Pinoy Excellence!

Last month we decided to "Globalize" the operations of Exist Engineering. To emphasize this, we renamed the company Exist Global. Also in the works is the addition of senior management team based in the US to aggressively market the company to international customers. I am looking forward to putting energy into campaigning for awareness of "Pinoy Excellence" in software .

This week - ZDNet honored Exist by naming it to its Top 10 Technovisionary list http://www.zdnetasia.com/toptech/2006. As always, this brings me great pride. Exist has been blessed with extremely talented people who love their jobs and it feels great to be recognized.

I dont think we are alone in this. During my short stays and limited interactions in the Philippines, I have come to meet other equally deserving great Filipino software companies that should be worth mentioning.

• Calen of Orange and Bronze has done an impressive job growing the company and at the same time keeping a close pulse to the Java community in the Philippines. I am also pretty impressed with the outwardly open culture of the team members. I like people who blog (like Clair Ching). I think it provides a good window into the mindset of a technologist.
• Stratpoint is fast becoming a leader in outsourced mobile software and Java development. Cliff (CEO) and its very active investor, Paco Sandejas, are making a name for Filipino talent in the US. During one of the visits made by our US teams to their offices, there was an instant feeling of a highly energized tech team who enjoy their work.

I have a very small sampling but very high hit rate. I am sure there are more stories to tell and more companies to talk about. I would like to explore ways to work with the Calens and Cliffs to market "Pinoy Excellence" as a team.

Exist awarded Red Herring 100 Asia winner

I am happy to announce that Exist Engineering will be receiving the prestigious Red Herring award in Hong Kong next week. This is an important milestone for Exist, a 100% Filipino company, on its fifth year anniversary.

Looking back into the early days, It was fun to fulfill a college graduation pact of building an IT start up (at the time called "Sistema”) that was temporarily abandoned when I left to try my luck in the US. Lots of beer and "guilt trip" worked at Grilla restaurant in Pasig to initiate the re-start of the "Sistema" idea. This time, with better global market idea, a specific technology target but with the same "I don’t know where this could go but I am sure we'll figure it out attitude".


Humble beginnings
As with most successful start-ups that I have seen, initial scarcity drives a certain clarity of goal, "make money or die". Exist Engineering was funded with $55K, 1/100th of the typical series A investment in the US. In comparison, Gluecode Software was funded with $5M of VC money. My co-founders, Junnie, Vince and Willex did not take much salary in the early months and we shared a tiny space in a tiny office. We were pleased that some developers took the risk to join us. Our first American customer was wondering how he could trust the development of the most valued IP in a cramped room set up classroom style using picnic tables.

Over 100 and growing
Today, after surviving a few near shut downs in our early years, Exist Engineering now serves several VC funded and public company software vendors around the world. We were able to build upon our initial interest of attracting the "best in Java" and developing the "best in Open Source" engineering team. We have helped Gluecode software and Oakgrove develop their products that led to acquisitions by IBM and Seagull Software. We have become an active participant of the Apache Software foundation and soon the Eclipse software foundation. Exist has also codified our development process experience into a hosted platform called e-DEN. The management team is now growing too and working hard at learning sales & marketing in a global setting.

The future looks bright but I expect a few rain clouds
On the Red Herring write up, they mention that our biggest challenge is competing against IBM, Redhat and the big Indian firms. First of all, that’s already something to be proud about. Exist has the opportunity to re-define outsourced or as we call it "smart sourced" engineering. We are going to do this with a careful balance of developing our People, Processes and Projects to deliver not just a "cheap" remote development facility but also an innovative remote "digital IP manufacturing facility". The key to Exist's long-term success lies driving cost down but improving our ability to innovate. This is not an easy task but I believe the company is up to it.

Philippine Software Venture Fund Idea

After my last visit, I realized that I have not been spending my fair share of stimulating the local software industry. I believe that this is the MOST EXCITING time for software entrepreneurship and it would a terrible loss if the Philippine software industry fails to capitalize on it.

Open source (OSS), Software as a service (SaaS) and Web2.0 (yes - I consider this as a software biz) will drive the next wave of software start ups. Fortunately, these new companies can be built without the “classic” venture funding model and still produce VC caliber results.

Software is the most capital efficient business. There is very little requirement for capital expenses and zero for inventory. The key challenge is harnessing people to realize their potential and exposing it to a large worldwide market. This is where we need some infrastructure to accelerate our global market participation.

What we have done at Simula and Exist can be replicated. I would be happy to share the model. I also think that there are still tremendous room for improvement and refinement to this approach. A few things that we have learned in the last 5 years:

• The service delivery provider “starting point” does not translate to developing a good product team.
• Product strategy must start with the global market in mind, the Philippine first approach did not work for Exist and Simula.
• Technical expertise must be imported initially. The talent required to compete in the global market still requires a lot of development. Specially on the cultural aspects of software development
• Global footprint is important. Selling to North American market requires a presence in the North American market.

So to the point of not building this with the classic VC model, I believe that the best way to catch up is to provide a more efficient entrepreneurial infrastructure for software businesses targeting an international marketplace. The VC model requires a “standalone” combination of technical, managerial and marketing expertise that is yet to be developed locally.

I’d like to solicit the group’s feedback on this idea:

• Fund a software venture lab in the Philippines. Focused solely of product development for a vetted market segments and augmented with worldwide technology experts.
• Open a product marketing facility in the US and EU to market the products
• Develop a shared pool of management team with the appropriate market expertise.

This format would look very much like an operating venture fund. External VCs can still participate on later stage rounds (if necessary).

We do this at Simula right now for later stage start ups (market penetration). I am exploring to do this within Exist for earlier (developmental) stages. The next step is to move the portfolio company to a market viability milestone. Further funding can be sought from VCs in the US.

If this idea resonates with a few more folks, I would love to make it a group effort.