Jaime Augusto Zobel de Ayala: Internet Man of the Year

By leinz Bulos

hile choosing the inal list o
1he \eb`s Moers and Shakers
proed to be a diicult exercise,
picking the person we considered to hae
the biggest impact in 2000 was, or lack o
a better phrase, a walk in the park.

In the past year, Big Business came onto
the Internet scene in a big way.
Conglomerates spun o Internet diisions
and acquired dot-com start-ups. Internet
banking went beyond mere hype. \hereas
broadband proed to be an empty
promise, wireless technology deliered.
\AP may hae not taken o yet, but
many obserers agreed that in Asia,
mobile Internet is the way to go. B2C and
B2B were the buzzwords o the year. VCs
and incubators were the rage. I.1. was
declared a priority by the Lstrada
goernment, right beore the political
crisis exploded. In all these, one person
stood at the oreront.

Jaime Augusto Zobel de Ayala II deined
the Internet in the Philippines in 2000.

1he Ayala empire extends ar and wide.
Perhaps you lie in a subdiision
deeloped by Ayala Land. Or you`re
driing a londa Ciic, inanced by BPI.
And taking the MR1 once a week. \ou
may hae had Pureoods luncheon meat
or breakast this morning, ate lunch at
Burger King, and watched a moie at
Glorietta. \ou could een be texting
someone right now with your Globe
landyphone.

lor the 41-year old, larard-educated
JAZA, as he is oten reerred to, the
Internet is the next rontier. And the man
is so coninced that the Net is the Next
Big 1hing that he punctuates his replies
with there`s no doubt in my mind.` le
also likes to use the word massie`.

\hat made him our choice is not so much
that he has his ingers in so many pies - to
be sure, he coers all the bases because he
can - but more because, with so much at
stake, he orged braely ahead.

1he Internet, ater all, is about taking risks
and being rewarded or haing the guts.
JAZA has guts. 1here`s no hesitation, no
wait and see.

In his own words, In this enironment,
corporate strategy is not about 5-year
capital allocation models. It is much more
about placing bets and creating options
or growth. It is about deeply
understanding how each industry will
eole, and then being a shaper o the
changes ahead, rather than a ollower.
Ignoring the orces o the New Lconomy
is not an option!`

\ith a 165-year history, Ayala is as Old
Lconomy as you can get. \hich makes
people een more astonished by Zobel`s
chutzpah. Declaring the Ayala Group as
the Prime Architect o the New Lconomy
undoubtedly raised eyebrows.

But it`s not empty talk. In the same
breath, Zobel has set up a subsidiary,
iAyala, that would manage the
conglomerate`s Internet-related entures.
Ayala Internet Ventures Partners ,AIVP,,
its enture capital orm, inested in
seeral local and oreign Internet
companies, including SIRl 1echnology,
Ldsamail, Music.com, MeetChina.com,
and PinoyLxchange.com. \ireless
Internet Solutions ,\Net, was ormed to
deelop \AP and SMS applications and
serices or the global market. 1hey
started Phil\AP to build a community or
\
\AP users and deelopers. Ayala joined
Bayan1rade, a B2B marketplace o a
consortium that includes the Aboitiz
Group, JG Summit, PLD1, and Unilab.
MyAyala is a joint enture with Ayala
Land to sere as an online retail portal,
coering Glorietta5, SureSeats.com, and
L-Guide. 1hey also set up an Internet
Data Center, the second in the country.

More than spinning o an Internet
subsidiary, Zobel is the only head o a
conglomerate who had the single-
mindedness in directing all the companies
in his group towards his Internet ision.
Ayala Land is enturing into cyberparks
and online retail, BPI spun-o its call
center and Internet banking serice, BPI
Direct, Globe 1elecom is moing towards
the wireless Internet and has launched its
DSL serice or broadband access, een
Ayala loundation is helping wire schools
in the country, and the rest are enhancing
their online presence. lis decisions and
actions will aect many o us and the way
the Internet in the country takes shape.

But what endears him most to the
Internet community is his olunteer work
in arious organizations to help jumpstart
the New Lconomy. le was
Commissioner or the Global Inormation
Inrastructure Commission ,GIIC, and
Co-Chair o the Inormation 1echnology
and L-Commerce Council ,I1LCC,. lis
resignation rom I1LCC along with other
key people as a sign o protest at the
Lstrada goernment may hamper
deelopments in the goernment`s I.1.
initiaties. Industry people respect his
sincerity and more so his strong grasp o
Internet issues.

And he practices what he preaches. An
aid Internet user, he surs, listens to
MP3s, and answers his own e-mail, which
incidentally led to our interiew. Meeting
Zobel was a bit daunting. Gien only 45
minutes or the interiew and photoshoot,
it was obious this man`s time is aluable.
\e were surprised that he already did his
homework. le had typed and printed his
answers in adance so we could just hae
a casual discussion, which turned out to
be engaging. le makes un o the act that
some interiewers quote him erbatim,
including his uhs` and uhms`, which he
acetiously says makes him sound like he
isn`t sure o what he`s saying.

le also took the time to know more
about our company and the magazine,
making the obseration in jest that our
readers, used to our usual coers o pretty
celebrities, may not buy the issue. le
doesn`t know o course that the entire
emale population at our oice begged to
tag along.

le has an ease about him, being pleasant
and gracious. le speaks without an
American or Spanish accent, not een
when he occasionally utters something in
1agalog. At the photoshoot, he chatted
with us as he was being photographed,
smiling and posing gamely. \hat ollows
is our chat, in some places, combined with
his written replies.

Ayala's Internet Strategy

Ayala Corp. is considered a
conservative company and it surprised
some for positioning itself as the prime
architect of the New Lconomy. What
were the factors that made you decide
to embrace the Internet as an integral
part of your business?

1he Internet has been something we'e
been talking about within the Ayala
Group or some time, and I remember a
major planning conerence we had, and
we were talking about the Internet, close
to 4, 5 years ago already, but we weren't
taking it as seriously as we did this year.
Instead o making it on an ad hoc basis, I
said let's make it a group initiatie and
gie it the momentum it deseres.

It came about rom two things. 1he pace
o actiity particularly in the US, which
moed up quite extensiely. \e want to
track what we're doing with the rest o the
world so there's no doubt that had a
major inluence. I had a short sabbatical, I
went to New \ork, Boston, 1okyo, and
during that time I met people rom
Internet-related entities. \hen I came
back I said we hae to take this a lot more
seriously. 1hen we started piecing
together a strategy and got the
commitment o our senior managers to
get a little bit more inoled, and rom
there we moed aggressiely. Bottomline,
it's something we'e been aware o or a
while and we decided to gie it
momentum this year.

1his year saw the downfall of dot-com
and tech stocks. And given the
political and economic crisis, are you
still bullish about Internet business
ventures as investments or revenue
drivers?

1he alue creation has been abnormally
large, it was something that clearly would
not last oreer, but I beliee that the
Internet and I.1. will undamentally
change the way we do business. 1he pace
at which that would change will always be
dierent but there's no doubt in my mind
that it will continue to be there.

1he people are a little bit ocused on the
political crisis, but our group remains
committed to it, but times like this, people
tend to ocus on the basics, but we're still
there, but the pace will be a little bit
slower.

Ayala's four core beliefs about the
Internet include the ideas that the
Internet in Asia will evolve differently
and that me-too strategies will not
work. Other than a strong push for
wireless Internet, is Ayala Corporation
adopting any uniquely Asian e-
business models?

\e do beliee that the New Lconomy will
play out dierently in Asia. 1he main
dierences will be around access, the role
o incumbents, and the relatie
importance o B2B ersus B2C. Also,
players in Asia hae the beneit o learning
rom the experience o players in the US
and Lurope.

MyAyala, or example, works in
partnership with mall deeloper and
operator Ayala Land. 1his is rather unique
and ully leerages our existing tangible
and intangible assets. \e don`t know o
any such B2C enture anywhere in the
world.

WAP has not really taken off this year.
And some say Iilipinos will not
necessarily embrace WAP the same
way they embraced SMS. Are you still
optimistic about Iilipinos using
wireless technology as their primary
access to the Internet?

In short, yes! \e are coninced that
wireless will be the irst - and or many
consumers, the primary - access to the
\eb. 1he numbers are compelling. Only
around 1 million lilipinos hae PC-based
\eb access, whereas by the end o next
year, 8 million will hae wireless phones.

1he PC will still be there but wireless will
play a signiicant role. lor it to be used
much more extensiely, the speed has to
be a lot higher. 1here will be inestments
in GPRS, which will allow ery reasonable
speeds, and this will really enable it to
blossom. Inestments hae to come in
irst, and that will slowly take o.

It will come in pockets and we can't
identiy yet how it will take place, but I
hae no doubt we'll start buying things
and use serices in a dierent way. In the
myAyala group, we weren't quite sure
what will take o to begin with, but the
major drier is ticket sales at our theaters,
so that's ery big. It has proided a useul
thing, you're neer sure, unless you try it
out, you'll neer know which things will
take o.

Which local companies do you
consider your strongest rivals in the
Internet arena?

I'm a belieer that this is an industry that
we all hae to promote, so rather than
seeing each other as competitors, I like to
see them all as peers. All o us are trying
to make the Internet come alie. In the
scheme o things, there's so much room.

Although it's too early in the game,
which specific areas do you see Ayala
dominating?

I don`t like to use that word. 1his is a
whole new industry that is coming alie.
\e're just one player in it. lrom the ery
beginning, I wanted also to be a catalyst
or the industry to come alie, and I mean
that sincerely. Part o the reason I
dedicated a large amount o my personal
time to the industry. I worked with
|ormer Department o Science and
1echnology secretary| Jun Uriarte, with
|ormer Department o 1rade and
Industry secretary| Mar Roxas, I spent a
lot o time with them just purely on a
personal basis trying to gie my support.

What do you consider Ayala's
advantages as an Internet player?

\ou hae incumbents like ourseles
beginning to embrace the Internet. 1hat
combination o an established player with
an established customer base beginning to
use the Internet intelligently is a ery
strong, winning ormula. It`s dierent in
the US where the entrepreneurs are the
major driers. lere, the incumbents hae
the customer base, logistics.

Our leading position gies us access to the
most aluable customers in the
Philippines. BPI has 3 million customers,
Globe has 2 million subscribers, and our
malls hae in excess o 20 million shopper
isits per annum. \e also hae amongst
the best people in the country. \e
encourage innoation and
entrepreneurship. \e hae a culture o
openness with a ree low o inormation
across the organization.

Who are the key people in Ayala in
forging and enforcing your Internet
strategy?

All the presidents and CLOs must irst
buy it, and gie it priority and importance.
1here's no speciic person. I don`t beliee
you can drie a major way o looking at
business just by one or two key people. I
see mysel as a primary catalyst in giing it
importance but ultimately it will spread
down the organization, but you hae to
start at the top and create an enironment
that makes it an accepted business thrust.

1he Philippines' Internet strategy

What is your assessment of the
Phillipines as an Internet player?

I think we can still be a major Internet
player, we're just a bit distracted at this
point in time, gie this period a chance to
settle itsel. Our major adantage by a
long shot is our people - Lnglish-
speaking, highly creatie. 1he whole
multimedia enironment is a mixture o
music, design, sotware, engineering,
creatiity. 1hat whole mix is so aailable
in this country. I the enironment is
right, the right combustion took place,
we'll be many places ahead o the other
countries.

What do you think are the obstacles
preventing the Philippines from being
a dominant player or significant
market on the Internet?

\e hae to get the inrastructure to a
higher leel, build it up in a massie scale.
\e need linkages to our ,000 islands. \e
need backbones running through the
country. \e need high data speeds and we
need more actiity in the inrastructure
side. 1he entrepreneurial spirit and the
youth population will take the whole
business ast. Second, is the educational
component. Children at a young age must
be gien the opportunity. \e don't een
hae books in our schools. It's a dream
that I hae.

Is infrastructure-building the
responsibility of government or the
private sector?

Interesting question. I`e been debating
about that mysel. 1he goernment as it is
already has diiculty unding the
tremendous needs o this country. I'm a
great belieer in priatizing all that.
Primarily the priate sector should lead
the charge. 1o do that needs massie
spending. \ou need the capital markets to
be lourishing, you need an enironment
that can use the inestments. 1he
goernment has a role in proiding the
regulatory enironment and perhaps
inesting in a ew key areas the priate
sector is less inclined to do, or example,
iber-optic pipes throughout the country,
areas that are too expensie.

Is there a particular country we should
emulate?

It's hard as you hae to choose a country
that is similar to ours. Malaysia to a certain
extent has made the steps in the right
direction. Ultimately, we should use the
US as the country to emulate.

A lot of people envy twenty-something
entrepreneurs who became instant
millionaires in the US, Lurope, or even
parts of Asia. Can the Internet create
an environment here in the Philippines
where young, smart, tech-savvy people
can become millionaires?

Absolutely, we are seeing successes o this
type in all sorts o enironments - rom
linland, to Ireland, to India.

You strongly believe in
entrepreneurship as a driver to
Internet growth. Despite the growing
number of local content and
commerce Web sites, only a few really
have the backing of VCs and
incubators. Is the problem the scarcity
of risk-taking investors or the scarcity
of startups with truly viable business
models?

Any entrepreneur needs a market. It's a
chicken and egg thing. On one hand you
need the industry to come alie or the
market to exist, on the other hand the
market won`t come alie unless the right
products and serices grow. \hat I'll
encourage entrepreneurs to do is ocus on
areas where serices are most needed.
\ireless is the irst point o takeo. Make
your point there and use that as a jumping
board to other areas.


Personal Issues

Who among Asian or US business
leaders do you admire most for their
ability in crafting and implementing
their company's Internet strategy?

I`m not sure who heads Lnron, an energy
company that has become one o the
largest proiders o iber optic cables in
the US. It was able to use the adantages
they had to be able to moe into a new
ield o Internet technology. GL under
Jack \elch. Both were traditional
companies in the Old Lconomy.

How do you use technology like
computers, gadgets, and the Internet
in your daily life?

I'm always testing out new stu mainly
also to keep mysel inormed. I use the PC
a lot to communicate. My laptop is a
Macintosh, I'm a Macintosh an. I
wouldn't say I`m a gadget reak, but it's
important to use technology to be able to
understand how it's changing people's
lies. I play around with MP3 players,
record music and see how it transers on
the Net. I don't use it extensiely, but just
to see how it works, how it sounds and
get a eeling or it. I use my cellphone a
lot to communicate and retriee my e-mail
while on the road. I need to understand
what serices are riding on electronic
equipment.

Which Web sites do you frequently
visit?

I access all the news areas. \hen I trael,
I access most o the Philippine
newspapers, Businessworld, Philippine
Star in particular. \hen I`m in Manila, I
access oreign newspapers -- Asian \all
Street Journal, 1he lerald 1ribune, 1he
linancial 1imes. CNN as well. lor un, I
go to the Apple \eb site, look at moies
and stu. I do a lot o shopping as well on
the \eb -- clothes, electronics. I sur a lot.

Is your family into the Net?

My wie uses e-mail. My eldest daughter
who's 12 is extremely actie. She learned
to type as she learned to write. She's on
the Internet and on the computer eery
single day. My son who's 10 is less actie
but still does a lot o his work on the PC
on a regular basis. So I think they're gonna
grow up ar more literate than our
generation. 1o them it's a natural
extension o the way they do things. My
daughter, she does all her homework on
the PC -- presentations, graphs. It's
amazing. I neer learned to type till I was
1!

Do you have a personal philosophy on
technology and the Internet?

1he Internet will proide an exciting
aenue or change, in the way we learn
and in the way we proide products and
serices. It's going to be ery much a part
o our lies. \e`ll no longer talk about the
Internet 10 years rom now just like we
don't talk about the telephone. It will
result in massie change.