Winston Damarillo was the CEO and founder of GlueCode. A self-taught programmer, Damarillo graduated with a bachelor’s degree in industrial and mechanical engineering from De La Salle University in Manila, Philippines.

Upon moving to Silicon Valley, he worked his way up at Intel Corp. and horizontally across engineering, marketing, sales, and finally, venture capital. At Intel, he was exposed to venture capital as an ecosystem builder of the company-backed software or gaming companies that would increase the use cases of their chips.

After Intel, Damarillo founded GlueCode, building the startup in both Silicon Valley and the Philippines. After just one round of fundraising, Damarillo was able to sell GlueCode to IBM, the first in a string of three exits that leveraged talent from both Silicon Valley and the Philippines.

Ezra Ferraz: You were a self-taught programmer before there were online resources like CodeAcademy. Can you share the story of how you taught yourself how to code?

Winston Damarillo: I’ve always been an engineer. I finished with an industrial engineering degree from De La Salle University. But when I went to the US, I had this crazy goal to work for the biggest names in Silicon Valley—Microsoft, Intel, or IBM.

I knew I had to learn how to work with computers, so I started with systems operations and networking. At the time, networking was the domain of the Novell Corporation. My first exposure to software development evolved from there as computing, telecommunications, the Internet, voice, and video conferencing were converging. I learned software development through reading SDKs and API documentation, and from the open source community. It was really a combination of wanting to learn and finding things to learn.

Eventually, I built software that enabled businesses to integrate voice and video conferencing into their operations. And this was a decade before Skype. I consider myself lucky having picked a tech innovation that is interesting and important to the way people do business.

Ferraz: How has your stint at Intel Corporation helped you build GlueCode?

Damarillo: I was doing well as an engineer, initially. But as Intel noticed, I enjoy finding new solutions for cool technology, so they transferred me to the marketing and sales departments, and eventually venture capital. It was a progression that was fortuitous.

As an investment executive, I was exposed to a much broader world of technology. I made investments in games, e-commerce, B2B platforms, and open source enterprise software. I believe, at that time, we invested as much as $1 billion a year to new companies. It was the early days of venture capital, way before it became what we know it to be today. Venture capital then was just geeks helping other geeks to turn their new innovations into reality. It was exciting to become part of that process.

Intel’s main reason for investing was to grow their ecosystem. We realized one way to convince businesses to buy more computers was to show them how they can innovate with tech.

The financially motivated VC came much later.

As I became more immersed in the world of investments, I realized the Internet was transforming from a static directory of pages to a global enabler of platforms. Websites no longer merely enabled communication between two parties. They were providing channels for transactions, too. Then I saw how these startups were making lots of money, and I knew I could develop the tech they were making, too. By then, I knew I wanted to become part of the new phase of the Internet. So I left, and built GlueCode.

Ferraz: What problem did you want to solve with GlueCode?

Damarillo: I’ve always championed inclusivity in technology. As the Internet was becoming a platform for conducting business, the ability to participate was limited to the few corporations that could afford expensive proprietary solutions offered by IBM, Oracle, and Sun. We wanted to build an alternative that was collaboratively built and accessible to all. The goal was to make sure that people could transact over the Internet, and that the ability to transact was broadly enabled to as many people as possible. That is the essence of open source technology—it is free to use by everyone, a total disruption to how things were done by the big guys. Somehow, GlueCode democratized innovation.

I built it in a way that could compete against IBM and Oracle—but at a lower cost. It was a battle of David versus Goliath, and I made sure to win.

Ferraz: Isn’t open source always known as a not-for-profit platform? How did you create a viable business model within the open source world?

Damarillo: I’ve always likened it to an auto business. GlueCode was selling cars for twenty percent of the cost of a brand-new one, since the main unit was offered for free. Customers were merely paying for the extra accessories.

Back then, there were three revenue models at play in the industry. First were services offered over free software. Second was dual licensing with enterprise support, like what Red Hat is doing with Linux. And third, and what GlueCode embodied, was open core—wherein paid add-ons were offered to create a better experience for users.

The entire model was disruptive because we weren’t only offering a more affordable product, we were also doing so at a much lower cost, operations-wise.

I didn’t need hundreds of employees to run the house. We were a fifty-person company competing against a tech giant, and we won. IBM kind of gave up and just bought us.

Ferraz: Several tech companies in the book are bipolar rather than unipolar in that they revolved around two headquarters, such as Razer with its presence in Singapore and San Francisco. In what way was GlueCode both a Silicon Valley and an Asian-driven organization?

Damarillo: Well, most of the GlueCode architecture marketing teams were based in Silicon Valley, since that’s where the market is. We wanted to make sure that we were close to the demand and close to the competition. This ensures that we are always on our toes. Manila and Cebu were the machinery to execute software development. A nice side effect is around-the-clock engineering. We were cranking code twenty-four hours a day. The local operations were pioneering in that sense, since at that time, most foreign companies operating in the Philippines were providing services to company headquarters based elsewhere in the world. They were not building products.

Most of the innovation and market demand was driven in the US and therefore the Philippines followed the Silicon Valley model. The ecosystem followed the US model as well. There was no RISE or Echelon or Slingshot then.

The popular option back then was to outsource software development from China and India, but I knew Filipino engineers had it in them to develop world-class products.

That culture of innovation was refreshing to Filipinos, especially since they were so used to building products based on specifications. We had to introduce the culture among local programmers. They had the freedom to create products on their own. We gave them the right tools and a collaborative environment, and they were excited to do their jobs.

It was a complete departure from the frenzy and energy in Silicon Valley, where retaining talent was a constant challenge.

In the US, everyone is recruiting everybody almost every other month. There is a “What’s in it for me?” feeling. There is a high sense of entitlement. But in the Philippines, Filipino engineers are just happy to create complex and innovative products.

Building a team culture in a short time is honestly very difficult. It is compounded by time differences, distance, or dual-site operations. What made it easier for us was the open source community. I focused on recruiting people that were already of a “like mind” being involved in open source development. that became the core of our culture and mindset.

The local operations also kept the product cost competitive. The duality was there, so I could build the best product possible—attuned to my customers’ needs for a better cost.

Ferraz: Can you go deeper into explaining your business model? What were the paid add-ons that you sold to your clients?

Damarillo: The business model delivers an enterprise model of software from open source. They pay an annual subscription for support and bug fixing for a specific open source version, tools and utilities that make the platform easy to use and maintain, and training and development assistance.

These are all on an annual subscription basis.

Ferraz: What were the challenges of converting your clients toward your paid add-ons, and how did you address it?

Damarillo: Mostly making sure that they realize the value of supported open source. Their biggest concern that to make sure that the software is free from infringement. We addressed it by working with reputable organizations like the Apache Software Foundation.

Ferraz: Did you develop any strategies to expedite the time it took a client to avail of your paid add-ons? What did you do?

Damarillo: It was a very cost-effective alternative to paid software. The biggest benefit of open source is that people can try it for free.

Ferraz: At Intel, you had done many different things, from sales and marketing to business development and investing. At GlueCode, which aspect of the business, did you find yourself focusing on the most, and why?

Damarillo: Sales [laughs]. I was the geek who could sell. So it was a unique capability to help the team.

Ferraz: Communities can be unnecessary gatekeepers. Did you get any backlash from the open source community about your business model? How did you respond to these naysayers?

Damarillo: There was generally no backlash, but there was a lot of hesitation in taking it seriously. Having big brothers like IBM and Oracle support open source was key to acceptance.

Ferraz: You seemed to nail both your revenue model in Silicon Valley and your service delivery and product creation model in the Philippines. Did you keep this model for your other businesses?

Damarillo: Yes, and we are now extending it to ideas in fintech, insurance tech, and regtech, where we inject key innovations to existing mainstream businesses.

As an entrepreneur, I’ve always been more fascinated by innovating and building teams that can compete against a large player. I wasn’t really interested in winning new markets and customers. I enjoyed being the game master, while the rest were scrambling to compete in the markets.

For GlueCode, it was honestly opportunistic. There was so much demand for enterprise open source M&A, we were acquired even before we could spend our VC money. LogicBlaze and Webtide were natural ingredients of large company portfolios, so once the market and technology risks were addressed, M&A followed. We did not have to build the customer base.

After one investment, I sold the company. I enjoyed it since I still maintained control until we exited.

Ferraz: How so?

Damarillo: It was a silly thing to do, but I felt at that time, who knows if this will happen again? So I signed the deal about twenty-four to thirty hours later than intended. GlueCode exited on five-five-five—May 5, 2005. When it’s your first, you want it to be memorable. I wouldn’t advise it to anyone, but it was fun to do. I used to commemorate the exit and do something special on every fifth of May, but it came to a point that it was time for new milestones.

Ferraz: In what ways do you think GlueCode was a predecessor to the boom of open source and platforms like GitHub?

Damarillo: GlueCode was a pioneer in bringing open source to enterprise customers. The business model innovation we brought to the table was hybrid licensing, community-tested and verified software, and enterprise-quality service and support.

Ferraz: What did you do in the first one hundred days after your exit?

Damarillo: Work on the next one? That sounds cocky, but I didn’t feel I was tired. It was addicting for me to create new companies. I thought the first exit was fun, so I wanted to do it again.

After my first exit, I had a rule: keep a third for savings, another third to enjoy, and another third to invest for the next venture.

After selling GlueCode, I wrote my next business plan. Right below our first office, I set up another firm called ActiveMQ, which eventually became LogicBlaze. It was later acquired by Iona and is now part of Red Hat.

Ferraz: After three exits, didn’t you think about an early retirement?

Damarillo: I was thinking of creating impact after a while. I thought I could do that serving as chief strategy officer at PLDT, knowing there were so many problems I could help solve in terms of Internet infrastructure. While I thought that was rewarding, I realized that I could have an even better impact on the Philippines and the region as an entrepreneur. So I went back to doing what I do best: building startups.

Ferraz: Can you share more about your present ventures?

Damarillo: I created Amihan Global Strategies first, which is sort of my laboratory. I realized that I am a creature of habit, so I did what I’ve always done, which was building the factory before the product.

I’m always reminded of a mantra popularized by Andy Grove at Intel: “Intel is the great microprocessor company because it’s a great manufacturing company.”

I fine-tuned Amihan by working with the biggest conglomerate in the Philippines—SM Investments Corporation’s Banco de Oro. Once I was confident, I built Talino Venture Labs, which has become the main hub for all the other startups I’ve launched in 2019.

Unlike my previous ventures, though, I am now more fascinated in reaching new markets and helping millions of customers.

What is new and exciting is that Southeast Asia now generates its own market demand and innovation requirement, similar to Silicon Valley ten years ago. This is an exciting opportunity, as I can now disrupt regionally while maintaining a global benchmark for quality execution. The region is no longer creating products for the West, but creating products for itself. We are our own markets now. It’s an opportunity for technology to bridge a lot of inclusion gap.

One of my startups, Saphron, is providing digital microinsurance for the base of the pyramid. The advance tech we’ve employed for it is revolutionary in its simplicity. We have learned to redefine the user experience by understanding the workflows of the mom micro-entrepreneurs, or nanays. We’ve helped them onboard new clients in a matter of minutes, which took hours before.

Knowing that your innovation can create that much impact to the base of the pyramid is ten times more rewarding.

Ferraz: But it sounds more challenging considering you’re working with mass markets now, unlike your previous ventures.

Damarillo: That’s true, which is why it’s important to be “smart lazy”. When you’re lazy, you think of ways not to waste energy. I wouldn’t write my own software, so I’ll tap what is available in open source. I won’t spend time building data centers, so I’ll use cloud computing instead. I won’t chase customers, so I’ll partner with conglomerates instead.

Smart lazy is being smart enough to leverage available innovation, infrastructure, and strategies. I’d rather use my brainpower to build commodity, or improve the customer experience. There’s a lot of people doing something that has long been commoditized, which I tend not to do.

That’s why for Saphron, I worked with the largest microinsurance provider in the Philippines, Pioneer. I’m not going to spend time buying customers. That isn’t only time taxing, it’s costly and quite dangerous.

There are companies that have gone four, five, six rounds of funding, yet never really lived up to their potential. They spend much of their money buying new customers so that they create an artificial momentum, but when it busts, they fail to maintain it.

It has worked for Google, Amazon, and Facebook for sure. But that strategy is a big gamble. It’s the reason why there are more honestbees than Google.

I’d rather stick to what I know best and stay in my lane. I’m good at coming up with cool new technologies and product design. I’d rather piggyback on conglomerates’ customers.

Ferraz: Can you elaborate on your theory about how startups and corporations can innovate together?

Damarillo: The ASEAN market is still developing, which makes it hard for a startup to hit escape velocity to success. At this point, partnering with the big guys is a critical strategy.

Conglomerates have started to embrace the startups that have long tried to disrupt them. I think we’re at a time when the two parties have seen each other’s value to their long-term success.