#ThinkPH: Country has to solve ‘real world’ problems first

Missed this year’s #ThinkPH summit? Join the #ThinkPH viewing party on Saturday, September 10! Get your tickets here. 

MANILA, Philippines – Technology is changing the world every day and at a pace never seen before, but in the Philippines, local problems still hold the future back.

“There is transformative technology happening all over the world, but you still have to localize to your market’s challenges in the real world. [These are] challenges that developed market counterparts don’t have, ” Xurpas founder and CEO Nix Nolledo said at a morning session of Rappler’s #ThinkPH event on Thursday, July 21, at the Resorts World Manila. 

One obvious real world challenge is the slow internet in the Philippines. So one has to figure out ways to work around  that. Nolledo said most popular games now are social multiplayer ones and slow internet is especially difficult for tech firms focused on games such as Xurpas.

Xurpas thus invested in an innovative firm, Nemesis out of Singapore, that allows user’s devices to send keystrokes rather than app data to each other, thus eliminating the need for a fast internet connection to play, according to Nolledo.

Nolledo was speaking at Rappler’s #ThinkPH event as part of a panel discussing digital trends in the country where he was joined by Kalibrr founder and CEO Paul Rivera and Rappler founder and CEO Maria Ressa. (READ: #ThinkPH: Man must learn to dance with machines – Van Geest)

All 3 startup founders agreed that the real world challenges the country presents aren’t all bad, however, as they also force firms to think creatively, innovating out of necessity.

Nolledo cited one example of transformative technology: blockchain – the key to making bitcoins works.

Block chain, and bitcoin technology is particularly suited to the Philippines because of remittances. The promise is that an OFW can send $1000  in remittances from Saudi Arabia to a province in the Philippines without losing any money through middlemen.

But the challenge is that the OFW’s relative has to get the digital currency in hard cash. That’s not a problem in small volumes but not when sums get bigger, especially in the provinces, according to Nolledo.

“If you don’t have enough liquidity in the local market to do that, whatever savings you saved using blockchain will be lost because you’ll have to change it again through a bank,” he said.

Slow pace of investment

In Asia, arguably no industry has been as disruptive to the real world economy as ecommerce and the rise of Alibaba, the world’s largest ever IPO.

But ecommerce also illustrates how the lack of liquidity affects the pace of industry transformation.

While ecommerce has grabbed a small foothold in the Philippines, it pales in comparison even to neighboring Indonesia with traditional retail firms and their malls still very much the dominant force.

“This is a function of the small amount of venture capital, or investor money, flowing into tech startups in the country as whole,” Nolledo said.

In 2015, not counting Xurpas investments, there was about $30 million invested into local startups while about $800 million flowed into Indonesia.

That is particularly troubling if one is an ecommerce startup. Nolledo explained that the playbook for online retail is 80% goes into customer acquisition, advertising and marketing, to get customers to make that first transaction.

As it gets more money, ecommerce can really upend traditional retail by subsiding prices to offer consumers bargain deals. They can do so because they don’t have far less fixed costs that traditional stores have such as rent.

Without that seed money, they cannot grow. But, Nolledo pointed out, “the reality is the growth of venture capital is going to happen in the Philippines and  will be coming so suddenly

“So if I were an incumbent, a traditional retailer, I would be using the opportunity to look at the disruption that has happened in other markets and prepare for it, ” he said.

Kalibrr’s job matching

Rivera pointed out how the booming BPO industry in the Philippines has created a situation wherein half of the people on Kalibrr’s job matching platform are local firms while the other half are international firms looking to scale.

This has created a situation wherein we are now tapping a rather finite number of skilled people, he said. Put another way, what do you do when you have the Ubers and Googles coming in, he said.

The way to stay competitive for local firms then is to innovate, and his firm has helped transform recruitment by using algorithms that provide ideal matches between jobs and jobseekers based on big data.

The process works like Netflix. When you watch, it automatically suggests other shows you might like through smart algorithms. Kalibrr does the same for jobs and people, Rivera explained.

Rappler CEO and Executive Editor Maria Ressa pointed out that a firm such as Rappler could have started anywhere in the world, but the Philippines was a compelling choice precisely because of its perceived weaknesses, its disorder.

“We chose the Philippines, partly because it was the social media capital of the world and partly because it’s very young with a median age of 23. Most importantly, we felt that there  was a real hunger, a real zeitgeist for change here,” Ressa said.

“When you’re in a more developed country, maybe cynicism is much more prevalent. But in the Philippines, with all its problems and its youth, there’s a sense that real change can be made here,” she added. – Rappler.com