Franco Varona: Grab GM to Foxmont Capital Partners, Empowering Filipino Entrepreneurs & Startup Success Blueprint - E357

· VC and Angels,Philippines,Podcast Episodes

“When I was in university in the US, I wrote a letter to my mom. It was a quick letter called "Why I have hope for the Philippines". I wrote an email saying I believe in our generation. I believe that what you'll see is this influx of people who studied abroad and will go back to the Philippines. Today, that's called sea turtles. And even that I would work towards coming back to the Philippines and giving back, employing more Filipinos, taking what I learned. I didn't realize that was going to come true so quickly, and all it took was to be brave. All it took was to take that first step into the Philippines in 2008 to start my business and learn to build the relationships that I had. That's when I realized you can be a pretty big fish in a small pond and make a huge difference in a country like the Philippines and the Philippines will give back. It will give back to you if you take that first leap.” - Franco Varona

“I firmly believe that venture capital is nation-building in emerging markets. Venture capital is another form of FDI into markets like the Philippines, Vietnam, and Indonesia. I mean, yes, of course, what we all know in emerging markets, FDI is usually used for bridges, highways, whatever it might be, infrastructure, and ports, but nobody ever really talks about the digitization of a nation and how that helps drive and transform nations much faster than a highway that connects one island to another, at least in my First on venture capital, one of the things that we thought about as the partners are, why is Indonesia growing so much faster? Why is their startup ecosystem growing so much faster? This is like 2018 ish, where I think there were probably like 10 unicorns in Indonesia, and there were none in the Philippines. Now, being a unicorn is not necessarily a metric for success, I would say, but it is something that shows how much capital is going into a country, especially in the startup ecosystem.” - Franco Varona

“When I was trying to raise money for some of the ventures that I was trying to start or work with post-Grab, there were a lot of regional funds that said, it’s a little bit too early for the Philippines and that we didn’t understand it enough. We needed more time to study. And I remember turning to my partners and I asked, ‘When is the right time?’ When is it actually time for us to be able to receive capital? It’s always too early, and then you're too late. There needs to be a catalytic moment. And when we looked at Indonesia because I love to look at Indonesia. It's such an interesting case of how to do it, and when I looked at the country specifically, what I realized is that it did have a catalytic moment in the early 2010s. That was the rise of independent Indonesia-focused venture capital popping up. There were a few very famous venture capital firms in Indonesia that were, and still are very focused on Indonesia, and I thought, that could be one thing that the Philippines is missing.” - Franco Varona 

Franco Varona, Managing Partner of Foxmont Capital Partners, and Jeremy Au talked about three main themes:

1. Entrepreneurial & Grab Beginnings: Franco detailed his early entrepreneurial experiences before the age of Google and widespread digital resources. He founded Creative Spark and subsequently Global Media, a company focused on advertising sales that serviced international media outlets. He shared how he was invited by Jesse Maxwell, a friend and later a partner at Foxmont, to launch Grab’s operations in the Philippines as country GM. He shared what it was like to live in founder Anthony Tan's apartment, to figure out how to localize and scale on-demand ride-sharing across Manila and other markets. He highlighted the hurdles he faced like dealing with slow and expensive internet infrastructure and training drivers to use smartphones.

2. Philippine Market Dynamics: Franco discussed his long-term vision for the Philippines, driven by a childhood dream of giving back to his home country. He discussed the growing middle class, the global diaspora's knowledge and rising adoption of digital solutions like mobile wallets. He also envisions a future where the local startup ecosystem is key for poverty reduction and education accessibility

3. Foxmont Capital Investment Philosophy: Franco discussed Foxmont Capital's mission as a cornerstone local VC investor to serve as a market filter and promote exceptional Filipino entrepreneurs, They initiated the Foxmont & BCG Philippine Venture Capital Report, which provides an annual overview of the country's rapid digital transformation, market insights and key changes. He discussed how they look at Indonesia as a benchmark startup market, and also share their investment philosophy that focuses on backing simple yet essential Filipino solutions to local problems.

They also talked about the role of CVCs in the Philippines, expectations vs. realities of building a business, and the pandemic’s impact on digital transformation.

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(02:16) Jeremy Au:

Hey, Franco, really excited to have you on the show. We had such a wonderful dinner in Manila. As I said, this is a story that has to be shared. I'd love for you to introduce yourself.

(02:24) Franco Varona:

Jeremy, thank you very much for having me. And it was really great to see you. My name is Franco Varona. I am the Managing Partner of Foxmont Capital Partners. One of the few venture capital firms that's focused solely on the Philippines.

(02:36) Jeremy Au:

Amazing. And what were you like all the way back as a student? Were you entrepreneurial? Were you an academic? What were you like as a student?

(02:44) Franco Varona:

It's funny. I went through this recently with my daughter, my oldest daughter, who's now in the same school that I graduated from in Manila. And I actually remember thinking that back then, actually, academics came a little bit easy for me. And because of that, by my junior and senior year of high school, so my third and fourth year of high school, actually, I didn't try that hard.

And I think that led to just like just senioritis, not really putting the effort that it was necessary to get into the greatest schools, let's say. And I use that as a lesson to, for my daughter now who's actually 11 years old. She's turning 12. So I wasn't the greatest student by the time I graduated high school. And when I went to university which turned out to be Syracuse University in upstate New York, my mindset was, it was interesting. It was more like, where am I, what am I good at? And how can I excel without trying that hard? That was actually my mindset. AnD I think the two subjects, the two topics that I landed on when I was in Syracuse was actually one was journalism. I wanted to get into journalism in my early days. And the other one was international relations. Now, Syracuse is actually well known for both of those schools.

The Newhouse School of Communications, for example, is amongst the top ranked colleges for journalism in the US And the Maxwell School of Citizenship is one of the top rank schools for government affairs in the US Now I couldn't get into the journalism school cause it was extremely hard to get in. So actually I wound up landing in literature. so I actually wound up studying literature at Syracuse University and had a second major in international relations, both of which again, if you think about it. I just excelled in without trying that hard and oftentimes I think these days, what if I just put that effort in more, right? Going as, as far back as my junior year of high school and all the way through my university. What if I just tried a little bit harder? Where would I have landed? It wouldn't have been here but I'm very grateful to be here where I am today because I think it, all of that stuff kind of led to entrepreneurship, right?

(04:40) Jeremy Au:

And what's interesting is that based on that experience and you said entrepreneurship, you actually went on to build Creative Spark Media which was your managing partner, a boutique media agency. What was the experience like?

(04:51) Franco Varona:

Jeremy, the thing is I had spent a good amount of time after university actually working in another job, which was in sales. It was basically international sales. I was basically paid to travel the world and sell advertising to CEOs and entrepreneurs. All over the world, right? So I spent about five years actually doing that before Creative Spark as an employee. And those five years were super interesting. I actually wound up living in about 15 different countries in those five years. So three different countries per year. I think what I learned about that was the power of entrepreneurship in any of these different countries. What it takes to be successful in a variety of different markets and what are the common things and what are the uncommon things in each of these different markets. So one thing that I found, a theme was really, the first level needs to be people that are willing to answer core problems of their community or their society. And I think from that's where you start getting some really interesting entrepreneurial opportunities. After that, it's people who are visionaries who are thinking about innovations that change everyday life in each of these countries. And I thought that was super interesting.

(05:58) Franco Varona:

Now, going to Creative Spark in the Philippines, that was really something that was surprisingly nothing that I had really planned for, right? It was something that I was more interested in. At that point, I was just trying something I didn't know where that was going to lead. And I thought it was interesting that it actually, it was the first attempt at entrepreneurship I’ve ever had. And I didn't know it at the time. That's the crazy part. I just wanted to pay a bill or many bills, actually. And that's the thing, right? It's not like I leaped into it. And I said, Hey, you know what? I'm going to do this. I'm going to become an entrepreneur. But, more realistically, what wound up happening at that point is I showed up in the Philippines. I arrived on shore in 2008 and I was looking for work and the stuff that was introduced to me here was nothing that was interesting to me financially, nor was it interesting to me as something I'd want to spend eight hours or nine hours a day doing.

So I wound up thinking about what sort of opportunities are available in the Philippines. What sort of solutions are necessary in bringing my skill set and that actually turned out to be Creative Spark, right? I found two good partners there. I realized that there was not really a strong agency. In like a media agency in this country, an advertising agency in this country at that point that could tailor make campaigns for let's call it large department stores retailers. And so for a short period of time, I teamed up with some good partners and did that. And that was nice, right? It was a good way to learn what were the pain points of the Philippines? Because remember it was my first time really starting a business and it turned out to be in the Philippines where I did not grow up. I grew up in Canada. And all the different parts of how to start a business in this country, which honestly back in 2000 and let's call it 2007. I mean, it was just hard. It's not like you could just Google how to start a business in, a developing nation like the Philippines. So yeah, that's, that's kind of what led me to, to creative spark and subsequently to global media which is the next thing I started, which is still around today.

(07:53) Jeremy Au:

And what's interesting is that after that you went on to become the gm to build the Grab Philippines operations from day zero. Could you share more about that? Right.

(08:01) Franco Varona:

Sure. So 2008, I actually wound up starting another business called Global Media that again, I found a great partner. And we built a advertising sales business. That actually was, built from the Philippines, but helped service a lot of foreign media. So we worked with like Forbes Asia, for example, and Forbes USA, Forbes China basically helping them to sell advertising around the world. I did that for about four years until I got a phone call in 2012. And that phone call was actually from a friend of mine who I had known at that point for like 15 years. His name is Jesse Maxwell. Today, of course, a partner of mine at Foxmont. And he had a funny story. He had just gotten back from HBS, so Harvard Business School.

He graduated 2011. And he says, Hey, Franco I've got a friend who graduated with me last year, and he's building out a business throughout Southeast Asia, starting with Malaysia and the Philippines next. He's basically helping, people hail taxis with a phone and I was thinking, isn't that already what's done?

That's what I remember thinking, it's not already what's done. Don't you just pick up the phone and call like a, an operator and then you order a taxi. And he was like, no it's actually more than that. It's app based, it's on demand. All these different words that back in 2012, honestly, I couldn't have imagined would be so prevalent today.

Right. And I said, Jess, why would you consider me? Right? I'm not like a tech guy, I haven't started any sort of app or website in the past, like, I just started a business in the Philippines. That's all I did. And actually his answer was that, listen you're one of the few kind of entrepreneurs that I know that I can trust that has built out something in the Philippines. And, we think that you might be good to try to rule this business out. So, fast forward two or three months, let's give it a try. And who lands on shore to meet me, but Anthony Tan, right? So Anthony basically says Franco, this is the first country that we will roll my taxi out internationally.

It'll be the Philippines first. And then, soon after it will be Thailand. And yeah, can you please help grow this out? And now that was, I mean, Jeremy, that was something. Spectacular, I gotta say, right? Today, I think about it and I'm so grateful for my time learning from Anthony, I'm so grateful for my time for learning from the rest of the team, I, it's, and it's only because my memory is bad. I think I was probably anywhere between employee number, like, nine to number 15, like, globally. In in, in grab, December 2012, Anthony basically says, why don't you come to Malaysia to learn about how we run my taxi and and so I'm like, okay, cool, let's do it. So I fly over and Anthony, again, so gracious allowed me to stay in his apartment which was cool.

And took me to the, my taxi operations, which turned out to be upstairs from a Nissan dealership. In kind of a neighborhood of Kuala Lumpur, and that's where I met the core team. I think there is, I'm going to say there was like eight of them. Up there. I'm at that point. Some of them, of course, are still there today. And I think that's a testament to this sort of culture that Anthony has built and Grab and I spent two days, three days on the ground learning about what it took for them to scale out the business. And honestly, I was like, okay, I could do this. It's, if I can hire the first eight or nine people in the Philippines I can get to the scale that, my taxi has in Malaysia pretty quickly.

He had gotten to, Thousands of drivers within six months in Malaysia, and I thought it would be the same in the Philippines, right? So I built out a budget. I remember this. This is going to be fun for all your listeners. The first three people working on the ground in the Philippines was myself, a Pretty famous guy in the Philippines called Brian Koo known as Mr. Grab in this country and a great girl who was with 917 Ventures now Natasha Bautista. Now I worked on that budget with Brian let's call it january of 2013 and that budget really only called for like eight or nine people because we thought it would be as easily scalable in the Philippines as it would have been in Malaysia. Guess what Jeremy? Totally not. It was totally not. It was extremely difficult and I didn't even realize it and the reason was actually because simple. Internet was not that prevalent for taxi drivers yet. In Malaysia, taxi drivers were willing to use their own internet, right? They already had it on their smartphones. In the Philippines back then, we were still using Nokias. So, not only did we have to train, well, first of all, not only did we have to negotiate and figure out a way to get You know, smartphones in all the taxi drivers in the Philippines. We also had to negotiate to get internet to all the taxi drivers in the Philippines. We also had to train every single taxi driver. in the Philippines, not only how to use the Grab driver app, but actually how to use smartphones.

(12:28) Jeremy Au:

Wow!

(12:29) Franco Varona:

Now, is not a job for eight people. And in fact, by the end of my stay in Grab, about a f later, two years later, we had hired 110 people in Grab Philippines.

(12:41) Franco Varona:

So it was a lesson for all of us, I think what it took to grow a business like that in a developing market and for me having a front-row seat I think what I learned there more than anything else Jeremy was the power of venture capital for a business, a rapidly scaling business like Grab. It probably, it would be the first startup that was powered by venture capital that grew rapidly in the Philippines. Every time I would tell Anthony, I'd be like, Anthony dude, we're running a little short here. He'd say, Hey man, listen, don't worry about that part. That's my job. I will make sure that we have, the capital that we need to kind of. And sure enough, again, Anthony doing what Anthony does, he was able to kind of find the capital and get it here and superpower the business.

That's when I kind of took a step back on a weekend, a random weekend in 2013, and I was like, this is amazing. Venture capital can empower not only the business itself, in this case, Grab, but also everybody around it. So the drivers, for example, listen, let's be honest here, Jeremy, without Grab, how much longer would it have taken for taxi drivers for the masses in this country to get the access that they had to the internet to smartphones? I actually don't know the answer to that. Because I'll tell you what, in 2012, there was no drivers with smartphones. And today, by the way, in the Philippines, I think the internet penetration is like very high. Here's an interesting fact for you coming from our report. Today, we have as many smartphones in this country as Indonesia.

(14:05) Jeremy Au:

Amazing!

(14:06) Franco Varona:

Isn't that an amazing number?

(14:07) Jeremy Au:

Incredible. And I think that gives us a nice, segue into the report, right? Because Foxmont has commissioned reports where you had a managing partner and it's been a tremendous resource. We previously covered and analyzed the Foxconn CGU report in the previous Brave episode. I was kind of curious from perspective, how did you eventually become to take on this role and join venture capital?

(14:27) Franco Varona:

Let me start with this. Let me start with venture capital first. And then let me start, and then let me go into the report. I think in many ways, I believe firmly believe from the bottom of my heart that venture capital is really nation-building in emerging markets. Right? That venture capital is another form of FDI into markets like the Philippines, Vietnam, Indonesia, right? I mean, yes, of course what we all know in emerging markets is, FDI is usually used for like, bridges, highways, whatever it might be, infrastructure, ports. But nobody ever really talks about, the digitization of a nation and how that helps drive and transform nations much faster than, a highway that connects one island to another, at least in my opinion, right? First on venture capital, I think one of the things that we really thought about as the partners is, why is Indonesia growing so much faster? Why is their startup ecosystem growing so much faster? This is like 2018 ish, where I think there were probably like 10 unicorns in Indonesia, and there were none in the Philippines. Philippines Now, being a unicorn is not necessarily a, a metric for success, I would say. But it is something that shows how much capital is going into a country, right? Especially in the startup ecosystem. And I couldn't, my partners and I, including Jesse and Yelmer, who's still a partner today.

We couldn't really understand what the issue was, right? When I was trying to raise money for some of the ventures that I was trying to start post-Grab or for some other companies that I was working with coming from the Philippines, what I think we ran into was there’s a lot of regional funds at the time that basically saying, Hey, the Philippines is a little bit too early. We don't understand it enough. We need more time to study it, and I remember turning to my partners and being like guys, when is the right time? When is it actually time for us to be able to receive this capital? It’s always too early, and then you're too late. There needs to be something there. There needs to be a catalytic moment. And when we looked at Indonesia because I love to look at Indonesia. It's such an interesting case of how to do it, and when I looked at Indonesia specifically, what I realized is that it did have a catalytic moment, in the early 2010s. And that was the rise of independent venture capital popping up in Indonesia, that was Indonesia-focused. I'm not going to name any names, but there are a few very famous venture capital firms in Indonesia that were really, and still are very focused on Indonesia. And I was like, wait a minute, I think that could be one thing that the Philippines is missing.

(16:55) Franco Varona:

It's like, if there is a, if there is VC firm that is taking that first ticket, taking that first step in for local founders. I mean, it, it does two things. One is, of course, you're investing in great entrepreneurs that are allowing them to pursue their businesses in an emerging market. But two is that actually that ticket in really represents faith. You almost become a filter for regional startups because you're literally putting your money where your mouth is. I'm not just saying Philippine startups are amazing. Now I'm doing it. I'm taking that first ticket here. So we become a filter. And that's actually what Indonesian VC firms were able to do so well back in the early 2010s and even today. I was like, wait a minute. There's got to be something there. Now, of course, at this point in the Philippine timeline 2018 ish is when we started the fund. We already had one great conglomerate CVC investing in the Philippines and that's Kickstart which, I have great respect for and I think they've done a great job. They've been around since like 2014, I think, or even 2013 when I was at Grab and, Minette is a visionary for what she was able to accomplish and really see the ecosystem. But I did think that by 2018, there just needed to be more and different types of venture capital as well. Can't just be CVCs. So we came up with Foxmont and going to the point about the report one of the things that we realized very early is exactly what I just said, that we are a filter, that we do play this role in this country where we speak to regional startups. And I do all the time and we explain to them, the opportunity in this country and filter out or filter in great entrepreneurs for them to look at.

And you know what we thought was just said, listen, there's. There's gotta be another way to do this as well besides like one on one meetings at the office or over zoom and that's how the concept of the Philippine venture capital report came about, which we published we first published in 2020, was our first edition, and by the way I can't take any credit for actually coming up with the idea. We had a great principal part of our team back then named Santee Ongsiako and Santee. Honestly, it was his idea and he was like, I think we need to be able to, summarize, encapsulate the ecosystem on a yearly basis so that people have something to refer to. I supported that and honestly, it's been a great experience ever since.

And that's why we do the report annually. I want people to be able to refer to it. And thank you Jeremy. I think you did make a, you did refer to it. And Mark Sng of Gentry, I believe was on that podcast. You both did refer to it and did speak about it. And I really appreciate the attention that you bring to the report and to the Philippines.

(19:19) Jeremy Au:

Well, looking forward to review the next one with you next time in the future. I'm so curious from your perspective, what was some interesting insights that you felt stood out for you because, You operated, you've built in the Philippines. Were there any insights in the reports that you've done so far that you felt like, it's special to you or different for you?

(19:37) Franco Varona:

Yeah. I think the biggest thing that, that has been so, let's put it this way, that's been so obvious to me in the last couple of years in terms of the Philippines and how we encapsulated it in the report is that we are going through this inflection point right now in I think, people in the VC space people in the investor space always talk about an inflection point. I mean, that's a word that I hear all the two words that I hear all the time. And when I continue to study the Philippines on the macro scale, at least for the startup ecosystem side, the digitization of this country I always get surprised at how rapidly the Philippines is developing. Great. I moved here 15 years ago. again, it was, we were, it was mostly Nokia based Back in 2014, I think it was, we literally made the news. The Philippines made the news because the Internet was like the slowest and most expensive in the world.

(20:25) Jeremy Au:

Oh, boy.

(20:25) Franco Varona:

I think it was bad. Like our mobile Internet back then. If I'm not mistaken was like 3.73 Mbps back in 2014, right, which puts us at like 176th in the world. I mean, it was super expensive too, by the way. So if you actually think about it we had this, we had the only people that could afford internet were the, the 1%, let's call it or the 2% that live in Metro Manila, but like the 98 percent still couldn't afford it. But if you look at our latest reports and what we've kind of uncovered. What you'll see is that our internet is now amongst the, well, not the fastest, but amongst the top, top third of the world. So the top 50, let's say, fastest internets, which I think is already a big leap from 176th.

I think now it's like 57 Mbps, right? You'll also see, like I mentioned earlier, that now our smartphones, we have 75 million of them in our country. And really, if you really think about it, that just gives more people more access to the internet. And I think to me, the biggest shock has really been, and I'm sure people will not be surprised I say this, but was really the rapid digitization of our country. I always share this one story about pre pandemic and pandemic. So for me, it's this pre pandemic, and this is my story pre pandemic. So let's call it February 2020. Paying bills in this country for me meant that I would print out my credit card bill. Let's say that was emailed to me. I would print it out and then I would walk to my branch, my bank branch, and I would stand in line with cash in hand to pay my credit card bill. This is me. Okay. Somebody that at that point had been running a fund for two years. Somebody that worked on the digitization of our country vis a vis Grab, and I was lining up and paying my bills in cash.

On a bigger scale, if you think about it in terms of let's call it Gcash downloads, right? I think January of 2020, there was only like 20 million Gcash downloads. So Gcash wallets that were activated. Now let's fast forward a little bit, right? Today, there's 86 million Gcashed activated wallets. That's like 90 percent of the adult population of this country. And that happened within the last three years. Three years? I have a pandemic baby. I had a daughter born in September of 2020. And in the time that she's been alive, we've activated 66 million wallets in this country. It's unbelievable.

Why is that? It had to take a, again an event like the pandemic to basically digitize this because the Philippines, as many people probably know by now, because I've repeated it like 100 times. we had one of the longest lockdowns in the world. Initially, we were, I remember I was traumatized. It was March 14, 2020 was when the announcement was when everybody needed to be indoors. And I think by the time we left, and we're able to just kind of leave our homes. Okay, just leave our, because in, in the time that we were locked down, we would only, we were only allowed to leave our apartments once a week. And one person had to have a quarantine pass to go to the grocery. So I think by the time we were actually able to start just kind of walking around and being outdoors more than one person per apartment or home. I think it was like August. Okay, so it was a long time to be indoors. And think about it.

If I was having to pay bills. In, February of that year vis a vis, paying in cash. How the heck was I paying while I was indoors? And everybody had the same problem. And the solution actually turned out to be, these digital wallets, GCash, PayMaya, all these different things. And once you digitize your money, and this is the other shocking thing to me, Jeremy, that I just didn't know but now I'm experiencing is, yeah, once you digitize your money, Then everything else becomes super fast. That means e commerce, that means logistics. And literally when I say come super fast, I don't just mean like the industry popping up.

I also literally mean the goods arriving super fast. Again, this is logistics pre pandemic, I'm ordering from Lazada or Zalora or Shopee in this country. And it would be like two or three weeks before any goods would arrive. Two or three weeks, right? I'd have to be very patient. I probably forgot that I bought it. But eventually it'll arrive. Today, that's two days, right? Three days if it's like, it's stuck somewhere. That's super fast. So we digitized our money, we digitized, our consumerism. And then we basically upgraded our logistics and here we are, ready for what's to come.

And Jeremy, to me, that's, what is to come in this country, it's exactly like I said, right, what I learned from the entrepreneurs that I had met with when I was traveling the world and living in 15 different countries. What's next for our country is very simple solutions, more solutions based on the digitization of this country, right? And solutions can be done in many different ways, right? One example I use quite often. And again, big credit to to Gentry and Mark Sung for finding these great entrepreneurs because my understanding is it was actually an inbound or sorry for Mark, it was outbound reach outreach to a startup called Edamama, right? In the Philippines. Big credit to, for him to identify that's something that's probably necessary in this country, right? The ability to send diapers to people online. Think about it this way. And again, Nish and Bella, great founders. They also had basically a pandemic baby.

And they also had the same problem that I did having a pandemic baby. It's like, where the heck do I find my diapers? Or my baby clothes or my bottles or anything if the malls are closed in the Philippines, I mean, and so they did something about it. They started Edamama.

(25:25) Jeremy Au:

Amazing.

(25:25) Franco Varona:

If you think about it, that's just a, that's a very simple solution to a problem that actually a lot of, people in emerged markets, let's say, developed markets don't think about anymore because there is a babies. com or diapers. com or whatever it might be in each of these countries, right? But in the Philippines, we didn't have that yet, but we add a million people to our population annually. And so think about that, digitization of money, digitization of commerce, 1 million new babies to our population annually. And, that point in 2020, nothing online and Edamama was able to answer that. So that's what I mean about, identifying, a problem in the country and then I say this all the time, right? I say, FoxMot likes to invest in Filipino solutions to Filipino problems and they don't have to be that complicated.

It could be diapers, it could be beauty, for example, right? It could be, accessibility. Of beauty products from homegrown brands. It could be coffee, right? But it is about identifying that. And I think that's where we stand in the Philippines, that we are at the precipice or we are already in our inflection point in this country, a little bit after Indonesia, a little bit after Vietnam, but we're here and this is, all of this is just the beginning, right? And that's kind of what I like to encapsulate in our reports these days.

(26:37) Jeremy Au:

What's your dream for the Philippines?

(26:39) Franco Varona:

I'll start by saying that I think my dream for the Philippines is everybody's dream for every emerging market. And that is that, it's not about the 2 percent or the 98 percent in this country, but it becomes more and more about, like, the growing middle class, the growing.

That 98% becomes less and less year on year, right? And I think that digitization and I think that the startup ecosystem has can play a very kind of important role in, in doing that, right? So poverty reduction, accessibility to education, right? These things are possible in this country.

And in some cases, more so than some other emerging markets. And why do I say that? Because I actually believe that our middle class, the Philippines middle class does exist. And it exists outside of this country. That's the craziest thing, right? Like, I, I grew up in Canada, so it's, that's definitely not what happens in Canada.

I mean, everybody's middle class in Canada. bUt in the Philippines, the middle class is literally our OFWs, right? Our overseas Filipino workers who are actually upskilling, who are actually getting educated abroad. And that also means they're children, right?

(27:38) Jeremy Au:

Yeah.

(27:39) Franco Varona:

To me, that actually means that, let's call it the OFW children, let's call it the second generation or third generation children that have actually maybe grown up abroad.

That means there's an opportunity there to leapfrog. we Don't have to wait for our own academia and education system to catch up. We can already piggyback on everybody else's, wherever Filipino diaspora is, right? I mean, there's Filipinos everywhere, Jeremy, I mean, Singapore is definitely a place where there's many Filipinos. Canada, of course, where I grew up. Yes, the USA, for sure. Australia, Dubai, right? Anywhere there's a Catholic church, actually, you'll see a Filipino, literally anywhere in the world. I've been to, Muslim countries and I go to the, I go to the Catholic church and it's all Filipino.

So I believe that actually. Our middle class being abroad, the ability for them to bring their own knowledge home or their children who, let's say some of them did grow up abroad, can bring that knowledge home, that's a great opportunity to leapfrog, and that's a great opportunity to create a stronger middle class in this country. That's my dream for the Philippines, right? More educated, middle class that can make good decisions, that can be entrepreneurs, that can kind of drive the economy of this country. That's the big dream.

(28:44) Jeremy Au:

What an amazing dream. On that note, could you share about a time that you've personally have been brave?

(28:49) Franco Varona:

I think I've repeated this a couple of times over this podcast, Jeremy but I think the big thing here is that I didn't grow up in the Philippines. I, even though ethnically I'm Filipino and my parents are Filipino I actually grew up in Canada. I went to school in the US and I, again, had kind of traveled the world prior to arriving on shore. Honestly, one of the things that I think I didn't realize at the time again, when we started creative spark or we started global media in the Philippines was that was kind of a very, a moment to be brave, was actually starting a business in a developing emerging market that quite honestly, I was not so familiar with and seeing and kind of going on that ride and kind of understanding the pain points or the opportunities. And let me tell you, Jeremy, one thing that I've learned. So people ask me today, like, people that know me from the old days, they'll say, where do you think you're going to, retire?

Where do you think you're going to where do you think you're going to basically end your life? Right? And I don't think I've ever answered with more conviction, but recently that I think I'm going to, no, I know I'm going to die in the Philippines. I'm going to live the rest of my life in this country and I'm going to die in this country. And the reason is because. It has given me so much. Right? It took that moment to be brave to understand it. Yes, it's really hard to do business in an emerging market like the Philippines, but the payout is unbelievable. And I don't actually mean the financial payout. I mean, the ability to give back, right?

(30:11) Franco Varona:

Jeremy, I'll invite you and I'll invite your listeners to actually Google this. When I was in university and In the US, I wrote a letter to my mom that actually became that actually went viral. Whatever viral meant back then which basically meant my mom copied and pasted my email or forwarded it actually to her, like, Yahoo groups. And it was a quick, letter called why I have hope for the Philippines. I had spent at that point two years in this country. Graduating from high school. So I graduated 1998 from the international school here. And I was already in the US and my mom had been sending me all these things about how difficult it was to be in the Philippines and just living in the Philippines. And so I wrote an email saying, Mom, I really believe in our generation. I believe that what you'll see is kind of this influx of. People that studied abroad and will go back to the Philippines today. I think that's called sea turtles. That's what if people talk about with Chinese and Indian students that go abroad and come back and I told her back in 2001, that's what I believe will happen, right? And even that I would work towards coming back to the Philippines and kind of giving back employing more Filipinos, taking what I learned. I didn't actually think that was, I didn't realize that was gonna come true so quickly. But that's wound up happening. And all it took was to be brave. All it took was to do that, to to take that first step into the Philippines in 2008 to start my business back then to learn to build the relationships that I did. And that's when I realized you can really be, a pretty big fish in a small pond and make a huge difference in a country like the Philippines and the Philippines will give back. It will give back to you if you take that first leap.

(31:41) Jeremy Au:

Wow. That was such a story. I have to read this letter afterwards. Immediately.

(31:46) Franco Varona:

Please do.

(31:48) Jeremy Au:

Yeah. Thank you so much, Franco, for sharing.

(31:49) Franco Varona:

Thank you, Jeremy. I really appreciate the time.

(31:51) Jeremy Au:

Yeah, I'd love to summarize the three big takeaways I got from this conversation. The first, of course, is thank you so much for sharing about your early entrepreneurial experience, about what it's like to set up a business from scratch in the early days, back when everything was on paper, everything was not Google-able, everything had to be done pretty much manually. And I think it's interesting to share about that early conviction to build a business, but eventually also using that experience to also build out the Grab team in the Philippines. And I thought that was such an incredible story about the early assumptions about what it would take to build a business again, versus the actual reality of it being much harder to do because, and, you mentioned names, the personal experience, you living in Anthony's apartment, all these incredible experiences.

Secondly, thank you so much for sharing about the Philippines. I think you shared about, I think the underlying, micro and macro dynamics of the Philippines in many stories, right? I think one of them was, again, your own experience as a founder, secondly, your own experience as a grab Philippines, launching the market, but realizing quickly that you had to get internet negotiate rates, train drivers on how to get those smartphones working. So, lots of different experiences that you had, for example, from the fact that internet was slow and expensive in the Philippines and now he has, improved by a lot, but also talking about mobile wallets and other forms of digitization is happening in the Philippines to make it such an exciting space to be in.

Lastly, thank you so much for sharing about your dream for Philippines . It was just amazing to hear, not just obviously the quantitative parts about inflection points and some of the numbers that we had that's driving the growth today. Also, I think your childhood dream of, coming back to the Philippines and giving back and building this out. And today, looking forward, your dream for the Philippines in the far future where. Many more people have access to technology to the FDI that you're bringing into the country and being able to be entrepreneurial. So what an incredible story, Franco, thank you so much for sharing.

(33:38) Franco Varona:

Thank you, Jeremy. It's been a real pleasure to share all that with you, and I hope it was interesting for you and your listeners.