Juan Chua, Nexus 1echnologies

By Heinz Bulos
September 2003

n 199, a nineteen year old
electronics engineering student at
De La Salle Uniersity bought his
irst microcomputer-a Radioshack
1RS-80. lrom that day on, he was
hooked into computing. Close to a
quarter o a century later, he`s
acknowledged as one o the most
successul technopreneurs in the
country, whose companies generate
more than a billion pesos in reenues.

1hat teenager who made it big is Juan
Chua, whose digital domain
encompasses Nexus 1echnologies,
\ordtext Systems, Jupiter Systems,
\ehey, Ldupro, Brainshare, and
Spinweb.

Larly start
hua didn`t plan to become an
entrepreneur. Although he grew
up helping his ather-a trader
in Binondo-mind the business, starting
a company was arthest rom his mind.
le recalls, My ather, being non-
traditional in that sense, neer wanted
me to inherit the business. le
encouraged me to seek out other lines o
opportunity.`

le added, le wanted us to make him
proud by being proessionals. lis
education was interrupted by the Second
\orld \ar. le had ery little ormal
education but he was a ery learned
man, so he prided himsel that I, my
sister, and my brother, all took up
technical courses, and he wanted us to
be successul technocrats.`

Chua also didn`t plan to get into the
computer industry, as, apart rom IBM,
there was really no computer industry to
speak o. In act, he was thinking o
taking up anthropology or archaeology,
as he was ascinated by culture and
history.

At the same time, Chua was also
interested in electronics. I loed to
tinker with things,` he notes. I was
always repairing radios, tape recorders,
that sort o thing. But I seemed to ruin
them instead o repair them!`

As ate-or sheer teenage laziness-
would hae it, Chua ended up signing
up or an electronics engineering
course-there were no computer
science undergraduate courses then-at
La Salle, een as he got accepted at the
Uniersity o the Philippines or
electrical engineering. I elt it was ery,
ery ar rom where I lied`, he
explains. I lied in Malate, and La Salle
was the nearest one. And electronics
engineering elt at that point ,to be, a
ery exciting ield to be in.`

Soon, Chua ound himsel taking up an
extreme interest in computers. le
recalls, 1here was a bunch o us who
had a Radioshack users club here. \e
would chip in to buy sotware and make
copies o them, because we`re all poor
students. \e would share Space
Inaders, and that`s how I got hooked
into computing.`

1he birth of an industry
t`s ery interesting to note that what
we know o as the local computer
industry-that is, not counting the
multinationals-can be traced to this
generation o technopreneurs who grew
up in the seenties and started computer
companies in the eighties.

1he ounding members o COMDDAP
,Computer Manuacturers, Distributors
and Dealers Association o the
I
C
I
Philippines, all come rom this group o
pioneers.

Chua narrates, In `83, it was the worst
o times to be in business. \ou had
hyperinlation, you had bank runs, you
had all sorts o companies going belly
up, and oreign companies didn`t want
to accept our letters o credit because
they were not deemed credit-worthy. It
was a ery diicult year to be in
business. But I1 was relatiely young,
I`m talking about microcomputing. It
was one o the ery ew industries that
showed some growth. In act, all my
classmates who did not leae the
Philippines-about a third o them let
the Philippines-ended up in the I1
industry. So a lot o the people in the I1
industry were my classmates.`

One o the major computer companies
that was born during that period is Phil-
Data. Rudolph Ng, a co-ounder o the
company, was a member o Chua`s
Radioshack users group. \hen I
inished college, his amily has already
put up the company,` notes Chua, and,
ater putting in an equity share, I joined
them three months later.`

Prior to joining Phil-Data, Chua actually
worked or Compex, which is now one
o the largest computer store chains in
the country. I think I was the irst
employee o Compex or the computer
diision,` Chua says. But I only stayed
or a ew months.`

It was in Phil-Data where Chua honed
his entrepreneurial and management
skills. lrom just three employees, Chua
helped grow the company to become a
major player. Lentually, he became
Vice President, in charge o sales,
marketing, and the sotware group.
Lleen years later, in 1994, he let.

1here were a lot o dierences in
opinion,` says Chua, explaining the
reason or his departure. \e had
dierent ideas on how the company
should head to, so we parted ways.`

It was a ery diicult decision. laing
hired a lot o his riends and classmates
into Phil-Data, and pouring the best
years o your youth and your lie into a
company and deciding to go, that was
diicult`. le adds, I things didn`t turn
out dierently, i we didn`t hae so
much disagreement, I probably would
not hae ,let,. I wasn`t gien a lot o
choice.`

le was just 34 years old. Suddenly, his
uture became uncertain.

1urning point
n the same year he let Phil-Data,
Chua, with a group o riends in the
computer industry-other resellers
and een competitors-put up Nexus.
1he name and the logo stood or point
o connection,` which described how
the company was ormed. 1here were a
lot o inestors but only three were
inoled in the operations.

1hey had the capital, they had the
connections, they had the experience.
1he problem was, they didn`t exactly
hae a business plan. Chua explains, At
that time, we just wanted to be iable.
\e started with just simple goals.`

But ortune ell on their laps. On the
ery irst day they began operations,
they got an order rom a reseller in
Cagayan de Oro or some Compaq
machines. \e got an order, we didn`t
hae the source,` says Chua. So I went
to an old good riend o mine who was
ery supportie-James \u o \utio
Corporation-who graciously sold those
machines to us at cost and I een had to
ask them to help us delier to the airport
to ship them to Cagayan de Oro. 1hat
was a ery heady start to immediately
hae a sale o-big then-Compaq
machines. I remember we had to label
those machines, we had to pack them.
I
1here were the three o us working. At
the end o the day, I carried the title
President, the other two were Vice-
President. One o them said, \ou
know, we need to hire assistant ice-
presidents to help us do the packing.``

Another stroke o luck: Nexus ended up
with a substantial amount o capital ater
Chua raised oer a million dollars rom
inestors. I elt that was a lot o money
than I knew what to do with,` he says,
So I coninced our inestors that we
just buy our oice, because it will sae
the company rom paying rent.`

1hey ound an oice space in Strata
100, where the preious occupant-a
Singaporean company-decided to pack
up and leae. Chua says, Actually, they
didn`t pack up, they let eerything.
1hey just let.`

So, Nexus not only had a 250-sq.m.
oice space ,good enough or the next
couple o years, or so he thought,, it also
immediately had the urniture,
calculators, typewriters, paper clips,
coeemaker, PABX, eerything. 1hat
was how lucky we were,` Chua says,
amused.

But that`s only hal o the story. Nexus
grew so ast that in six months, rom
three people, the company is by then 43
people strong. \e were so packed in
that space we could hardly moe
anymore,` recalls Chua, so we had to
moe.`

1hey ound a place a ew loors up,
twice the size o their oice space,
which they decided to rent, and sold
their oice space So ater six months,
een without making money rom the
business side, we made money rom the
sale o the oice space, and made quite
a handsome proit o it,` describes
Chua.

1he real turning point or Nexus,
howeer, began when the company
decided to hae some dierentiation.
Lxplains Chua, Being a brand new
company with no clients to speak o,
with no track record, we elt we had to
come up with something dierent.` le
continues, \e looked at the horizon
and decided that we will hedge our
uture on two technologies: Unix and
Microsot \indows N1.`

At that time, in early 1995, there was no
company ocusing on these technologies
here in the Philippines. 1he preailing
local area network operating systems
then were Noell and Banyan Vines.
\indows N1 ersion 3.0 had ery ew
users. 1he Nexus ounders started
training themseles and hiring and
training people on these technologies.
Soon, they went out to sell their
serices, aiming to help companies build
their I1 inrastructure based on these
two technologies.

Nexus also became a reseller o
Motorola Unix boxes. Later, they signed
up as a lewlett-Packard corporate
reseller to push the Intel boxes. But it
was Unix and \indows N1 which
droe the growth o Nexus.

Buying binge
1wo and hal years later, there was
an opportunity or us to buy into
one o the oldest sotware houses
in the Philippines-Jupiter Systems,`
Chua says. I elt it was a good
inestment because we all know that
hardware, the inrastructure that we
were doing, was becoming more and
more commoditized. So we needed to
hae more alue-add. So we thought a
company like Jupiter Systems with their
own LRP sotware was something that
would make us climb the alue chain.`

In 199, Nexus ormed a joint enture
with \utio Corporation to put up an
I1 training center called LduPro. 1he

company also inested in a small oice

in Cebu with a partner in Cebu to do
implementations and roll out
installations in the Southern Philippines.
1he ollowing year, Nexus was inited
by another pioneer, \illiam Chua, to
buy into his company, \ordtext, one o
the oldest I1 distributors in the
Philippines.

1hen, during the Internet heyday, nexus
inested in a \eb site owned by Jerry
Liao called Brainshare.com and in
another company called Spinweb, which
was into web deelopment.

Nexus now seres as sort o a holding
company to all o these companies,
although all o them are operating
independently. 1hese inestments were
all internally generated, so we neer got
more money rom the original inestors.
It was money that we made that we used
to acquire,` explains Chua.

le adds, \e did not come in with a
grand plan or anything. \ith the modest
success that we had, we started to
rationalize our inestment strategies and
how we elt all o these will jie. \e elt
that all o these companies that we were
going into would proide alue to our
customers.`

Among all the companies he`s inoled
in, Chua thinks that Jupiter Systems has
the potential to grow to be the biggest.
Jupiter owns the product that they sell,
they hae their own brand,` he explains.

It also has the potential to be the irst
lilipino sotware company to make a
mark in the international market. 1wo
years ago, with resh capital inusion
rom iVantage, which bought into
Chua`s companies, Jupiter embarked on
an oerseas expansion, setting up a
Shanghai oice. Recently, it opened up a
Vietnam rep oice. Chua notes, So
we`re now exporting our sotware into
Asian countries. And they`re expanding.
\e`e appointed resellers in 1hailand,
New Zealand.` le adds, It`s really
exciting because there are a lot o
sotware houses in the Philippines but
they all do work or other companies,
they do subcontracting work, whereas
Jupiter is out selling a lilipino product,
so we`re ery proud o that.` And, I
elt it was about time we showed to the
world what were capable o
accomplishing.`

Secrets of success
hua doesn`t consider himsel a
born entrepreneur, although he
credits his exposure to business
as a kid and to his start-up experience at
Phil-Data or honing his skills. le also
describes himsel as a reasonable risk-
taker`. le says, I will not bet the whole
house, I`m not like that. \e will risk
what we can aord to lose. Mind you,
I`m just an inestor in Nexus, I don`t
own the company, I hae to look ater
the interest o all the other stockholders,
so that makes me cautious.`

It`s not his technical expertise, business
acumen, or hard work he credits or the
success his businesses though. I
there`s anything I`d like to take credit
or, I probably hae a ery good ability
to ind great people who can run and
help these companies grow. Our
business is all about people.`

Len in these challenging times, Chua
presses on. le says, I just don`t think
about it, just go ahead and do it. Some
o the people think it`s quite bleak, it`s
quite pointless. I`d rather not think
about it, I just go ahead and do it. \hat
excites me though is that`s it`s a ery
ibrant and ast industry. As long as one
remains inquisitie and there`s still a
sense o wonder, then it`s exciting to be
in. As long as you maintain that sense o
awe, I think you can still thrie. \orry
about the things you can do something
about, don`t worry about things you
hae no control oer. I`d rather look at
C
the positie side. Leryday, you can
learn something new, to learn about new
technologies, to learn about how these
technologies can help our customers
become more eicient and productie,
and in turn, or our society to be more
competitie and progressie.`

Sidebar
Juan Chua's Advice to Aspiring
Lntrepreneurs

o \ou need to loe technology
and know the industry. \ou
know to spend a lot o time
knowing what trends, and bet on
the right technology.

o I always beliee in doing the
right thing or both our
customers and our people. 1hat
should apply in any business.

o Seek a niche market that you`re
good at or that you passionately
beliee in. It doesn`t need a lot
o money, but stay with it.

o lind the right people, ind the
right connections to help you.

o Don`t go into the I1 business
because you think it`s
glamorous, because it`s not.
Don`t go into the I1 business
because you think it`s extremely
proitable, it`s not anymore, it`s
hyper competitie.

o 1here`s a lot o opportunities to
go into. Just don`t think o
opening a PC store because it`s
not possible anymore. 1he
margins are just too thin, the
competition is just too hot. Do
something more innoatie and
technical.

o Serices, a lot o sotware,
there`s still a lot o growth in
sotware-sotware that gies
productiity and eiciency to
companies, proide more
security and redundancy, and
hardware, sotware, and serices
that will help people spend their
time more leisurely, like games
and the Internet.