The Finishers: Learn First-hand from the Philippine Founders Who Willed Their Startup from Idea to Exit was written by Ezra Ferraz in 2017. This book documents the stories of 11 local founders who were able to scale their startup and exit. This excerpt, titled “Socialytics and its quest to bring science to social media,” which focuses on the journey of Socialytics and its founder, Jonas de los Reyes.
The point of no return
When Universal McCann proclaimed the Philippines as the social media capital of the world in March of 2008, our netizens erupted in celebration. All across Facebook and Twitter, Filipinos held up the title as evidence that our nation had arrived, effectively patting ourselves on the back: Social media prospered here because Filipinos were forward-thinking. We were tech-savvy. We were cutting-edge. If Hollywood was known for its movies and Broadway its shows, the Philippines had finally found—after almost 500 years of history since Magellan’s arrival in Eastern Samar—its own selling point (sorry Boracay, sorry barrelman). The country would be defined by its collective embrace of the social web.
But Jonas de los Reyes, the country manager of ThoughtBuzz, which provided a social media analytics platform to brands, believed the Philippines was hastily crowned. There was no question that individual Filipinos, who friended, messaged, shared, liked, and Tweeted at rates that once seemed implausible, were benefitting from social media. To him, it was businesses who were left huddled in the dark, unable to make sense of, much less profit from, the activity swirling all around them. Just as in the real world, the digital Philippines had its “haves” and its “have nots,” and he was put off by the uneven distribution of wealth on his home turf.
Jonas got all his evidence first-hand. His clients at ThoughtBuzz often showed him reports from other digital marketing agencies. These were social listening reports—they were supposed to tell a client what people were saying online about their brand, their competitors, and their industry. If you were a bookseller, for example, yours should tell you whether netizens liked the addition of coffeehops to your floor space, how customers were responding to your rival bookstore’s ebook promo, and what international titles Filipinos were most anticipating the release of. In short, social listening reports filtered the great din of the online world into actionable information.
But what landed on his desk fell woefully short. “What they were being shown was just the start,” Jonas said, lamenting that there was no science to the reporting—they were just
moving numbers from dashboards to spreadsheets. “There were so many more insights they could have gotten from the data.”
The root of the problem were the agencies themselves, who offered nearly all of the services a business could need online, such as web development, search engine optimization, digital marketing, and more. Spread so thin, social media marketing was all but assured of getting a
The clients, as Jonas put bluntly, also did not know any better. To them, social media was no different than print or television. It was another medium that enabled them to push out branded content. He did what he could to correct this view, telling them that social listening should always
“Once you know the market well enough, you can find the intersection where your content not only talks about the brand, but the passion points of your customers,” he often told them.
He regularly traded industry tidbits like these at the Starbucks on Magallanes or the one on Arnaiz with Donald Lim, who was then the managing director of advertising agency MRM//McCann. The two friends had begun as colleagues at Philippine search engine Yehey! where Jonas, the head of ecommerce, reported to Donald, the president and CEO. Now several years removed from Yehey!, the friends shared the same problem: Clients all too often did not heed their advice.
During one meeting in 2013, Donald shared how he was about to leave MRM//McCann to join ABS-CBN as its chief digital officer. “Sayang.* I have all this agency experience, but I have no where to use it anymore,” he said.
It was then that Jonas got his lightbulb moment. If Philippine brands generally did not have the internal capability to maximize the opportunities available on social media, and third-party providers tended to focus on one area and even did that poorly, they could create an end-to-end firm that handled what Jonas considered the four pillars of this universe: content, engagement, analytics, and amplification.
Donald was on board for the idea. “Social media needed to be taken more seriously. It had become the first point of contact for the customer. You hear about a company, you check them out on Facebook,” he said.
Together with a third co-founder, Mon Lizardo, who was a consultant for such organizations as SM and ADB and knew the other two from Yehey!, where he was head of sales under Donald, they founded Socialytics in 2013. The name Socialytics, of course, reflected their belief that all aspects of social media, from the posts you make to the way you reply to customers, should be grounded in a thorough understanding of data via analytics.
While most would peg Socialytics as a services company, Jonas and his co-founders viewed their startup as a tech company. Their long-term goal was to automate much of the tedium between social media marketing agencies and their clients—the sending of PowerPoints via email, the discussing of day-to-day execution over Viber, the reporting of their findings—into a single platform.
Jonas only had a vague idea of what form such a platform might take: there would be a log-in screen, followed by a central dashboard that gave clients “access to all the data that they need.” His strategy, however, was clearer. Socialytics would manually service brands, dutifully using many of the methods they wished to someday render obsolete, until the day they reached critical mass. With enough clients on their roster, Jonas could then either A.) bankroll a research and development team to develop his idea into a product, or B.) attract investors to fund the R&D.
As the three co-founders geared up to launch the provider side of Socialytics, Jonas received an unexpected call from an old friend, who was a senior executive at an ad agency. He was looking to hire someone to manage social media for a client, ASAP. After feeling Jonas out, he put the offer flat on the table: The position was his, if he wanted it.
Jonas, of course, was over-qualified for the job. Even before his current stint as country manager of ThoughtBuzz, he already had senior positions at Chikka and Yahoo!, and he was widely considered a thought leader in the space. Assuming the position would have been on par with Henry Sy stepping down to manage the sales floor at one of his SM department stores—things like this just didn’t happen.
And so it would have been natural for Jonas to decline the offer, going through a spiel that masked any hint of offense from his well-meaning, but misguided friend. Instead he saw an opportunity and pounced on it. In something out of a feel-good movie, he suddenly turned the tables on the person recruiting him: he pitched Socialytics. Rather than hire a single community manager, the agency could have an entire team to service their client, and boast of the additional value they were sure to bring.
Whether it was his gall or his credentials that ultimately made the biggest impression was anyone’s guess, but there it was: His friend was on board.
“Instead of a job, I got an account,” Jonas said of the exchange. By acquiring this client in a roundabout way, he was able to secure future cash flow to pay for early hires, such as those who would lead each of the four social media pillars. The three co-founders also ponied up some starting capital from their own pockets, since it was typical for brands to withhold payment for as long as six months. “If that’s not how you prepare yourself, then you’re going to fail,” he said.
After minority partner Richard Yap set-up the operations—the business permits, the office space, the human resource—the co-founders tapped their professional network for leads on community managers.
On a basic level, Donald said that they preferred candidates who already had the technical aptitude for the job. They needed to be able to develop a brand playbook for social media, create posts with an understanding of Facebook’s NewsFeed algorithm, and generate genuine engagement from fans. Their experience in the industry did make it easier to separate the pretenders from the professionals when it came time to hire. “We knew who was good and who was not good,” Donald said.
While having a client list, a corporate account, and early employees was exciting, it finally dawned on Jonas, who had many leadership roles, but had never led his own business, that he had made a significant leap. “There was no more turning back,” Jonas said. “This was it.”
Viral is not a strategy
Jonas may have viewed the switcheroo—plugging Socialytics into the vacancy where a a community manager should have gone—as a one-time stroke of business-savvy, but agency-work ironically became their lifeblood at the start. For as much as any creative in his shoes would dream of landing the McDonald’s and Coca-Colas of the world through the big idea, there was still a hierarchy to observe. Deals for corporations that large happened at the regional level, where they would tap the same agency from country to country. The agency, in turn, would outsource some of the social media requirements to a third-party provider, like Socialytics.
Since the agencies essentially whitelisted Socialytics, there were some unique, almost sitcom-like sensitivities to deal with. When they asked Jonas to join meetings with the client, for example, he did so as a representative of the agency, not of Socialytics. Jonas de los Reyes, the locally renown thought leader on all things social media, was now a surprisingly brilliant, but unfriendly rank-and-file employee at client offices.
“I couldn’t be exposed too much because it’s easy for someone to check who I really work for,” Jonas said. “I had to help from the background as much as possible.”
If it was hard to picture the one-time country manager and then startup CEO ducking around as a wallflower in the shadows, trying to conceal his identity, Jonas did as well, looking back on the early days of Socialytics. The situation was weird, sure, but Jonas swallowed his pride out of basic common sense: You don’t bite the hand that feeds you. These contracts gave Socialytics the cash flow to pursue higher value, client facing work. In fact, by their seventh month in business, Jonas had enough contracts to fund their operations entirely from these payments.
Freed of sink-or-swim financial pressures (at least for the time being), Jonas went hard after small and medium enterprises, especially those on the higher end of that market. Social media was often a new channel for these traditional businesses, a fact evident in the questions
they posed to Jonas during initial meetings. Executives most commonly asked, “Can you make our video go viral?”
Replace “viral” with any other adverb—“well”, “great”, “successfully”, and so on—and the absurdity of the query becomes clear. It pushes for the fulfillment of a outcome so subjective as to be meaningless, all while neglecting any kind of concrete plan. Still, Jonas remained patient, eager as he was to work directly with clients. “We would always tell them that going viral is not strategy,” he said.
He advocated instead for a strategy built on the four pillars of social media. To succeed online, these companies needed to be engaging, amplifying, measuring, and above all, listening, a process Socialytics guided them through with a free audit all of the brand’s social media assets, noting where the company stood and how Socialytics could help them, based on a framework of their own design.
“The un-sexy way of saying what we do is that we help clients manage their Facebook and other social channels,” Donald said. “But what we communicate is the bigger picture: We manage your digital brand health.”
They calculated digital brand health through a proprietary assessment tool built around their own formula. Some could argue the concept was nothing more than a fancier way of delivering a problem-solution proposal, but the results were more successful than what you would get from walking clients through a written report. The digital brand health established a greater sense of urgency—who likes to be “unhealthy” after all?—and it framed Socialytics as the best remedy, since they were the ones to diagnose the condition.
On one occasion, for example, a company had told Jonas that their target market were people between the ages of 25 and 35, but the brand health check uncovered otherwise. Their online fan base fell mostly between 18 and 25. The company had not only missed the mark, but they had been shooting at an entirely different dartboard. “What happened?” Jonas asked the stunned roomful of executives.
Though Jonas most often presented alone, he was occasionally joined by Donald, especially when he knew the client from previous business dealings. Donald did his best to make their pitches more “agency-like,” for even if they couched Socialytics in terms of digital brand health, they were still ultimately competing for community management work. Companies wanted creative strategy, a content plan, and targets for reach and engagement.
Only after outlining their end-to-end plan did the co-founders present the company’s rate card. They priced their services lower than the big agencies who subcontracted work to them but above the boutique agencies, in a kind of Goldilocks zone just right for a small to medium-sized enterprise.
Getting brands to sign on the dotted line was not actually difficult. By the end of their first year, Socialytics had already recouped the initial investment the co-founders had put in—the hardest part of obtaining client-facing work was finding them in the first place.
Between the three co-founders, they had a large and diverse network, but there were still only so many brands looking for a social media marketing agency at any given time. Jonas, Donald, and Mon thus focused on thought leadership: Get in front of the people who needed social media help by any means necessary.
In November 2013, Donald was asked by his colleagues at ABS-CBN if he knew of anyone who could guest on one of their ANC shows to talk about social media’s influence on the Million People March. Donald naturally suggested Jonas, who was able to anchor his television interview from his position as the CEO and co-founder of Socialytics.
The segment would be amazing exposure for any agency, and it was even more so for one as young as Socialytics. “There’s no way we would have gotten an opportunity like that without Donald,” Jonas admitted.
Donald was also invited to give talks at events, workshops, and conferences on average at least five times a month, and he shared many of these to Jonas (see fig. 2.2). The co-founders were acutely aware they were competing as much on perception as on aptitude.
“I sincerely believe there were a lot of people in digital better than us, and that’s being objective. But we were out there more, so we were perceived as one of the best,” Donald said.
How they translated their thought leadership into actual clients was as smooth as you would expect from people whose expertise was content. Donald, for example, sometimes gave whole day workshops on community management. The twenty to thirty participants would roll up their sleeves and Donald would teach them step-by-step.
“After the session, some still want more help. Or after finding out how much work is involved, they don’t want to do their community management because they have other jobs,” Donald said. “That’s where I would insert Socialytics. ‘Okay, I have an agency...’”
Converting the unconverted
The average Filipino is not far from Jose Rizal, at least in terms of linguistic ability. Recall the last time you asked someone on the street, such as a security guard or a jeepney driver, for directions. He may have greeted you in English, continued in Tagalog, code-switched between the two, and even changed into one of his three local dialects, if he recognized your accent. Everyday conversation here can resemble a Rizalian diary.
This linguistic richness may be a point of pride for Filipinos, but it made life hell for everyone at Socialytics. The social listening tools they employed—either the client’s or their own—were not developed to handle the multitude of languages and dialects bound to spring up across an archipelago of 7,500 different islands.
“These tools can translate Filipino to English, but Taglish, they can’t. How much more with Jejemon? Or Becky?” Jonas said.
It was in gaps like these where Socialytics earned its keep. To give clients a social listening report that made sense, and provide more information than local providers typically did, their analysts lived and breathed data. Every morning they jumped into the chatter from the day before—picture a word cloud rendered in 3-D and expanded to the size of several galaxies—in an attempt to return with a valuable tidbit or two. Less metaphorically, they downloaded the data, cleaned the data, and interpreted the data, before sending their findings to the client.
Despite the labor involved, the social listening report often fell on deaf ears. According to Jonas, clients were only focused on their brand, resulting in an elementary, almost school-like view toward social media: They wanted to make sure people were saying more good things than bad things. It was social media as a popularity contest. The idea that online platforms like Facebook or Twitter could yield data applicable to the real
world business climate was beyond them. vvz to the unconverted.
“We give you data, so that you have the insights you need to make better decisions,” he often reminded the executives who hired Socialytics.
Some still did not listen. In one case, Socialytics was tracking a lot of complaints about long lines at a particular service center of a company. Social media could provide an avenue to address the problem immediately—they could direct customers to their other service centers, or offer some sort of official compensation to those who already wasted time in the lines—but these actions should only complement measures that improved the operations at the root of the problem. They company had to hire more staff, extend their hours of operation, improve their queueing system, or take some other similar measure. Social media cannot act as a band-aid on a gushing wound.
When clients did not act, even in the face of such overwhelming evidence encouraging them to do something, anything, anything at all, the people most affected were the front-line analysts who spent hours on the reports. They often vented directly to Jonas. “Sir, we have so much data here. Sayang, they could have actually done more,” they would tell him.
Contrary to what the analysts may have felt, brand indifference to their findings was not a reflection of the quality of their report. It was systemic to their organization. Their market, after all, were companies on the higher end of medium and small enterprises. They had larger budgets to work with, but it was harder to get them to move.
“They are comfortable with status quo, and it’s hard for them to go in different directions. It takes longer and there’s more you have to do before you actually get some support for what you’re trying to recommend," Jonas said.
Once brands did follow his advice and certain business goals were met, these companies tended to double down on their social media spend. For example, if the bulk of their customer service inquiries were handled over Facebook or Twitter, they could decide to close down their call center operations.
“A client might decide: I will outsource my customer care to you. So now we need a five person team to provide 24 by 7 support. Where do I get those people?” Jonas said as way of an example.
While this was a good dilemma to have, there was no easy solution. You could not just pull anyone with a pleasing personality off the street. Even Filipinos who had seemingly relevant experience would not necessarily be ready to serve as a customer service representative (CSR) online.
“You may be good at copywriting, but it may not translate when you are dealing with people via text and publicly on a social media platform,” Jonas said. “You must know the brand well enough to be able to maintain that persona, that voice.”
As a means of attracting more qualified CSRs and retaining the good ones he already had, Jonas adopted a telecommuting policy. CSRs who formerly had to sardine squeeze into the MRT or crawl in a car on EDSA, now only had to roll out of bed and pop open their laptop to get to work. A two hour commute reduced to ten seconds. Plus, who didn’t like working in their pajamas?
To keep community managers accountable, they had to be logged into a system that measured their productivity. In time, telecommuting improved retention of current CSRs and added more new ones to the company’s ranks, but it was not for everyone.
“One CSR was doing okay the first couple of months, but by the second or third month, their response rate was plummeting,” Jonas said.
When manpower fell short, as it happened in the case of layoffs, Jonas himself filled in shifts responding to customer inquiries over Facebook and other platforms. To his credit, he was able to embody the voice of each brand. No user ever even suspected they were chatting with a CEO. In the world of social media, as in theatre, the show must go on.
Socialytics gets sold
By 2015, Socialytics had reached critical mass, boasting of more than 27 clients, including the likes of Casio and Philippine Airlines. Even AdSpark, the subsidiary of Globe Telecom focused on digital marketing technology, wanted to outsource some social media work to Socialytics, as part of their bid to become an agency. The offer marked a true turning point: The best clients were pitching to them.
Jonas had once envisioned there would be a fork at this point: Either he would hire his own research and development team from the company’s own revenue, or he would leverage the traction to attract a deep-pocketed venture capitalist, his decision predicated on what could get him to the Socialytics platform the fastest.
A third path, cutting straight through the middle of the first two, emerged. Socialytics could get acquired. The thought had not even occurred to Jonas until someone was already standing on his doorstep, asking to buy the whole house. The inquirer was an ad agency. The company operated traditional marketing channels, such as print and billboards—bringing Socialytics into their fold could accelerate their foray into the
The ad agency proposed a majority acquisition of Socialytics: 70% would be theirs, 30% would remain with the co-founders. Jonas, in principle, was for the idea. If the ad agency wanted to go digital, there was nothing better than the kind of platform he had been dreaming of for more than four years now. From their corner of the Philippines, they could license the Socialytics product across the country, the region, and even
The stumbling block was the purchase price. Throughout due diligence, executives from the ad agency and the co-founders form Socialytics went back and forth on the numbers, the needle swinging wildly in either direction each time.
In case the deal pushed through, Jonas sent word to AdSpark that Socialytics would be unable to work with them. The conflict was remote but still relevant: One of the ad agency’s clients was AdSpark’s competitor.
“When AdSpark found out about the pending acquisition, they asked whether we had signed anything,” Jonas recalled. “I said, ‘No. Not yet.’ So they asked, ‘Can we make a counter-offer?’”
The impulse for most entrepreneurs in this situation would be to play the two suitors off one another, sparking a bidding war that would raise the price tag on Socialytics higher and higher. Jonas was not like most entrepreneurs. He deferred to the principle of a queue: first-come, first-serve.
“We already told the agency that we would sell to them, so as a word of honor, we would continue,” Jonas said.
But the two parties could not get past the price. The ad agency felt the founders were over-valuing Socialytics. The founders felt the ad agency was lowballing Socialytics. Since the final offer fell below the amount the co-founders had internally agreed they would be willing to part with majority ownership of the company for, they walked away from the deal.
Before Jonas could even process the failed sale, AdSpark swooped in from the rafters and met his asking price. There was one condition: Each of the three co-founders had to sign a non-compete clause. Once they left AdSpark post-acquisition, they would not be able to work in social media and digital marketing for the foreseeable future, which, as their interest indicated, was the future. AdSpark may as well have asked them to stop using telephones or give up electricity.
Only Jonas, who had aspirations to launch a startup in a different industry, was willing to sign. Both Donald and Mon made it clear that they could not bind themselves to a non-compete, as they had staked out their careers in the digital world. The board convened, and much to the surprise of the co-founders, agreed to their proposed terms. Donald and Mon could remain in the space, while Jonas would have to wipe his hands clean, once he left AdSpark.
That AdSpark did not acquire Socialytics outright, besting instead the ad agency’s majority offer for 70%, created another problem post-acquisition. The AdSpark management was set to transition Socialytics into an internal business unit, discovering only later that they legally could not. Since the co-founders still owned 30% of the company, Socialytics could not be housed directly under AdSpark.
Socialytics had to operate as an independent subsidiary, one managed by Jonas for a short transition period. He resigned from the post in August 2016. From then on, his role in Socialytics would be largely advisory as a board member.
The co-founders will come back to the negotiating table once again this 2017 to sell off the remaining 30% to AdSpark. “In hindsight, we could have waited a bit more,” Jonas said of the acquisition, before elaborating on why it was still an opportune time to sell the company. To him, there is no more need for a social media marketing agency—social media marketing and digital marketing are one and the same.
“All of the other agencies will be forced to create their own content. That’s why it was good for us to be acquired—it will be easier for us to scale, now that we are part of a bigger group,” Jonas said, adding they are now returning to the idea of automating some of the agency and brand interaction through their own product. After four years, dozens of clients, and hundreds of campaigns, Socialytics was finally ready to make
the impossible leap from provider to platform
To learn more from founders like Jonas de los Reyes, please check out the full book, available for purchase here.
The Finishers - and other business books about the Philippines and Asia Pacific - will soon be streaming on Audiophile, our platform for exclusive Filipino audiobooks.