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From Cagayan Valley to Silicon Valley
Michael Alan Hamlin
March 27, 2006
I’m borrowing the title of this column from an interview of Silicon Valley entrepreneur and venture capitalist Dado Banatao published in The SGV Review in 2004. Banatao is the legendary poor boy from Barrio Malabbac in Cagayan who revolutionized the PC industry by developing the first IBM-compatible chip set, thereby creating the non-branded PC in 1985.
That wasn’t his first, or his last, major contribution to the industry. He also invented the first enhanced graphic adapter chip later that same year. In 1989 he pioneered the local bus concept for PCs, which increased the speed with which PCs process data, and the following year created the first Windows graphical user interface chip, which made it practical to use Microsoft’s then-new graphical desktop.
The intellectual, cultural, and entrepreneurial gaps between Cagayan Valley and Silicon Valley are almost too extreme to imagine. Banatao grew up living without electricity or running water. His father was a farmer, his mother a housewife. But Banatao was — and is — both a dreamer and a risk-taker. Much of his earlier risk-taking involved educating himself, first by leaving his home to study high school in what seemed to the young Banatao a much larger town, Tuguegarao, where he entered Ateneo.
Intimidated by his more sophisticated classmates who grew up in and around the town, Banatao’s self-confidence received an important boost when he turned in aptitude test scores at the top of his class as the school year began. The future entrepreneur leveraged the skill of critical thinking he learned under the Jesuits to gain entrance to the Mapua Institute of Technology, where he became an engineer. Surprisingly to his friends, Banatao declined a plum job offer from Meralco upon graduation to enter flight school with Philippine Airlines.
“I told myself that I studied hard to become an engineer, and I wanted to earn much more than what Meralco offered even if it meant not practicing my profession,” he told one Manila audience last week. After Banatao was hired by Boeing, he moved to the U.S. and eventually entered graduate school at Stanford University, where he obtained an M.S. in electrical and computer engineering.
Banatao then set off on an amazing streak of hard-earned luck, albeit with a few substantial downs to put the many ups into perspective. He co-founded a company called Mostron that focused on PC mother boards, but ran out of cash and was forced to sell to investors. Learning from that experience, he founded Chips and Technologies with an angel investor. Additional funding was provided by a Japanese businessman who “thought our technology was cool.”
Cool enough that the company went public in 22 months, as a mater of fact, a record for time from founding to initial public offering (IPO) that still stands. No one has ever done it faster. That company was ultimately sold to Intel in 1997 for $430 million. In the meantime, Banatao founded a new company called S3 — for startup number three. S3, which later became SONICblue, IPO’d at $30 million in 1993.
Today Banatao is a major Silicon Valley personality, and managing partner of Tallwood Venture Capital. He is a hands-on investor, who says his greatest satisfaction is derived from creating real companies. Among the firms he has helped create are Nasdaq-listed Marvell — worth $17 billion today — Cyras Systems which was acquired by Ciena, and Newport Communications, acquired by Broadcom.
Another venture, SiRF, is a firm Banatao believes will impact industry the way Chips and Technologies did — in a revolutionary way. The company is bringing global positioning system technology to everyday consumer items, including phones and cars. In recent years he has also helped Filipino engineers and firms in their development. His Banatao Fellowships send promising engineers for study in the U.S. Affiliate Narra Venture Capital, managed by another Stanford alumnus, Paco Sandejas, is on the prowl for good ideas and entrepreneurs who can execute them. Narra recently invested in Stratpoint, a Philippine-based provider of enterprise solutions and services.
Banatao has lots of advice for entrepreneurs who want to chase his remarkable record of achievement. Here are some of the points that resonated with me:
· Do what you enjoy. Banatao believes that it’s much easier to be successful when you enjoy what you are doing.
· Learn from your mistakes. The first time around, Banatao ran out of cash. That only happened once.
· Be suicidal. Entrepreneurship is an inherently risky undertaking. Nine out of 10 news ventures will probably fail. But if you don’t try, there’s no chance of success.
· Hire great managers. There are lots of great ideas. The real trick is execution. Successful companies and executives are expert project managers. They know how to get things done.
· Devote time. A startup requires a lot of nurturing. Early on, Banatao spent up to 21 hours a day working on execution. Today, his associates say his pace, at 60, hasn’t slowed.
(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author. His latest book is High Visibility: Transforming Your Personal and Professional Brand. Write him at mahamlin@teamasia.com.).
Copyright © 2005 Michael Alan Hamlin. All Rights Reserved.
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