Show me the money
AFTER selling one of his Silicon Valley startups for millions of dollars to IBM last year, Winston Damarillo, 36, knows a thing or two about making money.
“I’ve made a lot money for my employees in stock options when I sold companies,” says Damarillo, at one time a venture capitalist for Intel Capital. “I’ve been able to do this over and over again in the States. I built my own companies, I made investments for Intel, I’ve seen how people react when their companies go public. The only remaining thing that I have to do is to do it here.”
In the Philippines to oversee the expansion of his open source software company Exist, Damarillo talks about building a globally competitive high-tech industry here that goes beyond business process outsourcing.
Much of what Damarillo says has been said before, of course.
We’ve seen our share of industry hotshots who talk up a storm about creating the next Silicon Valley here and making big bucks through the stock market. We’ve seen incubators and strutting venture capitalists who’ve had little to show by way of successful technology startups, ending up as glorified landlords, renting out space to call centers.
What makes Damarillo any different?
“All talk is just talk,” he says, noting that Exist has been quietly building up its capabilities and experience in the last five years. “You have to prove that you can build a company that can supply the world with technology and you can make money doing it.”
When Damarillo sold Gluecode Software to IBM last year, the unpublished story was that much of the code that went into the product was written in the Philippines by Exist, which has acted as the manufacturing arm for his US companies.
Now, Exist is finally getting some recognition in its own right, becoming the first Filipino company to get into the Red Herring 100 Asia list of technology innovators. The company also made it to the top 10 list of ZDNet Asia’s TechnoVisionaries Award.
Damarillo’s approach to making money through open source, too, is different.
“Open source is the best written 80 percent-complete software,” he says. “For enterprises to use open source software, somebody has to write the [remaining] 20 percent. Now imagine if you have 20 flavors of that 20 percent. The customer has choices. But because we’re only writing 20 percent, 80 percent is shared cost, and that will always result in cheaper software than IBM or Microsoft. It’s simple economics but works really well.”
This approach to refining open source software means Damarillo shuns the GNU Public License (GPL) in favor of more “business-friendly” licenses used by the Apache Foundation, BSD and Eclipse, which allow the sale of programs built on top of open source code.
“I’m biased against the whole idea that software is always free,” Damarillo says. “Software without an economic engine is not going to get sustained. It’s like communistic models; you can’t sustain those. I believe open source software is about collaboration and that people who join the collaboration should find an economic engine based on their unique value-add to it.”
He says the recent announcement by Oracle Corp. that it would compete with Red Hat is a good example of the disadvantages of GPL.
“I’ve always said that I don’t like that license because this is the 80 percent,” he says, marking off an imaginary portion of an open source computer program. “This is the 20 percent. Now what Oracle just did was very unfair, because they took this, and they also took Red Hat’s 20 percent and they’re monetizing it. It’s completely unfair but it’s legal because of the GPL license because GPL locks these two [portions] together.”
Unlike Sunday afternoon quarterbacks, Damarillo seems ready to put his money where his mouth is with a P100 million infusion into Exist to double its workforce of 100 programmers by next year and to build it up as a global technology company.
Beyond Exist, Damarillo also wants to encourage more startups in open source and wants software engineers to be able to get rich without leaving the country.
“The best minds should stay in the Philippines building products from the Philippines, as opposed to leaving the country,” says Damarillo, who graduated from De La Salle University in 1991. “I did it myself. I went to the States and I was remitting a lot of money. But while there was a short-term benefit, my leaving has not really helped develop the software economy in the Philippines.”
Now, 15 years later, Damarillo is making up for lost time.
