Inventor, entrepreneur and philanthropist Diosdado ‘Dado’ Banatao believes that Filipinos can excel in the field of artificial intelligence. He says that instead of displacing business process outsourcing professionals, AI can treble the size of the BPO sector, and together with data science and Internet of Things, can lift the whole economy.
“We will train a lot of engineers in designing those things and we have started already. We have already 20 AI engineers and we are beginning to train them here in the Philippines,” Banatao, a Silicon Valley-based Filipino technology innovator and venture capitalist, says during the inauguration of AIM-Dado Banatao Incubator Program at the Asian Institute of Management in Makati City.
“We did some basic AI, not even the best, but we know we can do it. And we actually have better than what they have in the US. We can replace their agencies in the US which could potentially triple the BPO revenue in the country from $40 billion. We can make that to $80 [billion] to $120 billion in a few years through AI. And so, we will just have to generate those engineers here,” he says.
“Two years out, we should be able to triple the current revenue in BPO here,” says Banatao.
AIM president Jikyeong Kang says with the onset of new technologies such as AI, data science and IoT, “there are plenty of jobs that would disappear, but there are plenty of new jobs that will be created.”
“So what AIM is trying to do is to produce more CEOs. We wanted the same kind of role and make an impact so that we will not be looking at a time where BPO industry is no longer viable in this country while we are already trained by people with the right skills,” she says.
Banatao is particularly interested in the potential of AI, or the intelligence exhibited by machines in transforming industries. Technology analysts warned that AI can displace thousands of call center agents and BPO professionals in the Philippines. The BPO sector in the country employed 1.2 million Filipinos and generated $22.9 billion in revenues in 2016, a number that is expected to hit $40 billion by 2022.
Banatao says he expects the Philippines to sustain the growth of the BPO sector. “With some innovation, I can conclude that we can stay in that business. We can protect ourselves. We still have to compete against others. This is in artificial intelligence,” says Banatao, who helped fund two AI companies, one of which is considered the fastest AI engine in the world today and competes against the biggest companies such as Google and Amazon.
“What I expect is that there will be more of us helping the country bringing in the technology, bringing in the courage to challenge themselves. I believe that the cycle has just started and what I mean by that is there’s the brains and the courage to do it,” he says. “We just have to show the population here, the ecosystem for startups including the investors.”
Banatao, a son of a rice farmer from Cagayan province, is a microchip inventor who made it big in Silicon Valley. Kang describes Banatao as one of the most successful Filipino entrepreneurs in the highly competitive Silicon Valley.
“Dado regaled us with the story of how he became an inventor, one of the most successful Silicon Valley entrepreneurs, and, eventually, a venture capitalist at his own firm Tallwood. So inspired was I by Dado’s stories and his encouragement that AIM set up an incubator, which could play a critical role in the Philippine innovation and entrepreneurship ecosystem, that I lost no time in enlisting his support,” says Kang, a South Korean professor who has taught around the world and served as a director of the Manchester Business School prior to her assignment at AIM.
Banatao left the family’s farm in Cagayan to train as a commercial airline pilot with Philippine Airlines, and later as an aircraft engineer. He graduated with a degree in Electrical Engineering from Mapua Institute of Technology and pursued a Master’s degree in Electrical Engineering and Computer Science at Stanford University.
Banatao co-founded several technology startups including Chips & Technologies, S3 Graphics, SiRF, Marvell and Inphi. He has also made major investments in Cyras Systems, Stream Machine and Wilocity. He is best known for pioneering two technologies that are widely regarded as the cornerstones of today’s PC: chipset and graphics acceleration architecture.
Banatao is currently the managing partner at Tallwood Venture Capital, which invests in unique and hard-to-do semiconductor technology solutions for computing, communication and consumer platforms.
Banatao teamed up with AIM to launch the incubator program, which started with a P14.8-million grant from the Department of Science and Technology. The program will provide mentorship and free office space to 11 teams, initially, to help them start up their businesses.
Banatao says successful applicants should be able to define the market for that startup. “Without a market, it doesn’t matter how your innovation works,” he says. “Number two, do you have a product idea that it differentiable and competitive in the market?”
“As crucial drivers of the Philippine economy, startups have such huge potential. They are small, but agile, and can pivot quickly in response to a fickle, demanding market,” says Kang, who earned her PhD from the University of Minnesota.
“I remember, when we launched last year, Dado said we would look for ‘suicidal’ entrepreneurs; those steeped in adversity, with the odds stacked against them, just raring for an opportunity to escape that vicious circle. Well, I am sure you will all agree, we certainly have lots of those in the Philippines,” she says.
“One of the fastest ways we can achieve this is to give the country’s biggest economic engine the rare opportunity to benefit from the mentorship of global visionaries, such as Dado Banatao. As for AIM, aside from providing qualified startups rent-free working space, we will also gladly make accessible to them a mentoring program and the expertise of our faculty and alumni, as well as support from leading businesses and industries,” says Kang.
Banatao says that based on his experience as an entrepreneur in Silicon Valley, the startup phase is the toughest with the highest failure rate in the life of a company. “Unless there is help from investors or friendly mentors, founders of the company are either suicidal or ‘crazy’, putting at risk their life status, family, friends, and future,” says Banatao.
Banatao, who is also the chairman of non-profit group PhilDev Foundation, says under the incubator program, the experience in building technology based, innovative and very successful companies from Silicon Valley will be used, while being aware of local culture and practices.
Kang says “aside from providing qualified startups rent-free working space, AIM will also gladly make accessible to them a mentoring program and the expertise of our faculty and alumni.”
“We do this in hopes of encouraging more angels and VC [venture capitalist] funds to invest as well as lowering the assumption-to-knowledge ratio of startups in the incubator as painlessly as possible. As a management institute, AIM can do no less,” she says.
It will provide world-class mentorship from serial entrepreneurs, top executives, industry experts, including individuals with a successful track record in Silicon Valley.
The incubator intends to support early-stage startups with deep technology, science, or engineering solutions to the neglected problems of an emerging world. Eligible startups will have a proven ability to build quickly, sell to customers, and evolve their idea into a business that can grow.
Kang says Banatao, being not only an inventor and engineer but also an entrepreneur, is an ideal model for the startups. “I think that makes a huge difference. He has been able to make a bridge between being an inventor, coming up with an innovative idea for the product and then being entrepreneurial in terms of how you sell those product to somebody who wants to pay money,” she says.
“Now, as you all know he is a capitalist himself. Not only he has done it but he has done in it Silicon Valley where the competition is just enormous. We always talk about his humble beginning to the journey he took to where he is now,” says Kang.
“He is our most famous technology innovator, inventor, entrepreneur and most importantly philanthropist.”