The Funambol model: US capital and Italian heart

I'm very happy to post this interesting contribution from Fabrizio Capobianco (blog), an Italian entrepreneur in Silicon Valley. Fabrizio is a friend of BAIA who has been participating in our activities. Last August he was involved as a speaker at the Mobile Platforms event in San Francisco (pictures on Flickr). Our plan is to open this blog to external contributions from invited speakers such as Francesco, and to make the BAIAblog a meeting point for the entire Italian and American business community. Thank you Fabrizio. Franco Folini

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.

Fabrizio Capobianco

Comments

[Johnathan Rossmann]

"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."
Thank Mr. Berlusconi for that

[Luca Penati]

Fabrizio,

I really like your vision. A vision that could help Italy find a way out of its current state of hibernation and paralysis. However, I think that we don’t only need to change the way we think about work (flexibility, job protection, etc.) but we also need to educate the people here in Silicon Valley and in other parts of the world that Italy is not the incarnation of "La Dolce Vita", but rather a place full of potential. Nobody thinks of Italy as a place to develop their R&D center. As a PR professional I really think it's a communication problem. Who can help address this? Is the Government ready?

[Matteo Daste]

We often hear this type of complaints, but hardly ever see anything on how to fix the situation. How about we stop complaining and blaming the past, and actually do something, like Funambol did? Can we hear some ideas from Italy...?

[Matteo Fabiano]

Globally dispersed startups are no longer the exception.

The classic Silicon Valley/Bangalore model is showing clear signs of maturity (and the problems that come with it), but there are other ways. And companies all over the world are demonstrating that it does make business sense to source the skills and resources you need wherever they are most readily available. If that happens to be across the world, so be it. Technology makes it possible.

At Collanos, for example, we have people in California, Switzerland, Ukraine, Bulgaria and Indonesia. There are less than a dozen people in the company!

As long as the legal and financial framework is flexible enough to accomodate this type of "stretched" organizations, I am convinced we will see more of that. In Italy like everywhere else.

[My2Blog]

thinks of Italy as a place to develop their R&D center. As a PR professional I really think it's