“If I can find success as an entrepreneur, anyone can do it.”
This is the message Xurpas Chairman and CEO Nix Nolledo wants to convey to entrepreneurs across Asia, but specifically in the Philippines.
“A lot of people think they cannot start [their] own startup because of so many perceived limitations. I do not have enough money, I do not have connections, I cannot program, I am not smart enough. I would like myself, Xurpas, and my partners, to be an example that it can be done,” says Nolledo in a conversation with e27.
And he should know. The self-described ‘average student’ from a middle-class background, Nolledo joined KFC as a Management Trainee after graduating from Ateneo de Manila University in 1998 because the Asian Financial Crisis had ground hiring to a halt.
The 2015 EY Entrepreneur of the Year in the Philippines credits a lot of his growth as a businessman to his time at KFC.
“I would say, when you are a startup entrepreneur, you take on multiple roles on day one. And I was inherently already doing that when I was in KFC. So I think I learned a lot from that experience,” says Nolledo.
“I thought I would be an entrepreneur in the food industry, and I thought I would own my own restaurant someday”.
But life is rarely a straight path, and while Nolledo did follow through with his goal to become an entrepreneur, it was not in the food industry.
Instead, Nolledo, Raymond Racaza and Fernando Garcia founded a mobile Internet company called Xurpas. It has grown into one of the most successful startups in Philippine history and made Nolledo a billionaire.
And he may have his previous company, PinoyExchange.com, to thank for Xurpas. After the online message board was bought by Ayala Group, Nolledo noticed that, at the time, there were 6 million cell phones and two million computers.
“Ultimately there are two drivers of Internet access: cost of access and cost of the device to access. You know, you can’t sell toothpaste if people don’t have toothbrushes,” says Nolledo.
Armed with this information, the three Xurpas Co-founders — Nolledo and his Ayala colleagues Racaza and Garcia — hatched a plan to start the mobile Internet company. Each invested US$500 into the venture and they have never looked back.
In December 2014, Xurpas went public on the Philippine stock exchange, saw net income rise by 20 per cent in 2015 and in March 2016, expanded to China by purchasing a 23.53 per cent stake in Micro Benefits Ltd.
That is a long way from the early days of not paying themselves a salary, working out of the 40 square metre space owned by Nolledo’s father and hitching rides with friends on the way to the city to avoid costs like parking fees.
Obviously, it is not as if the company went from nothing to IPO instantly and certain strategic shifts were essential to the company’s long-term success.
For example, Xurpas constantly has to find alternative methods from developed nations to meet the same goal. Nolledo says he believes if the company had launched mobile gaming with credit card companies, Xurpas may never have left the runway.
The Philippines has an extremely low credit card penetration rate — various estimates put the number in the 7-10 per cent range — which was a problem Xurpas needed to work around.
“So we worked with the telecom companies, that had their own billing structure. So we were able to circumvent the problem of not having enough credit cards in the country,” says Nolledo.
Other strategies included building simple versions of a project, and analysing data to either double-down or kill the feature. In large part because the company did not have a safety net, Xurpas took multiple small bets to scale-up over a long-term timeframe and reduce expenses to focus on profitability.
After spending so much time around tiny companies motivated by the every day need to survive, when a company becomes as successful as Xurpas, what is the daily motivation for C-suite management to come to work inspired every day?
“We feel we are still just at the beginning,” Nolledo says.
Which is why he made a point to say the company’s IPO was not an exit. Rather, it was a fundraising effort that doubled as a branding strategy — a way to differentiate itself in a consumer tech world that rarely IPOs in Southeast Asia.
“As companies, both tech and non-tech, are looking to expand to Southeast Asia, Xurpas is automatically one of the two or three companies they consider getting in touch with to see what kind synergies and partnerships can be applied,” Nolledo says.
He also explained the IPO strategy opened access to an entirely different class of investors — fund managers used to investing in real estate, mining, banks etc. Being one of the only consumer tech company with access to these types of investors is a distinct advantage, Nolledo says.
And while Xurpas is doing well at the moment, any company hoping to operate on a timeline of decades — and not years or months — need to be prepared for inevitable down years.
“So what we do is say, in an emerging market, what are the points of friction that prevent customers from shifting? How does a customer think? How do you drive customer acquisition cost down?” said Nolledo.
“We stick to ‘the lowest common denominator’ principles. How do people think? What is the experience? What is the go-to-market strategy? So the technology is secondary to us [compared with] the customer being at the centre.”
He explained that discovery, payment, purchasing power and speed of the Internet are some of these frictions that need to be considered.
Active in the startup ecosystem
As many people familiar with the Philippines startup community are aware, Nolledo is quite an active participant in mentoring, speaking and angel investing.
“I think that a rising tide should lift all boats. I mean, it would be quite a sad proposition if Xurpas continues to grow but the startup community doesn’t experience that level of exposure, growth and access to the success that we have had. I would be pretty sad if that happened,” he said.
Nolledo tries to raise awareness of opportunities in the Philippines so more venture capitalists are aware of the opportunities in the country. Compared with neighbouring Indonesia, the country receives significantly less investment.
“I admire how the Indonesian startups have been able to build up the traction. I respect the number of large, growing companies there. But I feel the Philippines has a lot of upsides. So I try to evangelise the opportunities in this market to a lot of investors,” he said.
But, the key point Nolledo wants to express is one of individual responsibility.
“These [perceived] barriers are not insurmountable and if you are able to surmount them, then it becomes a very, very profitable, and exciting enterprise for those who would dare to make that happen.”