Thursday, December 21, 2006

BAIA invited post on the Funambol model

The guys at BAIA - Business Association Italy America - asked me to write a post on their blog ("The Voice of the Italian & American Business Community") to explain the Funambol model and how I feel it could be replicated.
BAIA is an independent, nonprofit, member-based network whose mission is to create tangible business value by establishing a professional forum through which information, knowledge and opportunities can openly and effectively be exchanged between the business communities operating in the United States and Italian business interests. BAIA's new approach to business networking is based on an Open Source Governance model. BAIA aims to enjoy the support of anyone who shares the BAIA vision of an open exchange network.
I share the vision and I like the people running it (and I am not really a shy individual...), so here you have my post.

The Funambol model: US capital and Italian heart

Life as an emigrant is tough... You look back at your native country and you struggle between love and hate. Emigrants flee home because they go looking for something they could not find where they were born. They leave their heart in their home country, hoping to come back one day to find that everything has changed.

I left Italy for California in '99 and I go back home quite often. Not that much has changed, but I am not planning to give up that fast...

After founding a couple of companies in Italy and working for a public US company, I founded Funambol in 2002. Funambol is the mobile open source company, bringing BlackBerry-like capabilities to the masses. A Red Herring 100 company and the largest open source project in mobile with almost one million of downloads, Funambol has been funded mainly by US Venture Capitalist. The headquarter is in Silicon Valley, but the R&D is in Italy. In Pavia, close to the local university.

US capital and Italian heart.

Italy is a beautiful country, but in a state of crisis. The economy is suffering. Globalization is killing our small manufacturing companies. Competing with China in these markets is simply not doable. Protectionism attempt will fail. We need to move on.

Italy can compete on high tech and software in particular. Our labor cost in this sector is highly competitive. It might sound strange to many, but Italy has the lowest cost of software in Europe (35K/year Euro per engineer). That's extremely competitive with respect to Silicon Valley (the weather is still better here, sorry) and also with India or China, where wages keep appreciating every year.

In particular, if you compare the Intellectual Property protection Italy enjoys. I know of a few examples of outsourcing companies in India, where a group of employees took a product they were developing for a third party and started a new company... Outsourcing saves money and it is necessary, but can be risky in a country where the legal system does not support you. On top of it, Italy is the best with respect to loyalty of the employees (a key element in software, which is all about people)

When it comes to education, Italy ranks high. In my experience, the competence of Italian engineers is comparable if not better than American peers. Italy is the country of creativity. It is in our DNA. Software is creativity. Add some rigorous engineering and you have Ferrari, the most beautiful car on the planet, but also a technological jewel.

Software is great for Italy. It requires limited capital to start. If you use open source as a distribution model, it is even better. You can take advantage of globalization and reach markets anywhere on the planet.

When you are ready to go to the next step, however, risk capital is missing in Italy. The ability to manage risks of Silicon Valley VCs is unrivalled. All your connections are here, if you want to grow your company or find an exit via M&A. This is the place to be if you want to go big. Not just for cash, but for the mentality. Things move at a different speed in the Valley. And I do not believe it is going to change any time soon.

For now, I see a great opportunity for Italy to be a center of excellence for software outsourcing. Becoming a new Silicon Valley is the next step. We are not ready for that yet, but the Funambol model is a start. US capital and Italian heart. I hope many more companies will follow. It is simply the best of both worlds.