Sri Lanka’s Software Future

WSO2 Chief Sanjiva Weerawarana prescribes how Sri Lanka can take the most out of a software-driven world

If there ever were tech superstars in Sri Lanka, WS02 Chief Sanjiva Weerawarana is one of them. The company he co-founded, WSO2 is a pioneer in middleware applications, a software that connects other software components to create a seamless workflow for business operations.

The arcane world of middleware is dominated by the likes of Oracle, IBM and Microsoft. From its inception 12 years ago with initial funding from Intel Capital, the investment arm of chip manufacturer Intel, WSO2 has evolved into a key player among the Silicon Valley behemoths. Its applications for eBay is most famous for its power to process over one billion transactions per day.

Last month, Weerawarana stepped down as the chief executive of WSO2, leaving way for Tyler Jewell, a board member with major linkages to Silicon Valley. Jewell, a former Oracle VP and a partner at Silicon Valley venture capital firm Toba Capital, is expected to drive global business development efforts and product evangelization for the company. Weerawarana, on the other hand, will focus on the company’s technical side of things.

This year, Weerawarana was selected as the key speaker for the Ray Wijewardene Memorial Lecture. Here are four takeaways from his speech:

“We have to be a software-creating country.” The phrase ‘Software is ubiquitous’ is a too mild way to explain the extent of its influence on our lives. Finance, agriculture, media, sports, transportation, military, genetics and everything else that exists are integrally linked with software. Weerawarana, taking a leaf out of famed Silicon Valley venture capitalist Marc Andreessen’s playbook, calls this phenomenon “software eating the world”. The great thing about software, as Weerawarana points out, is that it creates a level playing field—meaning from Fortune 500 companies to college dropouts working from a ramshackle garage in Uganda, everyone has the same opportunity to create a killer software product that could be used by billions of people around the world. “The opportunity software presents to a country like Sri Lanka is massive,” he says. “It’s a game where the number of people doesn’t matter.”

“Stop worrying about tiny Sri Lankan market opportunities. We have less than 0.03% of the world’s population. Creating a software solution product targeting that is almost silly.” The small market conundrum is a much-talked-about inconvenience that local tech companies have difficulty grappling with. But, in the world of software, where economic, geographic and cultural barriers cease to exist, this is no excuse. Weerawarana points out a bevy of local examples who have braved uncharted markets. Today, Cinergix, a local diagramming and collaboration software firm, reaches companies in 193 countries, including NASA. But, going global also entails significant risk and means facing higher competition, which begs the question, are investors ready to take the leap? “Companies think too small. Investors think too small,” he says. “We have to risk more.”

“In services, you get paid by the hour. If you want to expand the company’s revenue by ten-fold, then you need ten times the number of people. The real value of the software industry is in the products.” Weerawarana argues that continuing on the path of the software as a service (SAAS) model could be a less lucrative venture. In the Indian subcontinent, where numbers are plenty, companies like Tata Consultancy Services and Infosys have reigned supreme using this model. But, for Sri Lanka, adopting such a model would prove inadequate given the labor-intensive operations and low-margin nature of the business. What Weerawarana prescribes makes sense if you want to make money while you are sleeping; making products is the way to go.

“Stop worrying about tiny Sri Lankan market opportunities. We have less than 0.03% of the world’s population. We have to risk more.”

“If we can build 10 companies, each of which can have a market cap of $100 million, they can be sold to someone. Then, they can generate billions of dollars coming into the acquired company. That’s what Israel does.” Making Colombo the next Tel Aviv is an often-heard rhetoric in the local startup community. This idolization is not entirely without merit.

With just an eight million population living in a geographic area that is one-third the size of Sri Lanka in a hostile neighborhood, the Middle Eastern country has become a technological super power by focusing on niche and high-tech areas. In this context, the allure of the Israel model makes sense. In the first six months of 2016 alone, total acquisitions of Israeli startups amounted to $3.32 billion.