and gaming news for a fun chat.

The good news with these groups? Eight are mainly present in the Makati-Fort Innovation Strip. Ayannah and Sulit.com.ph are pretty close by in the Ortigas district – a quick twenty minute drive from Makati.

Who else should be on this list? Which events should visiting founders look out for? Let me know below.


I Can Buy You, You, and This Economic Bubble

Actress Anne Curtis

“Bubbly” (Photo credit: Wikipedia)

As Ms Curtis’ hand was making its way through three cheeks last week, Forbes columnist Jesse Colombo succeeded in getting everyone’s attention with a piece on how we’re all smoking mushrooms and are unknowingly fueling the next big bubble.

Bubble forecasters have it easy. Pick a popular topic. Issue a gloomy forecast. Throw in a couple of charts that trend upward (often out of context).  Sit back a few years, watch the market correct (or the bubbles popping), and get to say “I told you so.”  If he’s right, then he can claim street cred for that call. If he’s wrong, he can claim that his timely warnings prevented a bubble. He doesn’t really lose anything either way.

We do: in misinformation and getting lumped together with frothier emerging markets like Singapore or Hong Kong, and thus the foregone foreign direct investment.

So, I feel I have a responsibility to put my views out there. Not just on this so-called bubble, but on a social media-obsessed media culture that incentivizes content like this.

What is a Bubble?

I can “boldly predict” that Facebook’s stock price will come down – and it obviously will at some point. That’s the nature of the market.

Loosely throwing around the word “bubble” is irresponsible. It’s a catchall term – like “sustainable growth”, “competitive advantage” and “efficient markets.”  Rising prices don’t mean we’re in bubble territory.  Rising consumer spending, FDI, government spending, and low interest rates on their own don’t lead to bubbles.

The distinction matters. Bubbles require very different policy responses from regulators. Premature bubble talk misrepresents the economic prospects of the country to foreign investors – something the country desperately needs.

So for the purpose of this note, here’s what I mean when I refer to “bubbles”. Three things characterize one, and here I borrow from the work of Charles Kindleberger:

1. Rapid increases in prices that don’t reflect the intrinsic, fundamental value of an asset. The mismatch between market vs intrinsic values is a crucial point. So let’s repeat that again: in a bubble, prices do not reflect fundamentals. So when a friend claims that an asset seems to be growing more and more expensive, the first question one should ask is, “relative to what?” (ie should you really P10,000.00 for that juice cleanse?)

2. Speculative, short-term investments in assets with unknowable risks. In the run-up to the 2008 global crisis, investors who took on collateralized mortgage obligations (repackaged and re-rated derivatives from pools of questionable mortgages) were speculating because these were securities that were hard to understand.

3. Herd behavior. The dot-com crash saw masses of would-be entrepreneurs and investors mindlessly jumping into the internet bandwagon.

Looking back, I’ve been a victim of all three, so I’ve learned a thing or two. I eagerly jumped the bandwagon of 1990s comic books: multiple X-Men #1 covers, Gen 13 #1, Brigade #1, and Rob Liefeld. All in the hopes that these would be worth gold one day. These weren’t fancy collateralized debt obligations or pre-series A participating preferred stocks, but for a 12-year old in the 90’s, P10,000.00 lost to comic books were a lot. And over the years, I’ve repeatedly dodged (that pretty, popular girl in college who turned out to be… never mind) and fallen prey to speculative manias (the mini-bubble of a Management Engineering degree). The underlying principles are similar: a a huge mismatch between market and intrinsic values, speculation, and stampedes.

Mr Colombo’s main point is that this period of economic expansion is driven by cheap credit, and that’s a bad thing, because this in turn is driving a.) a bubble in real estate prices, and b.) unsustainable, debt-driven consumer spending. There were a number of other arguments (which have been effectively tackled here, and here), so I’ll focus on these two.

It’s almost impossible to predict bubbles using the traditional economic models – these tend to be lagging, not leading indicators. Maybe the Nate Silvers and the Nassim Taleb’s of the world can sift through all the statistical gobbledygook. I’m not smart enough to do this.

I can, however, look at people. As an entrepreneur, I’m lucky not to be stuck in a desk and be in a position to constantly meet people outside my company. My view involves asking three questions about the underlying behavior of our economic models:

First: Are people buying property like crazy? Nope. My basis of comparison is my time in Singapore: when new condos are launched, thousands of buyers flock to showrooms, with many projects selling out in hours. We definitely don’t see that kind of mania here. If this were the case, they we wouldn’t see all those spam texts and pesky real estate salespeople handing out flyers in the malls.

Oh, and look here. The number of license-to-sell permits from the HLURB for high end condos has actually decreased this year. Note that a license-to-sell doesn’t mean an actual sale – this is the permit given to developers to allow them to start selling a housing unit. It’s a measure of upcoming supply. If this were a bubble, this number would be up this year – not down. And as you can notice, the number of licenses are down across the board. (This is actually not good because the country has a housing gap of up to 4 million units. But only 22,270 socialized housing units were licensed from January to July this year.)

Next, let’s look at real estate prices. Yes, prices have risen. But is there a huge mismatch from its intrinsic value?  One way is to look at rents in relation to property prices, which is how The Economist tracks global property prices. Looking at CBD prices (since this the data Mr Colombo quoted), the average monthly residential rent is P800.00 per sqm vs an average property value of P132,000.00 per sqm. This is an asset yield of 7.3%. Asian property buyers will recognize that this is actually a decent deal. In the peak of Singapore’s housing booms, yields can fall as low as 1-2%. For a so-called economic analyst, it’s annoying how he didn’t take the time to dig into this.

Plus, these properties were purchased by Filipino households who are significantly less leveraged than their US counterparts – so even if property prices “burst”, there will likely be no widespread sell off that can further deflate prices.

Second: Are people maxing out credit cards for conspicuous consumption like, say, handbags and a trip to London? Nope. My basis for comparison: my time in Boston, where it is common to take on additional student debt just to go to that weekend trip to Iceland.

Lets dig deeper into Mr Colombo’s contention that easy credit will make consumers spend beyond their means. If this is the case, then we should see numbers like this: massive credit card growth, increasing credit card balances, and increasing consumer defaults.

What he fails to see is that the Philippines has one of the lowest credit card penetration rates in Asia. So even if the vast majority want to splurge on a Louis Vuitton bag, they simply can’t. The vast majority still pays in cash.

This is data from the BSP showing the balance of credit card loans. Credit card balances grew 10% vs last year – quite reasonable in an emerging market and coming from a small base. If we assume 4 million cardholders, then we have around P39,000 in average card balance per card holder: hardly reminiscent of the US.

The problem with with Mr Colombo’s argument on cheap credit is this – it’s cheap relative to what? After all, short term interest rates are still 4-7%, and long term rates at 7-12%. Debt may be cheap by historical standards, but not by any means too cheap that it makes everyone take on debt.

Oh, and look here. Mr Colombo likes to post charts that trend up, such as this one, which he uses to assert that consumer spending is growing unsustainably. But if you look at closely at the scale (don’t be deceived by the sizes of the bars, look at the numbers) and the time period (from Jan 2008 to the present), you’ll see that consumer spending grew 6% year-on-year in 2013 and 7% the year before. An emerging economy whose consumer spending growing 6-7% a year? Hardly sounds excessive to me.

Third: Are tech companies getting unjustified investments? Companies that play in tech + emerging markets are a good bellwether for observing bubbles, simply because of the perceived high growth opportunities. As an entrepreneur in this space, am I seeing frothy behavior among investors? Absolutely not. Domestic investors still tend to be cautious with valuations. And foreign investors are wary about things like user acquisition, regulation, and logistics.

So, based on purely man-on-the-street, daily observations – no, we’re likely not experiencing an overheating economy.  What will make my answer change? When people rush to scoop new condos a la Singapore showroom launches, when my friends start complaining about credit card debt, and when we see pre-product, idea-stage startups getting $5 million pre-money valuations.

What’s Behind the Scenes? Fear Mongering and Content Marketing

I always love a good debate, but with a bold pronouncement such as Mr Colombo’s, the bigger question to ask is this:  Does one have an incentive to, at best exaggerate the context, or worse – distort the facts? It seems he does. Worryingly, Mr Colombo proclaims to be an investor – without disclosing if any of his investments may benefit from his writing (for instance, shorting an emerging market stock). Mr Colombo is a self-proclaimed bubble watcher – his entire career is dependent on making dire warnings, and his strategy is to attract online traffic via bold proclamations of various sectors that are heating up.

And Mr Colombo is definitely concerned about traffic, as he proudly states in a previous post,I published a report that went viral, and was read over 145,000 times and shared over 6,700 times via social media.” This is part of the worrying side of journalism in the digital age – when writers optimize for views and shares, they under-optimize for quality and integrity. It’ll be great to see him in a local conference (and debate him on stage).

And this leads us back to Ms Curtis. Celebrity culture thrives in manias and herd behavior – popularity snowballs and leads to more fame. Ms Curtis’ bubble might have temporarily popped last week, though she was quick to apologize. In trying to be a celebrity bubble-spotter himself, Mr Colombo may have unknowingly burst his own.


Relief Goons


At Escolta, the restaurant at the ground floor of the Manila Peninsula Hotel, there’s a private dining room in the far side corner, just beside the hotel’s pedestrian entrance by the Makati Avenue side.  It’s 9pm and the restaurant’s patrons are slowly exiting. Inside the private room, five men were assembled, enjoying sips of their Johnny Walker.

“May bagong release. Mga isang-daang milton. Sabi ng mga contact natin sa DOF at NDRRMC,” proclaims the man at the head of the table.

“Pagawan mo na ng dokumenta sa brod natin sa Leyte. Sabihin mo isulat niya na para sa food and medical para sa mga barangay na hawk niya,” says the man to his right, signaling the younger man in front of him who appears to be part of his staff.

“Magkano ang SOP natin, brod?” says the man at the far end.

“Pare naman, dahan dahan tayo rito. Maraming nasalanta eh. Baka magalit. Mainit pa. Lalo na nakadetain pa si ma’am Janet”

“Pero brod, kailangan din talaga eh. Sampung truck ko yung natangin sa bagyo. Sira negosyo natin. Baka mahirap maka pondo para sa 2016.” 

“Sige pare, ibaba nation at SOP from 50% to 30%.  Alam kong kailangan din natin. Thirty million parin yun. Hindi naman siguro mapapansin.” 

“Salamat, brod.” 

 “Pare, okay na ba yung pinsan mo? Natangin daw yung bahay diba?”

“Oo, pare. Sirang-sira. Pero nakatulong daw naman si Mayor. Kaso lang kulang pa rin.” 

“Sige, bigyan mo rin isang milyon. Sabihin mo galing sa ‘kin. Bilisan natin ‘tong operation na ‘to. Bago makilatis ng DOJ.” 

This is a fictional story, of course, a product of my cynical imagination. But it’s not really hard to believe that clandestine conversations like this will take place in the months ahead.

The worst effects of Typhoon Haiyan are yet to come. And these will be man-made disasters rather than natural ones. With the economic loss estimated to be $12 billion – $15 billion, or roughly 5% of GDP, rebuilding will take many years and a substantial amount of public funds disbursed, which we all know will be a seen as a bonanza for a rotten minority.

For the foreseeable future, preventing the hundreds of millions of international aid from falling into the hands of corrupt officials will be a major public interest battle. As of November 16, the Philippines has received over $124 million in aid from the international community, and the UN kicking off a $300 million pledge drive. Once the immediate relief gets into full swing, it’s time to start thinking about the next disaster, and getting the right policies in place to manage the deluge of funding into the system.

If there’s anything that the international aid community  has learned from the Aceh tsunami and Haiti earthquake, it’s that the resulting corruption after a disaster can be more be damaging than the catastrophe itself.

But if Facebook users, civil society and overseas Filipinos can show the same level of engagement and empowerment that they did with this week’s relief efforts, then I’m confident future would-be-Janets would think twice before dipping their hands in the aid jar.

Some possible immediate steps are: 

1. Publicly disclose the flow of funds.  While the government is right in announcing the launch of a website that will track the flow of foreign aid. Granularity will be the name of the game. Although public databases like the FTS can track the global flow of aid, we need tracking on a barangay level – with each barangay council showing in a very transparent way how much funds are coming in, where they’re being spent, and metrics for progress.

2. Time to pass the Freedom of Information bill. Local officials will of course use multiple layers of legalese to prevent 100% transparency on disbursements. That’s why it’s time to prioritize the FOI bill, as it allows citizens to accelerate requests for government records. This, combined with technologies to speed up transparency (Think of Google’s People Finder, but instead, use it as an open data platform showing a network map of corruption risk areas) will maximize its impact.

3. Make any crime related to the theft of Yolanda relief funds punishable by death. Tough one to pass into law – but a crime of this kind is essentially treason of the worst kind.

4. Enact whistleblower mechanisms on a barangay level. Think of a easy-to-use whistleblower hotline (via text, a board at the barangay hall, or phone) that can empower citizens with an immediate feedback loop to report instances of local corruption. This means also expanding the definition of corruption beyond fraudulent financial practices, such as cronyism, nepotism, and the using one’s control of resources in exchange for sexual favors, as we’ve seen in various embassies in the Middle East. Seeing a widely-shared Pinterest board for Epal practices like politicians’ names on food packs would be welcome.

5. Celebrate the success stories. When Mayor Arquillano of San Francisco, Cebu, evacuated an entire island prior to the storm, he ended up saving 1,000 lives. When all the island’s houses were discovered to have been destroyed, it became evident that years of disaster preparedness and adoption of best practices can indeed substantially stem the loss of life.

There are longer-term fixes, of course, such as rethinking the division of labor between the NDRRMC and local governments, expanding disaster insurance coverage, and accelerating housing finance for low-cost, typhoon-resistant housing, but these require navigating through immense legal and political quagmires. In the meantime, the above can be immediate fixes.

As for me, we’re trying to contribute as best we can. I help run AVA, an e-commerce website for design brands. Though no single company can make a dent on a number this large, all of our efforts combined can make a difference. To this end, AVA will be highlighting homegrown brands and social enterprises this Christmas. Homegrown and social enterprise brands will also play a more active role in our merchandising strategy next year. Your support for their products helps grow local businesses, sustains raw material suppliers, and creates new jobs. As a result, every peso you spend in supporting these jobs has a multiplier effect on the local economy.

I’ve also been having a number of conversations with friends in the startup community. A common problem we face as entrepreneurs is building the skill set and capabilities of the local tech industry in areas such as product management, agile development, lean startups, growth hacking, and performance analytics. One of these areas is using technology for disaster preparedness in the short term, and prevention in the long term. Hence, one our passion projects is in education – helping improve local talent by matching them with proven entrepreneurs and experts who have actually built businesses.  If you’re interested to learn more about our efforts, feel free to reach me here.

Entrepreneurship, Philippines, Startups

Can the Philippines be the Silicon Valley of Social Enterprise?

Browse through Vogue and you might notice these colorful clutches.

Thoughtfully-designed and beautifully-handcrafted, they marry form and function. The brand itself has grown a loyal following the past several years. It’s worked with some of the most established designers. And its story has garnered wide appeal across different segments – adored by celebrities, supported by moms, trusted by twenty-somethings, and studied by policymakers. That’s an incredibly hard thing to do in the finicky world of fashion.

This might sound like a label straight out of the fashion houses of Milan or Paris, but these clutches come from a humble social enterprise based out of San Juan in the Philippines.


 (Photo credit:  R2R and Maine Manalansan)

Rags2Riches is just one of the many social enterprises scaling up all over the country. It’s a great example of what the Philippines can offer the world. The Maia clutch, designed by Rajo Laurel, has been a consistent bestseller and it’s now making waves abroad, thanks to a partnership with the retail chain Anthropologie. Co-founded by Reese Fernandez-Ruiz, R2R works with artisans from poor communities to produce wonderfully designed products and improve their livelihood.

Fashion presents a fascinating opportunity for local social enterprises to reach a global market – we have lots of talented designers, a cluster of manufacturing zones in Manila and Cebu, underserved artisan communities, amazing brand managers, and a growing cohort of e-commerce entrepreneurs. There are thousands of social entrepreneurs like Reese, and now is their time.

Business for the Next Billion

The bigger story is that the Philippines has been incubating social enterprises long before the word became fashionable.

CARD is a pioneer in micro finance. Hapinoy has been creating innovative supply chain solutions to the quintessential feature of Filipino retail – the sari-sari store. Sari has been developing interesting point-of-sale technology for this space too. Gawad Kalinga, a leader in the space, launched the GK Enchanted Farm with an interesting go-to-market model that links producers and consumers of agricultural products. A seminal moment came last year when Jim Ayala became the first social entrepreneur to win the prestigious Ernst & Young Entrepreneur of the Year award for his work to deliver solar powered products to marginalized communities.

These are ventures with the dual objective of addressing a social problem and becoming financial sustainable – not tasteless propaganda-in-the-guise-of-charity we’ve come to expect from most big corporations and local politicians. And the space has now reached a tipping point.

If this generation of entrepreneurs sees social enterprise as a rewarding career path, impact investing scales locally, linkages with international institutions increase, and enlightened leaders get into government,  then there’s no reason the Philippines can’t be known as the Silicon Valley of social enterprise.

We have the raw ingredients: hard-to-solve social problems that require the convergence of skills from the private and public sector, a passionate post-Marcos generation of founders tired of institutional corruption and rent-seeking capitalists, and early pioneers who have proven the model in various sectors, and supporters in government.

What defines Silicon Valley is a hard-to-replicate mix of universities, companies, government support, and maybe even good weather. But what ties the eco-system together is the incredible willingness of people to come together and collaborate. I believe we can create that mix for social enterprises in the Philippines today, and in 10-15 years, see a vibrant industry of social enterprises making as large an impact as huge infrastructure projects to the economy. We need more PEOPLE, diving into well-defined PROBLEMS, and sensible POLICIES from universities and the public sector. And this kind of PPP can arguably make a bigger impact than this administration’s long delayed programs of the same acronym.

There’s value in being recognized as a mecca for social enterprises. It allows the country to attract even more talent from around the world, not only because the Philippines has immense social problems, but because this can be a testing ground for solutions that scale across the developing world. It helps attract the much needed capital to scale up these enterprises. It increases overall career satisfaction and fulfillment, something we’re starting to see becoming a real problem in the high-turnover BPO industry. And as people have seen in the growth of innovation clusters, these effects are self-reinforcing and create a virtuous cycle.

So how can we the scale social enterprise sector? I have four suggestions, most of which will be admittedly hard to pull off:

Teach Business History. It’s a shameful tragedy that our business and economic history is not a widely shared narrative among students. I took up business in university, and not a single class tackled in detail how the Coco Levy Fund single-handedly raped a whole industry, how the Binondo Central Bank prospered, or how government-protected concessions given to cronies and relatives suppressed competition in the guise of economic nationalism (allow Walmart and Amazon to compete in the Philippines, and I can guarantee SM will be obliterated). After World War 2, there were generally only two ways to create vast amounts of wealth for one’s self: collude with the government or avoid it. Collude in order to get a government-protected extractive monopoly, or go underground to avoid taxes and state appropriation.

If the story of Philippine business is widely told, what won’t be remembered are stories of entrepreneurship-against-all-odds (though there are many), but how the wealth of a few was generated from monopolistic rent-seeking companies that extracted from the many.  Business history affect us until today – and the numbers show it. The top 40 families control up to 76% of GDP.  When I read the about the story of Philippine capitalism, I can’t help but feel anger and a profound sense of social injustice. And I guarantee that when more people read about these stories, the less attractive that nice-sounding job in Large Company Inc. will sound and the more compelling social entrepreneurship will be.

English: Manuel V. Pangilinan Center at the At...

Wanted: An Ambeth Ocampo for Philippine Business History. Enemies from Local Elite Guaranteed. (Photo credit: Wikipedia)

Include Social Enterprises in the Investment Priorities Plan. The DTI each year lists priority sectors that can qualify for a cocktail of government benefits in order to boost investments. Though traditional industries such as housing and agriculture are included, it’s perhaps time to recognize the social enterprise sector by explicitly extending benefits such as tax breaks and investment grants. Of course, any business can stake a claim to be working for the social good, so a measurement & verification mechanism will be needed in the same way impact investors use various metrics to measure the impact of a social enterprise.

Redo our Social Contract. Has there been a single Filipino tycoon who’s signed the Giving Pledge, the effort led by Bill Gates and Warren Buffet that encourages the world’s billionaires to commit half their wealth to charity? I honestly can’t think of any. So correct me if I’m wrong. I really wish I’m wrong. Because if I’m not, it would be really sad.

The country’s top richest 50 families have a combined wealth of $66 billion. That’s more than a fourth of GDP. Imagine half of this wealth donated to various charitable trusts, endowments, social venture funds, and the like. That’s $33 billion in resources. If you assume that 3% can be drawn down each year, that’s close to $1 billion that can be reinvested back into the economy. For this happen, we need to celebrate real giving and not the superficial ones. The local press seems to joyfully celebrate the donation of $7 million for a school building, but that really is a drop in the bucket and will barely make a dent in the pocket. It also means making it comfortable for tycoons to spread their wealth without fear of appropriation. Most importantly, it takes believing Warren Buffett’s philosophy of rejecting intergenerational wealth – a truly hard thing to do in this country.

Make it Less Risky to Be a Social Entrepreneur. If we can design programs that help social entrepreneurs forget about the downside so they can focus on the upside, then we’ve come a long way.  For instance, policymakers can offer state-sponsored schemes that provide healthcare and education plans to social entrepreneurs. Companies can create secondment programs for executives who want to try out a social enterprise for a year. Education helps aspiring founders to be prepared. The good news is that there is a wealth of accessible knowledge on social enterprises from all over the world.  And I hate to rant about Ateneo again, but if it can channel as much resources to a large-scale fund similar to the University of Michigan’s Social Venture Fund, then we won’t be just winning basketball games, but also the war against poverty.

Today on the Stanford Social Innovation Review...

Stanford is a pioneer in social innovation. How much did we spend on the Blue Eagles again? (Photo credit: techsoupglobal)

Our ASEAN neighbors have come a long way in establishing great brand names for themselves. Singapore is the region’s finance and entertainment hub. Thailand is known for its tourism. Vietnam and Indonesia are fast-growing manufacturing countries. If our generation of entrepreneurs can build this country as the Silicon Valley of social enterprise, then we would have made a great leap forward from the sordid past of Philippine business.

What else can we do? I’ll be happy to hear your thoughts.