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Mentor Capitalism: How Endeavor is Turning Entrepreneurship in PH into a Force for Development

The unique organization is holding its first international selection panel meeting in the Philippines this week

By Lorenzo Kyle Subido
Apr 3, 2018

"Endeavor gives the big fish an opportunity to create an aquarium, where big fish can actually help small fish grow."

Endeavor is a non-profit organization that targets for recruitment into its network not the richest or biggest business owners but emerging entrepreneurs and startup founders who hold the most promise to make an impact on entrepreneurship and society.


 

 

 

When pioneering Filipino technology entrepreneur Nico Jose “Nix” Nolledo listed his consumer tech firm Xurpas at the Philippine Stock Exchange (PSE) in December 2014, it opened up a whole new world for him.

 

The management graduate from Ateneo de Manila University gained access to a deep pool of financial capital and, more importantly, “intellectual capital” as well. The public listing—and the respectability that came with it—opened up access to local and international events where he got to meet fellow entrepreneurs and learned of the latest developments in the consumer technology space.

 

Seven months later, Nolledo was named an Endeavor entrepreneur in August 2015, the first Filipino to be inducted into the global organization that aims to transform societies through entrepreneurship.

 

Joining Endeavor supercharged his links to global networks of high-impact business leaders who could provide inspiration and mentorship in growing his company. More than just invitations to events, he got a place right at the table, so to speak, alongside global industry leaders.

 

“One of our businesses is an HR technology company. Through Endeavor I was able to sit beside the founder of LinkedIn, Reid Hoffman, at a dinner and get his perspective. A few months later he sold his company to Microsoft for $25 billion. That’s one example of where I get to exchange ideas with someone who’s been there several times over, and get his insights on how he sees technology transforming the HR space,” said Nolledo in an interview with Esquire Philippines magazine published March 2017.

 

He also tries to pay it forward by helping emerging entrepreneurs through sharing his experiences and ideas with them. “In the same vein, you’ll find a lot of entrepreneurs here at Endeavor who are trying to scale their business tenets and want to understand how technology impacts their business. I am able to lend my perspective on how to view technology as an accelerator and disruptor for their space,” he said in the same interview.

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Endeavor’s Business Model

Nolledo’s account of how Endeavor connected him with the LinkedIn founder, how that helped his HR business, and how he, in turn, helps younger entrepreneurs with advice best illustrates what the global organization is all about.

 

Considering the value that such connections create, Endeavor could very well be a lucrative business charging thousands of dollars for access to its exclusive network of global pioneers and thought leaders.

 

But it is not. In fact, Endeavor is a non-profit organization. It targets for recruitment into its network not the richest or biggest business owners but emerging entrepreneurs and startup founders who hold the most promise to make an impact on entrepreneurship and society. It was formed to address the lack of infrastructure and services for most entrepreneurs in emerging markets, according to Manuel “Manny” Ayala, Endeavor Philippines’ managing director.

 


Manny Ayala is the executive director of Endeavor Philippines

 

 

“Potentially ‘high-impact entrepreneurs’ that weren’t part of the economic elite in their countries had nowhere to go, and they faced a number of structural barriers to succeed. We began to wonder whether you could transform and build strong economies by providing high-growth companies and high-impact entrepreneurs the support they needed to compete in a global economy,” a Harvard Business School case study quoted Endeavor co-founder Linda Rottenberg explaining the ideas that gave rise to the formation of the organization.

 

By selecting and supporting 10 to 20 “high-impact entrepreneurs” who aimed to create large and successful companies in each of the countries where it is active, Endeavor believes it can hasten the emergence of an ecosystem of entrepreneurs and investors that can push economic growth sharply higher, according to the HBS case study. Based on an analysis of Latin American economic data, Endeavor concluded that the creation of 55 new firms of 500 people can increase Mexican GDP by one percent.

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“We’re aiming to create the kind of entrepreneurial ecosystems that emerging markets severely lack—the ecosystems that fueled the success of Silicon Valley and Route 128 were idea-rich and had a diverse set of players. They included service providers, venture capitalists, angel investors, entrepreneurs, entrepreneurial role models, universities and a tolerance for risk and failure. Endeavor is planting the seeds for those ecosystems to grow around the world,” Rottenberg said.

 

As of end-2017, Endeavor had built a network of over 1,500 entrepreneurs from across 30 countries. These business owners have provided almost a million jobs with their over 1,000 companies, which altogether generated over $10 billion in revenue for full-year 2016.

 

And its efforts are proving to be successful. In a 2012 study, Endeavor surveyed over 200 entrepreneurs in Argentina—where the organization established its first office in 1997—who founded tech companies from 2000 and onwards. The survey revealed an intricate web that connected companies through mentorship, investment and other modes of influence. In this web, between 10 and 20 companies stand out for having influenced a high number of companies within the ecosystem, and many of these were founded by Endeavor entrepreneurs.

 

This isn’t a one-off occurrence—Endeavor has done similar studies in other countries such as Colombia, Chile and Mexico, and it found the same dynamic of key entrepreneurs impacting entire industries.

 

In an updated edition of his best-selling book, The World is Flat, released in 2007, author Thomas Friedman described Endeavor’s “mentor-capitalist” model as “the best anti-poverty program of all,” according to BusinessWire. He wrote: “As important as it is to help make poor people into small business people, it is just as important to make small business people in a developing country into big business people who can employ lots of their neighbors. It is precisely these sorts of middle-class start-ups and small businesses that create the most jobs and the greatest innovation in a society.”

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Endeavor in the Philippines

In 2014, Endeavor was launched in the Philippines—its third Southeast Asian affiliate—after signing up some of the country’s most progressive and successful business leaders as members of its board.

 

Chaired by Eugenio “Gabby” Lopez III, chairman of ABS-CBN Corp., the founding board consisted of Jaime A. Zobel de Ayala, chairman & CEO of Ayala Corporation; Cezar Consing, president & CEO of the Bank of the Philippine Islands; Anthony T. Huang, president of SSI Group, Inc.; Sheila Lirio Marcelo, founder, chairwoman & CEO of Care.com; Edgar “Injap” Sia II, chairman of DoubleDragon Properties Corp.; and Julio Sy Jr., founder & CEO of TAO Corporation.

 

Today, the board is chaired by Roberto “Bobbit” Panlilio, the senior country officer and banking head of JP Morgan in the Philippines. New members have also joined the board, namely, Jesen T. Ko, CEO of ActMedia, and Wilfred “Fred” Steven Uytengsu Jr., CEO of Alaska Milk Corp.

 

 

 

 

 

The composition of local boards is an important factor in the success of Endeavor country chapters. While they obviously need to be successful and generous—they shoulder a bulk of the country chapter’s initial operating expenses—they must also be capable of thinking beyond themselves and their companies. After all, some of the Endeavor entrepreneurs they are supporting may grow big enough to compete with them someday.

 

The role that Endeavor plays in mobilizing big business to help promising entrepreneurs who are also potential disruptors was best captured by the chairman of Endeavor Mexico, who said: “You can think of the large companies in Mexico as the big fish, and sometimes big fish eat small fish. But we all want a robust economy, which is why Endeavor is important for the Mexican business sector. Endeavor gives the big fish an opportunity to create an aquarium, where big fish can actually help small fish grow.”

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The board appointed Manny Ayala as managing director of Endeavor Philippines, which is incorporated with the Securities and Exchange Commission (SEC) as a non-profit and non-stock corporation. Not related to the Zobel family behind Ayala Corp., Manny was an entrepreneur in his own right. He was co-founder of tech incubator Hatchd Digital, managing director of investment bank IRG and chairman of pioneering media startup Rappler Inc.

 

Since naming Nolledo the first Endeavor entrepreneur in the Philippines in 2014, the global organization has inducted 13 other Philippine-based business owners and founders to be part of its exclusive network of “high-impact entrepreneurs.” The latest member was Peter Cauton, founder of STORM Technologies, who was selected by an international panel held in Florida in the US in December 2017. All in all, the 14 Philippine-based Endeavor entrepreneurs represent 12 companies that are either based in the country or have a sizable local presence.

 

Each of the 14 Endeavor entrepreneurs from the Philippines underwent a six-to-12-month selection process that involves various interviews, mentorship and pitches to international panels. The local chapter is responsible for searching and screening suitable candidates but the final decision is always made by an international selection panel (ISP) that meets around seven or eight times a year in different countries. While the composition of the ISP is not fixed, all members need to agree unanimously for a candidate to be accepted into the network.

 

 

Related story: Storm Technologies Founder Joins Exclusive Endeavor Global Network of High-Impact Entrepreneurs

 

 

The selection process is tough, lengthy and labor-intensive. To find and help the 14 Endeavor entrepreneurs make it through the ISP, Endeavor Philippines had to screen hundreds of potential business owners, interview dozens and select only a few of them as nominees for the ISP from August 2014 to the end of 2017.

 

Ayala described three characteristics that Endeavor values highly in making the selections: (1) the ability to create a large and successful business, which Ayala defines as providing “hundreds to thousands of jobs” and making “tens to hundreds of millions of dollars in revenue at some stage;” (2) having a product or service that is innovative, disruptive and transformative; and most importantly, (3) the ability of an entrepreneur to “pay it forward,” or giving back to fellow entrepreneurs and helping them grow their companies.

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“One of the things we’re trying to promote is this idea that your success is not measured simply by the size of your business, [but also] by the size of your impact in the ecosystem,” Ayala told Entrepreneur Philippines.

 

 

Multiplier Effect

According to Ayala, the 14 Endeavor Philippines entrepreneurs have generated over 4,000 jobs and more than $132 million (Php6.6 billion) in revenue in 2017.

 

While that made up only 0.04 percent of the Philippines’ nominal GDP in 2017, singly and collectively, Endeavor entrepreneurs in the Philippines are beginning to create an impact on the business landscape.

 

He pointed to Nolledo as a prime example. Through Xurpas, he has invested in various tech companies across Southeast Asia, giving them access to more resources and wider audiences while simultaneously growing his own company.

 

But even outside these company acquisitions, Nolledo has helped a large number of entrepreneurs both locally and internationally. Ayala estimated that Nolledo was connected to around 2,000 companies in some degree, which includes being a mentor, an advisor and/or an investor. He added that Nolledo has also helped two companies in other Endeavor offices—Detroit and Malaysia—by mentoring their teams and introducing them to valuable connections.

 

 

Related story: This Is the Man Who Went From Ex-KFC Worker to Tech Tycoon

 

 

One of the many entrepreneurs Nolledo has helped is Farouk Meralli, the CEO of Southeast Asian medical technology startup mClinica. According to Ayala, Nolledo introduced Meralli to Entrepreneurs’ Organization, a global network of business owners, where Meralli was able to pitch to around 100 of its members.

 

Since then, Meralli has also been inducted into Endeavor as a high-impact entrepreneur, becoming a member in September 2016. On top of the over 10,000 pharmacies in Southeast Asia he is helping through mClinica, Meralli also co-founded a local incubator called Machine Ventures in 2015, which has since given rise to three tech companies.

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In turn, Meralli has invested in and advised over 10 startups in the healthcare, financial technology and consumer internet segments in the Philippines and Southeast Asia.

 

According to Ayala, the willingness not just to invest in but also mentor other entrepreneurs is evident among Endeavor’s 14 Philippine inductees, and it isn’t limited to the technology companies. He pointed to Steve Benitez, the owner of food-and-beverage chain Bo’s Coffee, who was inducted into Endeavor in May 2016, and how he is helping a number of social enterprises by carrying their products in his stores, either as part of the menu or the store’s interior design.

 

 

Related story: Bo’s Coffee: Ready for Hypergrowth

 

 

Ayala also pointed to furniture designer Kenneth Cobonpue, who entered the Endeavor network in July 2016 along with business partner Christopher Reiter. “At any given moment, he (Cobonpue) has a handful of up-and-coming designers under his wing,” said Ayala. “He’s also spending quite a bit of time teaching… and anytime there’s some big trade fair focused on design, usually he’s one of the key guys there.”

 

 

Related story: How Kenneth Cobonpue Built on One, Big Lucky Break to Sustain Success 

 

 

For Ayala, these are signs that Endeavor’s “multiplier effect” is kicking in, referring to the process of how entrepreneurial ecosystems—Silicon Valley in Southern California is a favorite example—grew from a small group of pioneers who worked or co-invested with a multiplying web of colleagues and co-investors and who, in turn, founded companies that eventually became or gave rise to the giants that dominate the US tech industry today.

 

“If you look at all the public companies in Silicon Valley today, about 70 percent of them somehow trace their connections or roots back to these eight people of the Fairchild Mafia,” said Ayala, referring to the scientists, engineers and investors who founded Fairchild Semiconductors in 1957 and grew it into a leading computer chips maker in the 1960s and 1970s.

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And Ayala’s mission to find these entrepreneurs with the potential to create similar multiplier effects in the Philippines has only begun. He revealed that Endeavor Philippines’ pipeline is full of many prospective business owners to join its current slate of 14 high-impact entrepreneurs.

 

Indeed, a number are nominees for the 78th International Selection Panel to be held in the Philippines for the first time on April 4 to 6, 2018. And for Ayala, the more high-impact entrepreneurs Endeavor finds, the better the effect on the country as a whole.

 

“Think of it as a positive virus that you infect them with this principle, with this idea that helping others is a good thing,” said Ayala. “That your success is not just the size of your company, it’s the size of your positive impact.”

 

 

 

 

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Lorenzo Kyle Subido is a staff writer of Entrepreneur PH

 

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