Paolo Villonco – Ignition for the Startup Community

Welcome to episode 60 of the Outsource Accelerator. This episode is a little bit different. We are speaking to Paolo Villonco of Ignition. It’s a co-working space. It’s an innovation hub and it supports a thriving startup community here in the Philippines, in Manila in the Philippines and Paolo has a very interesting background in that. He is a Filipino. He is a lawyer but he has done a lot of his study and had a lot of experience from Stanford and Silicon Valley. So, he brings a huge amount of experience back into the Philippines and we discussed this. This is part one of three parts. OK. So, I try and keep these episodes really short and punchy. So, in respect to that, I have split up this chat into three parts. I’m sure you’ll really enjoy this chat with Paolo and learn a huge amount. If you want to get in touch with Paolo or learn more then go to our show notes that is at outsourceaccelerator.com/60.

Derek: Today I’m joined by Paul Villonco. Hi, Paolo.

Paolo: Hi.

Derek: Paolo is the CEO of a fantastic super cool. I’ll actually put some photos in the show notes of Ignition which is a co-working space which has just opened in BGC which is a really sort of kind of built up trendy business district of Manila. So, Ignition is maybe at the heart of the co-working community. And because of that then there’s also kind of a Startup fire. So, and again I’ll put photos of the office super trendy office a lot of art hanging around, a lot of communal spaces and socializing spaces. So, yeah really interesting to have a chat to Paolo today. So, I suppose just as an introduction what inspired you for the space?

Paolo: Yeah. So, Ignition is a. Co-working is just I think the first impression that people get ‘hire for space’ but we’re actually a lot more than that. And the inspiration was the venture studio from Stanford University where I actually came from and I went through that venture studio for a year and you know trying out different ventures with schoolmates from Stanford and I just really like the vibe. I really liked the community. I liked the assistance how people are just very generous with information and collaboration and their time and resources. I mean everybody was aligned in trying to disrupt, innovate and improve the status quo. So, a few years ago I came back to the Philippines and thought how do we replicate that. So, the problem was that was associated with Stanford and it was attached to the academic institution which had a lot of funds, which had a lot of like built in community. And I first tried to shop the idea around schools, Universities here. I still continue to do so but it wasn’t being received well. So, a bunch of my friends who also had the same passion for entrepreneurship for innovation we all got together and said why don’t we just build it build it from on your own. But we have to think about how do we make this sustainable. So, we came up with products lines, product in order to sustain the studio. So, co-working is one of it, the Space side is one of it. We have co-working space seats and we lease out conference rooms, private office suites but we also thought that you know we also have other expertise. And at the same time that’s an entrepreneur needs much more than just space. in the Philippines huge barrier to entry is regulatory compliance. I mean, in other jurisdictions other countries you can start a company within days even a matter of hours or minutes even through the computer. In the Philippines it takes three to six months at a time. And so, it’s not that we can really shorten that time significantly. But I think we can take it off the hands of the entrepreneur to allow.

Derek: To allow the entrepreneur to concentrate on their core.

Paolo: Yes, and in the Philippines, there’s also a huge gap. If you want to do things right you have to go to branded firms, SGV is top of mind and Ernst and Young and you have these other services. But it’s either really expensive or you roll the dice with solo practitioners and there wasn’t really an established brand for the middle and off the market and for SMEs. And so, we thought that yeah why don’t we also. Why don’t we be more efficient. Like I feel like there’s a we well us we as a community as partners we felt like there was a lot of inefficiencies with the way firms do their work and they charge by the hour. But if you’re an expert you should know how much time it actually takes. Right. You should be able to anticipate that. And so, for us we try to do everything at fixed fee. Right. And so that if we are unable to anticipate the resources needed to achieve a certain project or output we claim to be experts. So, we should be the ones penalized for that not the client.

Derek: And when the bootstraps startups they need.

Paolo: Yes.

Derek: The dependability of fixed costs.

Paolo: Exactly. And I think in as much as you want to really conserve capital and spend it on your core business you also want things to be predictable like expenses, predictability of expenses. And unfortunately, in the Philippines there are some services many most services out there the way these fees are structured is by the hour. And so, you encourage servicers to be inefficient and then you penalize them for being efficient.

Derek: Yeah that’s true there’s almost an incentive to take twice as long.

Paolo: Yeah exactly. So, we were studying this whole the service industry here. Also, the space and building a community and as much as we can we’re trying to simulate that Silicon Valley. What makes Silicon Valley Silicon Valley.

Derek: So, you’re at the coal face of all of that which I find it super exciting. And correct me if I’m wrong but you know Silicon Valley has been going a few decades now and the startup community has been slow to take off here. But now it’s really gathering pace and there’s an ecosystem beginning this kind of VCs popping up and there’s places like ignition which are you know would you call yourself like inspiration and incubation kind of hub then.

Paolo: And I think definitely I think we, I would consider ourselves an incubator but not in the traditional or common definition because when you say incubator people usually think that we finance startups. That is certainly in the pipeline for us. We would like to be the conduit of financing and if entrepreneurs come onboard with us and get the full suite of services. Meaning, we are able to service them for their bookkeeping, accounting and regulatory compliance, corporate, housekeeping then it’s so much easier for an investor to invest because everything is in order already. But right now, we are focused on just community building and providing these essential services. However, we have been approached in a matter of a few weeks. Maybe it’s a month and a half since we started. We’ve been approached by several groups, venture capitalists from abroad that really like our platform and like the professionalism and transparency that we provide both to clients, SMEs and also to investors. And they’re looking at our platform really to also as an incubator.

Derek: Because VCs they need deals. Yeah. So.

Paolo: Yes.

Derek:  So, for them to ignore platforms and you know whether you call yourself an incubator but certainly you house the startups.

Paolo: Yes.

Derek: You know for them to not acknowledge and not to because it’s like scouting in sports. Yeah. The scouts want relationships with the places that really breed the talent.

Paolo: Yes. Yes. I love that analogy by the way. I think that’s it.

Derek: I make analogies in a minute. But yeah, it’s I find it super exciting. And your concept is well I think of if you do the books for these startups then there’s an enhanced transparency. And if the books are good it’s almost as if the books are sort of validated, vindicated already. There’s not as much DD that a VC would be that.

Paolo: Eventually we created a sort of some sort of branding for startups, that if a startup is serviced or is part of the Ignition community that means something. That means that they we’re incorporated the right way they are run the right way because one of the big things that we as Ignition is introducing to the Philippine market our co-founders and shareholders agreements. Now, these are basic for bigger companies and even in Silicon Valley, it’s basic. But here in the Philippines, SMEs they don’t think about that and don’t thoroughly think about what a partnership relationship means. What will happen if certain expectations are not met. What are the roles and responsibilities of each partner to the business to the Enterprise? How do you exit the business? What if what how are the critical decisions made like budget-setting, salaries, hiring and firing employees. Who or how are these decisions made. These are not really discussed until later on.

Derek: And that’s a really exciting thing because you’re Filipino obviously but you have you know condensed and brought the best knowledge from one of the best universities and one of the best sort of like Silicon Valley which is you know kind of the hub of innovation in the world at the moment. You bring it home and like Silicon Valley from what I hear they can now make 10 or 100 million-dollar investments using pretty much a one page templated.

Paolo: Yeah.

Derek: Terms of Agreement. Whereas other countries you know I am personally experienced in the UK and Australia where there’s not that familiarity with deal flow. It’s still a 100-page document. and that Silicon Valley has got it down to such a fine art and the VCs you know it’s kind of such a high-volume thing. I think it’s kind of refined but so it is interesting that you can not necessarily bring that over but you bring the knowledge and efficiency over of the startup community and try and plant seeds of that here.

Paolo: Yeah. So, you know, the phase one is just really creating the fundamentals bringing in like these fundamental best practices down to the SME level but at the same time what we want to do also as Ignition is bridge that network as well give that exposure of VCs internationally. Highlight some of the innovation that’s being done in the Philippines but at the same time also expose Filipino entrepreneurs to what it means to be world-class.

I’m sure you enjoy that chat with Paolo. I really learnt a huge amount having a chat with him if you want to know more or get in touch with Paolo then please go to the show notes that is and outsourceaccelerator.com/60. And stay tuned for part two coming out soon.