Zalora Philippine CEO Paulo Campos on the State of Startups Today
Getting into the startup scene can be tricky for aspiring entrepreneurs, especially without inside knowledge. There is perhaps no greater insider of the Philippine startup scene than Paulo Campos, the co-founder and CEO of Zalora Philippines. He is also an investor in Philippine startups, such as the up-and-coming cloud kitchen company Kraver’s Canteen.
An alumnus of both Harvard Business School (HBS) and Princeton University’s Woodrow Wilson School of Public and International Affairs, Campos has plenty of expertise in entrepreneurship. At HBS, he was part of the Class of 2010, which included his college buddies and insanely successful startup founders Anthony Tan, co-founder of Grab, and Nadiem Makarim, co-founder of Gojek.
After graduating from HBS, he started his career in the Philippines as special assistant to then-CEO of Ayala Land, Inc., Jim Ayala. He followed that up with a stint as a consultant at the world-renowned Boston Consulting Group. Then in 2012, he jumped onto the growing e-commerce and co-founded Zalora Philippines and grew it into the stable and successful online shopping platform it is today.
When he’s not overseeing Zalora, Campos is an active investor, mentor, and thought leader in the Philippine startup scene. We talked to Campos to pick his brain on the startup landscape, what investors look for, and the common mistakes startups make.
ESQUIRE PHILIPPINES: What are your thoughts about the Philippine startup scene during the pandemic?
PAULO CAMPOS: From our overall macroeconomic perspective, it's actually quite worrisome and troubling. And quite sad [given] how the momentum we had in the Philippine economy was really doing so well. [There was an] extended run of consecutive years of very solid GDP growth. And we were really seeing the Philippines develop and move in the right direction. What we've seen is that, of course, the Philippines is the most adversely impacted economy in Southeast Asia as a result of the pandemic.
That has meant consecutive quarters of contraction in terms of GDP growth, and it stalled what was really strong momentum. So having said that, I think precisely because of that adverse impact that we as Filipinos face in light of the pandemic, that's precisely why I think there's been an extreme explosion of innovation in terms of new startups and new opportunities in the Philippine startup landscape that can leverage the seismic shifts in consumer behavior that we see.
We've been under lockdown longest in the region, our economy is most impacted. That has meant the behavioral change on the customer side, and we all live with it every day. We see that at Zalora in terms of being on the frontlines of e-commerce, but also generally in how we order food, shop, and spend our free time.
There's been a good five, six years of digital adoption that have taken place just in the last few years before the pandemic. So I think, against this context, where there's a need for the Philippine economy to recover, there's a need for the Philippines and business people to fight back. We could either run away to the mountains and hide until this is all over, or as business people, we can do our part to actually invest in that creative side of what they call creative destruction, right? Even as old industries and traditional customer behavior goes by the wayside, there's really an opportunity now for new companies to emerge, new entrepreneurs to solve specific problems, new technology and platforms to take advantage of this increased move towards digital adoption.
In the wreckage of COVID that we're seeing in the economy today, you very much see some very exciting green shoots of what the landscape could be in the future. I do hope that we look back at this COVID time as a time when that led to an explosion of innovation and new startups. We're seeing the confluence of entrepreneurs with good ideas, investors, and both institutional and angel investors interested to support these entrepreneurs.
Some of these other things (digital adoption, consumer behaviors) are converging in a very positive way, such that it really is called being fertile ground for new startups to emerge and emerge quickly. We're seeing that across all areas, of course, in e-commerce, in my business, but also in other areas, [like] food, services, and in a range of industries. The economic outlook we currently face and the prospects for the future [are] actually quite great. And the prospects for Philippine startups, in particular, are exciting.
ESQ: What do you look for in a startup as an angel investor?
PC: When I look at startups and their prospects, I, of course, think about my own journey. I think it wouldn't have been possible without the team. What sets us apart as a company is the quality and the capability and the skill within the team that we've built, the commitment of the team that we built. And so I think, first and foremost, it always starts with the people behind any new concept or any new startup.
I'm very proud of many of our alumni who have come through the lower ranks [of Zalora and] are now starting their own course. [They’re] diving in, trying something entrepreneurial. Having some experiences to having seen it before, and having seen a company go from zero to something, there's just having lived through that experience, even if you're not the founder is, in my case, very invaluable.
So first and foremost, again, I think it would start with the team and the originators of the idea and entrepreneurs behind it.
[Then] in terms of the product, and then of course, the problem they're trying to solve and the prospects of the business they’re pitching in.
I think there are really a tremendous number of opportunities out there. So it's not the lack of opportunity or ideas, but I think we just haven't had that confluence of the entrepreneurs and the investors to kind take on those opportunities.
ESQ: What do you think is a common mistake that startups make in their early stages?
PC: I would say the common mistake would be to essentially not have the grit and the resolve to see an opportunity outright. Building a startup to something of that scale is not easy.
It's definitely not going to be a smooth ride, it's going to be a roller coaster, [with] a lot of downs, as well as ups, of course, but a lot of downs that can be really challenging along the way.
Without a certain level of resolve, which could either come from a firm belief and vision, that vision that you have will materialize, or without the discipline in the middle of the resolve to see something through and to fight through the challenging times, I think a lot of people give up. Actually, they give up without putting in the fight. When in fact, if they were just to chase it, [it would be] actually possible.
The other common mistake would be to not focus on the customer? Especially at the technologies side, where you think that the solution is inventing [something] new or deploying technology. That's all well and good. But that really won't help if you're not looking at what the real customer need is, or the user experience would be. Because only when focusing on making even a small subset of customers extremely happy with what you do, only then will you be able to have a broad product market fit and scale. I often find that some startups don't think about the customer enough.