Ubertor: Outsourcing The Niche – with Stephen Jagger

Being a former debt collector out of high school is how today’s guest became schooled in business. His first company started as a website hosting business he launched out of his parents house, doing the sales and 24-hour customer support himself. Everything changed when he found a niche and the wonders of outsourcing.

His company soon became profitable, using inexpensive labor in the Philippines. Hear how Stephen Jagger bootstrapped Ubertor, a software company that helps real estate brokers build sites and grow their presence online.

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About Stephen Jagger

Stephen Jagger is the co-founder of Ubertor, a real estate software company where agents can develop websites and have access to online marketing tools.

Raw transcript


Mixergy’s audio transcription is done by Speechpad

Andrew: Hey, before we get started, if you need a web app built or a mobile app built, who do you call? Check out Kumbia.com, they’ll take your idea from PowerPoint to product in just a few weeks, and when you go to Kumbia.com, I recommend you look at that top tab, the one that says work on it, to see their previous work and understand what Kumbia can do for you. From a minimum viable product to a full blown web app, they have you covered. They work on Ruby on Rails for web; they can build an IOS or Android app for mobile, Kumbia.com.

And if you need a phone service, a phone number, who do I recommend? Grasshopper.com. Because with Grasshopper.com you can get unlimited extensions, that means that when a caller calls your company, they can basically be screened before they come to. If they’re looking for sales, you direct them to one place, if they’re looking for tech support, to another place, if they’re looking to just get on your blog, maybe they go into voice mail and you respond to them when you have a chance. Lots of extra features at Grasshopper.com, that’s one of my favorites go to Grasshopper.com and understand why the virtual phone system that they create is the one that entrepreneurs love.

Finally, if you need a lawyer as a tech entrepreneur, you need to talk to Scott Edward Walker of Walker Corporate Law. Why, because if you go to the high end law firms, they’re going charge you an arm and a leg, and probably expect to take a piece of your business, they want shares in many cases. Or if you go to the mom and pop law firm, the one that your friend recommends, that lawyer is probably not going to understand the issues that you go through as a tech entrepreneur. I recommend, go to the guy who specializes in start up entrepreneurs, Scott Edward Walker, of Walker Corporate Law. Here’s your program…

Hey everyone, I’m Andrew Warner, I’m the founder of Mixergy.com home of the ambitious up start. The place where I bring you stories from entrepreneurs who tell you how they built their businesses so you can pick up their best tips, their best ideas, the ones that are most applicable to you and your business apply them, and hopefully come back and do what today’s guest is doing, which is teach others how you did it.

Big question for today is, how do you bootstrap a profitable company, using inexpensive labor in the Philippines? Joining me is Stephen Jagger, he had a traditional company with an office in North America, and it was operating at about break even. Then he discovered the idea of outsourcing and it supercharged his profits. Stephen’s profitable company is Ubertor. It’s a software company that helps real estate brokers build sites and grow their presence online, Stephen welcome.

Stephen: Thank you, thanks for having me.

Andrew: You and I did a pre-interview, so I know the answers to the first few questions, but I think it’s still important to ask. What size revenues are you guys doing?

Stephen: We don’t give out exact numbers like your audience probably wants, but our revenue numbers were probably in seven figures, the low seven figures.

Andrew: And how profitable are you?

Stephen: Now the business is quite profitable, it definitely produces a few hundred thousand dollars in profits.

Andrew: And you and I talked privately about that. I’ve got a question for you about the number. The number that you gave me before, does that include your salary, and your partner’s salary?

Stephen: Yes.

Andrew: It does. I know you have an outsourcing company now that you created to enable other people to outsource the way that you outsource over at Ubertor. When you told me that bottom line number is that net of the impact of outsourcing things done to other business?

Stephen: No, you’d have to look at the two businesses separately.

Andrew: I see, so the number that you shared with us vaguely but more concretely with me that’s just for this business, that’s just for Ubertor?

Stephen: Yes, and then right now, because we’ve been building out that other business, the outsourcing business. One the software has been lending money into the outsourcing business.

Andrew: That makes sense, you want to re-invest your profits in another business, because if you grow equity, it’s taxed at a lower rate than if you grow profits, and also you want build equity, and also you don’t want to just bank cash or give it to someone else to invest it, if you can do better with it. All right, the other company, we’ll talk about later on, outsourcing things done. I want to focus on one business, explain it and then we can go into the details of the other. So, before we go back into in time, let’s understand what Ubertor does. Say I, Andrew Warner were a realtor, what would you or your site and your business say to me, what would you offer me?

Stephen: So we basically offer a web based product that allows residential commercial realtors to build and maintain their own websites. So it’s a web platform that you get to build, there’s a full control panel that you can log in as the agent and control the site. Adding your listings, your solds, but more importantly there’s a blog built into it there’s video and video syndication built into it, integration with social media tools, and Google analytics, and sort of all the things that we think a real estate agent needs to do or to use to grow a business in this economy, and especially in this internet based world.

Andrew: You know I focused the introduction on the fact that you have outsourced labor in the Philippines, outsourced to your other company, but it just occurred to me, I could have just as easily focused it on the fact that you’re so niche. You found a product that’s pretty commoditized online, which is website creation, blogging platforms, all those things are pretty commoditized. But because you assembled them, it seems for realtors and you made it easy for them to access, and you targeted them, you were able to find your niche and your profit in your business, is that a fair assessment?

Stephen: Yes. And it kind of happened by accident sort of. When we started, just over ten years ago, we were actually a web hosting company, and part of hosting customers was realtors. And we found just what you’re talking about. We found that it was a commodity, everyone was pinching us for money and these guys do it for this much lower, or GoDaddy or Yahoo was just sort of killing the business because they were just able to offer at such a cost effective rate. So we did exactly what you’re talking about. We decided to focus on a weird little niche and it happened to be real estate agents, because we knew that they needed help in the web world, and they were willing to pay for that help. So we actually got out of the hosting business, kept the real estate clients and found a way to charge them more money than when we we’re hosting their websites because of the software we started building for them. And we sort of morphed from a hosting company into a software company.

Andrew: You said we, this was your business partner right, how did you meet your business partner?

Stephen: His name is Mike Stevenson, he and I went to high school together, he’s a couple years older than me, but we were at the same high school and we actually lived about ten blocks away from each other at our parents house’s.

Andrew: How did you guys get to know each other, I mean, usually in high school, if you’re not in the same grade you’re not going to get to talk to each other, and often if you are in the same grade, and you have slight differences like color or background, you’re going to be sitting at different lunch tables, how did you two guys get to connect?

Stephen: I went to a very unique school, it’s an all boys school in Vancouver. I come from quite a very large family, my business partner had quite a large family. So I had a brother or cousin in almost every grade, he had a few brothers in a bunch of grades, so there was a lot of crossover. He was a couple years older than me, but he was the same age as my older brother, and his younger brother was the same age as my younger brother, and we were all kind of neighbors so we’d see each other inside of school, outside of school. And actually we ended up at our first jobs, our first real jobs outside of high school together. So that’s where we really started to hang out and chat.

Andrew: What was the job?

Stephen: Third party debt collections.

Andrew: Get out.

Stephen: Yes.

Andrew: Who were you calling up to collect debt from?

Stephen: So when I started doing it I was calling people for their pager bills, if you can imagine people with pagers. Because when you’re a new collector they sort of throw the low volume stuff at you, somebody owes 50 bucks on their bill, and it was usually like kids that went away to university that had a pager and just forgot about their bill. And they start you there and you work your way all the way up to where you doing Visa over 10,000 or whatever it is.

Andrew: Give me one thing you learned from that business?

Stephen: By far it was the best thing I ever did. It taught me how to cold call. So if you can imagine I was 18, 19 years old, living at home with my parents calling people my parents’ age telling them what to do with their money. And telling them to pay me rather than this, telling them to get a second mortgage on their house. I didn’t know a lot about how it all worked, you just sort of get comfortable and you acted as if you know what’s going on, and you just hope for the best. It was the best thing for me as far as getting comfortable with the phones, calling people that were older than me, more experienced than me, you know, people are saying they’ve got families, they’ve got kids, they had mortgages, they had cancer, they had all these issues of life and here I was this sort of young guy trying to do my thing, but it was very valuable job. I learned a lot about debt, credit, collection, and cold calling.

Andrew: So just the idea that you have to make phone calls, and say things that you wouldn’t normally be able to say to another human being, doing it over and over again got you comfortable with talking to strangers and getting them to buy.

Stephen: Yes, because if you can collect money from somebody that bought something but never paid for it, but they’ve already had it that thing, and they consumed it six or eight months ago, I think you can sell almost anything. It’s a very difficult job, the weird thing about collections is they’ll literally hire anybody, because they can’t judge, if I’m going to be good, or you’re going to be good, they have no idea. Like a very soft-spoken woman could dominate at it but the next soft-spoken woman could be terrible. And there’s just no way to know, so they just hired everybody and, you know, you usually find your way out of it pretty quick if it’s not for you.

Andrew: I did cold calling for a newspaper back in high school. It was pathetic. But it taught me a lot, and it did get me comfortable with making phone calls over and over, knowing if you don’t try, if you try a different angle, you try a different word even, it could help close a sale.

Stephen: Totally.

Andrew: All right. So how did you get into the hosting business?

Stephen: So, Mike and I were in the collection world, and he was doing his thing in debt collection, and I was doing mine. And I decided I wanted to get into business. I wanted to do something. And I ended up with the idea of trying to start an advertising company on the inside of taxi cabs. And one of the things I needed to do in the beginning to get started was build a website, and get that rolling. And I went to Mike, my friend at the time, and said, hey, I don’t know anything about how to build a website, or what to do. And he said he’d help me. But he wanted me to go find a web host. And, you can imagine, this is 1999, and he said go find a host. And I said, great, what’s a web host. And so, he kind of explained it to me how the hosting world works, and what I needed to look for. And I was jotting down notes. He’s like, you’re going to want to phone them, right? I was like, yes. He goes, make sure they have a phone number. And I was like, what? Why wouldn’t they have a phone number? And he goes, you know, back then the hosting world was weird. You email support, and it was a tech guy talking to a tech guy, and if you didn’t know what you were talking about, they weren’t that helpful with you. So, a long story short, I kept on coming back to Mike saying, I can’t find somebody that charges just monthly with no setup fee, no contract, that has a toll-free number that has support that makes sense. All these things. And so, we kind of convinced each other than maybe there was a good opportunity here, the Internet was growing, and there’s probably a lot of people like me that have for or want small businesses and want to get involved in the Internet and will need that web host that caters to the guy that doesn’t know anything–as far as the Internet goes. Right? Instead of, at that time, you paid lots of money for your local tech guy to help you out. So, we ran with it. And we came up with the idea of starting a web hosting company.

Andrew: How much did it cost you to launch it?

Stephen: I think we had $5,000 in total, $2,500 each.

Andrew: How do you launch for $5,000?

Stephen: Well, so what we did was, we went and got a server, a single server at a company, I can’t even remember what they were called, down in Baltimore. We didn’t have the money or the know-how to do the proper research to figure out where the server should be. So what we did was we tried to figure out where do big companies put their servers, and let’s just assume they’re making smart decisions. And so, we figured out where Yahoo was, and IBM, and where these guys had servers. So, we ended up getting one dedicated server and put it in there. And Mike’s job was to make sure the server stayed alive. And my job was to sell customers on that server so that the monthly fees of maintaining the server wouldn’t kill us. I think I had like 90 days to sell enough people to get us our whatever it was costing us–$1,000 a month to run it. So, bang. Cold calling kicks in. I would literally call anyone with a website and try and convince them to move over to us.

Andrew: How did that work out for you?

Stephen: Well, I guess it got us here. We learned a lot about the Internet.

Andrew: You were calling up people who already had a website, who already had contracts, I’m assuming, or at least they were buying from another hosting company and telling them, move from that hosting company to ours. They’re willing to buy, ‘cuz it’s not an easy process. There’s a transition period, there’s a trust you period, there’s the fact that there’s a stranger on the other end of the phone who’s asking me to give over my site. That’s not an easy sell. How are you able to get them to say, yes?

Stephen: It’s funny, because I made a big list of all friends and family that had websites. And I thought, okay, here’s 50 guys that are no problem. I’ll be able to get these. And of course, they all said to me like, what do you know about web hosting? So, I found it easier to call people me, and didn’t know that I didn’t know what I was talking about. And I was able to chat with them about what’s going on. They’d ask me questions on things that were very basic in this world now, like how many megabits of space, or how much traffic does it get? Whatever, and I’d have to actually put them on hold, call Mike, and he’d be like, how does this work again? And I’d have to regurgitate it back to the person on the phone. But, you know, we were able to do it, and we learned quickly. And we were flexible on pricing at the time, because the only thing that mattered is we needed to cover costs. So, if you’re willing to pay $5 a month, it was like, sold.

Andrew: So, what was the price that got your sales?

Stephen: Well, we were flexible on price. I don’t know if that was the . . .

Andrew: What was it?

Stephen: Sorry.

Andrew: Help me understand why you were able to make so many sales, with no experience. I mean, even at $5, you have to sell a lot of people.

Stephen: Well, we didn’t try and sell it at $5. We had plans, very specific $50 a month gets you this; $100 a month gets you this, and so on. But when you’re desperate to sell, you’re flexible on things like price. So somebody was pushing on price but they were willing to buy. I needed to get them in and get them going. So we can move on to the next customer.

So it helped a little bit.

But we were chasing a market of where we’re speaking English to them. Not that everybody else, our competitors weren’t speaking English, but we were speaking in regular entrepreneur to entrepreneur business. Here is what we can do to help you, here I’m going to be your guy to help you get this done. And where it wasn’t confusing tech guy talking to you. And you’re just sort of hoping that this is the right decision.

So we pushed in that world, Mike did all the tech support for the time, I did all the sales and we just hammered it out.

It was a very interesting time. Because we were running it out of my bedroom at my parent’s house. And so I had phone lines in there, fax line, my own internet connection. And we ran 24-7 support. Imagine that, 24-7 support just me and Mike.

Andrew: Did you get phone calls in the middle of the night?

Stephen: All the time.

Andrew: What kind ?

Stephen: Just people like I don’t know how to set up my email, or this is down. So I actually got used to sleeping with the lights on. And people would call in and I’d answer the phone and they asked me super, super generic, like basic questions. I’d said you know, I just don’t know, because Mike would be asleep. I don’t know the answer to that. I’m only tier one tech support, I’ll have to get tier two to get back to you at 9:00 am tomorrow.

Andrew: Why didn’t you put on voice mail?

Stephen: Because we wanted to offer 24-7 support. That was the one thing I was looking for in a good web hosting company. So we felt that the time it needed to be done.

Andrew: OK. I get it. Yeah, you’re in that scrappy mode. You really at the point wanted to do what ever, what ever it takes. And you’re grateful that being up late actually brings in more business or does a little bit more for your business.

You were kind of a loss to figure out what are some of the elements that would grow your business. If you find one, you say, let’s, just do it.

Stephen: Yeah. And our bigger problems weren’t 24-7. Our bigger problems were things like, someone would call in at midnight and they get me. They know that I own the company and I sold them the hosting, now I’m doing tech support. They start to sort of see through our…

We were saying, you know, we weren’t lying to people, but we were definitely putting the image out there that we were bigger than we were.

Andrew: So how did you combat that?

Some one in the middle of the night…

Stephen: We got an answering service.

So we had an answering service that answers all the calls and they would transfer the calls to my cell, or Mike’s cell or whom ever, to get the call through.

And then when they got to me, they be like what, you’re doing tech support, didn’t you sell me?

I would like say something like, because I sold you, your client has been assigned to me, so they route it to me and I’ll take care of you.

Andrew: I love that. I love to hear that kind of stuff.

All right. You said a t some point you started to realize that real estate brokers, were where it’s at, for you.

Help me understand where that realization came to you.

Stephen: It’s not like we decided it. We had one of our real estate clients was a hosting customer of ours, this guy called the Loss Vancouver.com. And they came to us. At the time when a realtor got a new listing, they would take that piece of paper and fax it to their web designer, and their web designer would then update the website. That was just how you did things.

So they came to us and said, can you build us a little thing that let’s us manage our own listings. Because it takes too long, there are always typos, and we wanted it out immediately. So we said, yeah, we could do that. So we build this little thing. I think the plan was, they wouldn’t pay for it but they would help us sell more of their agents on web hosting with us, like their colleagues.

So we build this little thing which helped them manage their site. It actually worked really well and they liked it, and we were able to charge now $5 more per month to have this, what we call, the listing engine.

And then we start chasing realtors and we found some sells guys to go to real estate offices, and call on realtors, sell them this listing engine product on top of our web hosting.

And then it got kind of confusing selling web hosting to realtor that doesn’t understand the term web hosting in the first place. They would get fired up about the listing engine thing. So we decided, let’s stop talking about hosting, they don’t even care about it. Let’s just say, you’re getting this, hosting is free. It’s $25 month.

Some of them would say, well, I like your listing engine, but GoDaddy is $9.99, Yahoo is $4.99. And so we start saying, hosting now is free. Everybody gets hosting for free, you’re paying for the software.

And that’s what kind of spawned us to sort of go that way. And we ended up selling of the hosting client base to a competitor of ours, and focus specifically on the real estate clients.

Andrew: You know I love scrappy entrepreneur stories. I just really dig every part of this story.

What year was this that the, what year did you launch?

Stephen: June 2000 officially.

Andrew: June 2000. And about what year was it when you started realizing that the real estate people were where it’s at for you?

Stephen: I think it’s like 2003.

Andrew: OK. So three years later.

And three years of just pushing, and pushing in this hosting business and never really grew big, but it was doing OK.

Stephen: Yeah, we were almost in survival mode.

Andrew: Were you still living at your parents’ house?

Stephen: No we left after the first. . . Oh, sorry, yes. I was still living at my parents’ house, but we had moved the — office is a loose term for what we had at that time — moved the office out of my parents’ house about a year and a half and where Mike and I . . .

Andrew: Actually, finish that thought, I got to ask you a question

Stephen: As I say, we just wanted to, we knew after a year and a bit of being… I was at my house, mike was at his, I still had a job as bouncer at a bar trying to make some money while we were doing this, so we were taking shifts on the phone coverage. It sort of, you know, was a crazy time. But we knew after a little while, that we needed to be together, if we were going to do this thing. We were missing something by him not seeing what I do and me not seeing what he does, being able to learn off each other. So we ended up getting a live/work situation, you know, like an artist’s studio, somewhere that we could live, it had a kitchen, but where we could also work from. Not that we lived there, but we pulled such long days, sometimes we slept there. But we wanted a kitchen, because we couldn’t afford to go out to eat. So we would go to Costco and bring the food in, and that’s how we survived; we were able to eat at our kitchen in the office.

Andrew: Thanks, and thanks for continuing to talk as I was sneezing there. I had it on mute, so the audience didn’t hear, but couldn’t hold back. The thing I was going to ask you was this: I launched my business, the first one, while I was living at my parents’ house. I think I was there for a year, or it might have been two. And every time I saw a joke on TV about how one girl wouldn’t want to date another guy because he probably still living with his mom, or someone else like the principal on The Simpsons was still living with his mom. Every time I saw any joke like that, it just stung, made me question myself, and made me feel insecure. Did you have any of those feelings?

Stephen: No, because I think at the time lots of people around me were living at home. They were just going to university instead of doing what we were trying to do. So it didn’t really bother me that I lived at home. You know, my home life with my parents and family was great. So there was no problem being there, and my parents were very flexible and supportive of what we were trying to do.

Andrew: What about the fact that you were going three years, and you still were scraping by? Some people would have given up at that point. Some people would have taken a job, or gone back to school. Why not?

Stephen: I don’t know. I think we were growing and learning, so as long as we saw forward progress, everything was good.

Andrew: I see.

Stephen: When I talk to friends that were going to university at the time, they would always say that I was missing out by choosing not to go to university. But I was learning a lot about things like payroll, you know. I got now a couple guys on the payroll, and I’m trying to learn about, you know, Visa and collecting Visa cards, and merchant accounts and all these things that you guys may or may not learn about in theory. I’m trying to do the same thing, so were getting a similar education. I’m just living it, while you’re sitting in a room learning it. And so I think it was OK, for me, it worked out. That made sense, to keep pushing through and keep driving ahead. My business partner, I think we’re both quite similar in that way.

Andrew: You mentioned earlier that you brought in new sales people. How did you find them? The first people that you hire are really tough.

Stephen: We went after students, and friends of my family, and brothers, and guys that we went to high school with, or kids younger than us who went to the same school.

Andrew: What was it like to manage someone who is a friend?

Stephen: It’s OK, I think. As long as you’ve got some reasonable structure, as to what they’re expected to do, so there’s, hopefully, minimal confusion.

Andrew: Did you put that structure in right from the beginning?

Stephen: No, we learned as time went on. We made mistakes, and argued about . . .

Andrew: Tell me about a mistake that helped you learn that.

Stephen: From my side of it we’d always, well not always, but at the beginning I definitely ended up getting into commission arguments with guys, because we had a loose structure. They knew how much they got paid if they sold something, but the problems started when one salesman would be chasing this client or agent, and wouldn’t get the sale, but eight months later the agent would sign up with a different salesman, and we had no rules on what to do in that case. The first guy definitely warmed the client up, but the second guy closed the deal. We didn’t have a structure for commission splitting, so we were kind of learning by trial and error, and arguing with the salesmen trying to find a way to make it work.

Andrew: What’s the way that you found?

Stephen: I think what we did at that time was we put in structure where, I think, whoever was, you know, 90 days into it . . . If there was stuff that was in the past, it was too long, and you got to close the deal. And if it was the two of you in there, the same commission from my point of view, we would just split amongst them. Of the two salesmen, if there was an issue.

Andrew: How formal was the structure that you put in place for your sales people?

Stephen: I would say not super formal.

Andrew: Was it just an understanding that built up over time?

Stephen: No, we had it documented.

Andrew: OK.

Stephen: It was documented and we were constantly improving on it, to make it better. It was one of those things always a work in progress trying to deal with sales. Sales guys, good sales guys, can be cowboys. They like to do what they do and if they’re selling them kind of feel like I’ll do whatever I want. As long as I’m producing then if I show up late or I’m missing this thing or I’m not wearing what you want what do you care? I’m closing deals.

Andrew: What do you say to that? So far that’s a rational argument. They’re closing sales; they’re growing your business. Why do you care if they’re wearing flip-flops and not shoes or shorts and not jeans?

Stephen: Totally. There’s certain things I would say yes. Especially in the collection world. Collections agencies, the best collectors can literally do anything. You can skip half the month as long as you hit your numbers they didn’t care. In our world we were similar in that way. As long as you hit your numbers you’re fine but if you’re not representing us well, like the flip-flop thing, I don’t care how much you sell. We wouldn’t want you in their office in flip-flops because you just make the company look bad. If you choose to go to the beach for a week and not sell that’s your choice, as long as you’re hitting your numbers. That’s not affecting me necessarily, or the business or the reputation of the business. We had some rigid rules around how you represented us.

Andrew: Commission only at first?

Stephen: Commission only always.

Andrew: Always? Your sales people only got a commission? You didn’t have any fixed costs with that?

Stephen: Nope.

Andrew: You didn’t even have to pay health insurance or anything in the early days, I imagine. Right? Just friends. If you sell, I’ll give you money.

Stephen: Yup. At the beginning we charged a set-up fee for the software and the set-up fee was basically 100% to the commission of the (inaudible). When we got rid of the sales team we got rid of the set-up fee.

Andrew: You got rid of the sales team? Actually, let’s come back to that because I want to follow up on something you said earlier. Before you got rid of the sales team you sold the hosting part of your company, right?

Stephen: Sold the hosting client base. I wouldn’t get too fired up about it. We were more of the decision let’s get rid of this distraction that’s driving us nuts. We didn’t go through any fancy process to make it happen properly. We just went to a couple of our local competitors and just said look, here’s the story. We’re going this direction. These guys are here, we want to make sure you’re going to take good care of them. It was more of a just take them.

Andrew: It wasn’t even about the money that you’d get, you just wanted to pass the responsibility to someone else.

Stephen: Yeah, we wanted to be paid a reasonable amount. The reasonable amount was enough for us to take what we called at the time the listing engine and rebuild it. We took that money from the hosting sale of the clients, got rid of all that stuff, and took that money and rebuilt it. It allowed us to take a couple of months with a couple of programmers and rebuild the whole system. We originally built it for one realtor and then we’d install it for another realtor. It was cool but then when you have like 500 realtors.

(Audio breaks up)

Andrew: Whoa, losing your connection there for a bit. You’re still there, right?

Stephen: Yeah.

Andrew: OK, great. Sorry, can you repeat that thought?

Stephen: Just saying that we used the money to reinvest and to rebuild the product.

Andrew: Here’s the thing. Sitting back here, 20/20 hindsight, your decision makes a lot of sense. If we were sitting in a business class and we were talking about this company of course it would make sense. You get rid of the part of the business that’s stagnating and you concentrate and reinvest in the part of the business that has potential and is growing faster. But when you’re running a business the emotions of having built something and wanting to let it go are tough to break with. When you’re running a business it’s tough to say hey, hosting is never going to work out and this will. You kind of want to say let’s just keep things going, if for no other reason than for momentum. But really in the back of your head is the optimist who launched the business in the first place who’s saying we’re going to find a way to make that work. We can’t get rid of it. Did you experience any of that?

Stephen: Not really. At the time the realtors never called us in the middle of the night. It was the hosting customers that would call us in the middle of the night with their problems because that’s what they expected. Realtors just didn’t expect that. The hosting clients were becoming a pain. We were running this night shift out of the office and our night shift was a pain because it’s tough to find people that want to work the night shift. We’d have problems where a guy is sleeping at his desk or who knows.

The hosting started representing a distraction to us. A lot of our issues that we would be talking about always related to hosting and the exciting stuff was real estate. All of our sales guys were chasing realtor, like we were definitely focused on real estate and we had this sort of lagging thing.

Andrew: Gotcha.

Stephen: It allowed us to just, I guess in today’s terms you’d say pivot and make an adjustment and keep moving forward.

Andrew: What was the year that you sold that part of the business?

Stephen: I think it was around 2003 or 4, somewhere around there.

Andrew: Alright. And at some point you said you closed down the sales team. Why?

Stephen: When I tell the story to people, it sounds like it was some big master plan, but it wasn’t. We were trying to find way, like, when you go into a real estate office, if I was going into sell, I’d beg my way into the real estate office, the broker, the manager would say, “Yes,” and they usually make us bribe them with, “OK, yes you can come. You get 5 minutes to be in the meeting, but you’re bringing donuts and coffee.” And we’re like, “OK, fine, we’ll do that.” But then you come and you’re speaking to 50 realtors, but maybe 3 or 4 of them actually care about what you’re talking about. But the problem we had, is we didn’t know of the 50 which 3 or 4 actually cared. Some of them were on their cell phones walking out the back door, it was difficult to figure out who was the right person. We actually started using meetup.com and started the real estate technology Meet Up. And the idea was to run a meet up once a month with the idea of educating real estate agents on how to use the internet to grow the business. It wasn’t, this is the key, it wasn’t the Ubertor meet up because people wouldn’t show up to hear me talk about how sweet I think our product is. It was a real estate tech meet up, and it was, this month would be Twitter for realtors, next month is iPhone or Blackberry for realtors, we’d bring in different speakers or sometimes I’d speak. But what it did for us, it allowed us to bring those 3 or 4 realtors that were interested in our product, but from a whole lot of different offices, together in one place, but bring them to me, or bring them to where we’re in control. And it was a whole bunch of like-minded people that were interested in what we’re talking about, nobody’s on their cell phones. They paid for parking to get there, we usually did it in a bar. They’re buying their own beer, their dinner, their food, or whatever. We weren’t supplying any of that stuff, so they were making a conscious decision to come, so all we focused on was educating them on the internet and tools they can use to grow their business. It became an awesome thing were we have 80 to 120 real estate agencies that show up every month. We’ve been doing it for quite a few years.

Andrew: You’re still doing it today?

Stephen: Yeah.

Andrew: And why not keep the sales team in addition to that?

Stephen: Because one thing we wanted to do, we wanted to get rid of the setup fee. And so we ended up cutting the setup fee as well as changing with how we worked with our sales team, so we just, it didn’t move as quickly as I make it sound, but we got rid of the sales team but also got rid of the setup fee. What we did, is we started an approved vendor program. So we started chasing web designers, we unlocked our system for starters so any web designers could beat up the system and adjust it however they want from a look and feel point of view. And then we went and found web designers that would be our approved vendors. We actually charge them to be an approved vendor. And when realtors come to us saying, “I want to change the look of my site”, we send them back to the vendors, and the vendors adjust their sites on our system. But the approved vendors have become our sales team, except they pay for access to be a vendor, and we cut them in, some of them on the highest level, cut them in on the reoccurring revenue. So they are building a reoccurring revenue model out of our reoccurring revenue model.

Andrew: Who’s calling up the vendors and soliciting and closing them?

Stephen: At the beginning, I was. And now they just sign up or they inquire because of the work we do on the blog or Twitter or Facebook, stuff like that where we’re saying, “Look at this website, isn’t it amazing? And it was designed by this approved vendor.” So other designers would be like, “Hey, how do I get exposed to your client base?” And so we’d say, “Here’s the approved vendor program, here’s the terms, here’s how it works if you want to apply, you apply here, here’s the fees”. The only reason we charge a fee was just to get rid of people that weren’t necessarily serious, they just wanted a link or something from the site so we charged them a little bit of money and it does get rid of a few people that aren’t

Andrew: What do you charge?

Stephen: I think it’s just, the low end, I think it’s 125 dollars, a one time fee. And then the highest end is $500 annually. That’s where they get access to the reoccurring revenue. And again, we do that one annually because it’s a pain for us to cut a payment to somebody that’s 200 dollars every year. We’d rather encourage them to get out there and sell and get that reoccurring revenue up.

Andrew: How did you evolve the product once you got the money from the hosting, from selling the hosting business? You told us that you had this very basic product where real estate agents could come in and add listings. You got new money and you wanted to create the new version of the site.

What was the new version of the site?

Stephen: The first problem was that is was on a single install on all these sites. So we rebuild it and then installed one platform into all these sites that if changed we can roll it out system wide, without having to do it individually every time.

So then we just started adding little features that made their lives easier. Because the original concept was build for one, or two agents, one website. So we went with what they wanted, what they asked for. So it was very specific to what type of real estate they sell.

So we started looking at it, well, if you sell real estate in NY for example, is very different than somebody who sells it in Vancouver, or Hawaii, or Miami. There’s different words that they use, there is different terminology, there’s different ways that they talk about properties.

So we had to start thinking about that, and how can the system work for all types of properties. And we don’t want a whole bunch of customized versions out there.

We want it to work fro a guy that sells land, or a person that sells condos, or somebody that’s selling timeshares.

Andrew: How do you do that, how do you make one product fit so many different need?

Stephen: So there is just a whole bunch of drop downs that they can adjust to what the label say on specific things. And if they don’t fill in the field, that field won’t show up. So if it’s bare land, it wouldn’t say zero bedrooms, it just if you didn’t put anything in, it wouldn’t say any bedrooms, because there is no bedrooms, it just a piece of land.

Andrew: Got you.

Stephen: And so just adjust it like that, and learn, trial, and test it. And just sort of learn what do people want.

One of the early things is, there’s what’s called, half bathroom. So our system, how many bathrooms does the house have. One, two three, four. But there’s 3.5. There’s 2.5. In the beginning we didn’t consider that.

Andrew: How would customers tell you about that?

Stephen: They would do at the beginning, they would do it by email.

Now we use UserVoice for them to…

Andrew: I saw that, as soon as I went on your website, to research, your user voice, pop up came up, that said, is there anything I can do to help you?.

Stephen: That’s live chat.

Andrew: Oh, that’s live chat.

Stephen: Yeah. That’s SnapEngage, I think.

Andrew: Right SnapEngage, right. That’s what that was.

Stephen: That’s what I meant, right.

Andrew: So in the early days, before you said you have a voice tab?

Stephen: No. Voice tab didn’t exist back then. No. back then we would do it so people would phone me, or it would be email.

Andrew: But you didn’t have any system in place to rapidly get that kind of feedback, so you can rapidly illiterate, rapidly create what they are asking.

Just was whenever they contacted you, you knew.

Stephen: Yeah. And sometimes we wouldn’t take, there is definitely a big piece of business that just saying, no. Or just educating them on why we don’t think that’s important.

So it wasn’t that we just want to satisfy all clients, it was just a lot of it had to do with us saying, here’s why we chosen to do this, it makes more sense from the internet point of view or the web point of view. Whatever it is and try to educate the agent on the importance to whatever, and whatever it is they should be looking for.

Andrew: All right. I just want to spend a little more time on sales here.

How did you get so many design companies to pay you, and then to recommend you, and if that was your channel. How did you get so many people to trust and to pay?

Stephen: Well, I think there are two sides. One they are looking for a niche to chase. And the niche is Real estate, it’s a good niche to chase.

We had a built in client base. Where we used to do the custom web design. A sort of service for them, and we decided a while back, we didn’t want to do that any more. Custom just wasn’t our thing.

So we wanted to farm this business out to people. So we would either see a designer that did something amazing on our system, and call them up and say, hey, I saw that you did this, do you know we have this program we can actually send you more. We can potentially become your sales arm. Where our live chat and our customer service team is pushing clients to you, say if you want to change you banner, or you want to update your head shots or whatever, call these, here’s our list of approved vendors.

So it’s sort of mutually beneficial relationship. Where we help them sell, they help us sell, it works quite nicely.

Andrew: All right. At one point you realized, we’re just breaking even. We’re paying ourselves a nice salary, but what we have is a job. But what we like to do is have more profits and the business that can grow beyond what we’re capable of here in North America, and Canada.

What’s the first thing that you did, when you had that realization?

Stephen: I think it happened because we found that we were getting caught up in the, check company thing, we had pool table, and pinball machines, and the fancy new office in Yale town, and we build a theater into the office so we could do training. We got out of control a little bit. Before Our Work Week, Tim Barris’ book, I read the book, my business partner read the book. We chatted about it. Some of the stuff we didn’t like because it’s encouraging employees to outsource their jobs and I wouldn’t totally be pumped if I found one of my guys doing that. We looked at it from our point of view of there’s a lot of things in here where you can think outside the box a little bit and find ways to cut costs and not try and act like a tech company in the way that a successful tech company should look. People always say how big’s your company and what they mean is how many people do you have. At the beginning we try and add more people because that’s what we thought was successful and it’s not. It took us a while to realize that that’s not a good way to measure how successful a business is.

We started thinking outside the box. We started dabbling in off-shore workers. We started playing around with a-getting our current team working from home and see how that felt and how that worked and can we do that if programmers just stopped coming in? It saves them a commute either way and they preferred doing it and they like to work at midnight or whatever. We started being much more flexible on how things worked. We started dabbling in the Dominican Republic using other outsourcing companies and using their services. Just sort of testing the field of how does this whole world work.

We liked it and we enjoyed how it felt, how the business operated. We found a lot of holes in our business where we didn’t have things documented or systems and procedures documented. Where before you would just sort of tell the guy sitting next to you oh, I need you to do this but with the guys in the Dominican Republic it’s not that easy. We started documenting systems and procedures to ensure that everyone knew what they were supposed to be doing and it went well.

This is right at the recession, the recession’s just starting. Lehman Brothers just about to go bankrupt. The whole world is just sort of slowly falling apart. We decided to look into taking what we were doing in the Dominican, which we only had a couple of guys there, to the next level. How can we actually have a whole bunch of guys in China, India, Vietnam, the Philippines or whatever? We ended up looking into the Philippines. The English there is great. The business community is great. The original plan was just to find some guys over there to do work within Ubertor. A small office of ten people to work in the Ubertor world.

Things changed. The recession was really starting to ramp up. Other business owners would say hey, can you find me a guy in the Dominican or somebody in the Philippines. We at the beginning said no, no, that’s not what we do. We’re not trying to do that. We’re just trying to figure this out for ourselves. More people asked and the recession got worse and the news was terrible. Mike and I were just like maybe this is an opportunity for us, that outsourcing is something that we should get into. We flew to the Philippines and basically never left.

We set up a Philippine corporation and we opened what’s called Outsourcing Things Done and it’s a leased labor business. Instead of opening a ten person office we ended up opening a 150 city office there. Ubertor, our software company, became a client of the outsourcing company, our first client.

Andrew: Sorry. I was going over to Outsourcingthingsdone.com as you talked and that sucked up bandwidth from Skype and I couldn’t hear that last part. In fact, before you continue with the story–when you tried doing outsourcing yourself, tell me about some of the mistakes. What are some of the issues that people in our audience who try to outsource are going to come across, based on your experience?

Stephen: A lot of the stuff we had trouble with in the beginning was not having systems and procedures in place. Just assuming that they would know what to do.

Andrew: Give me an example. What did you assume?

Stephen: Well, you assume that they’re good at project management. You’d say go do this project and it was sort of a very vaguely described thing. Like here’s the end goal of what I need you to do. We would get crazy stuff back or incorrect stuff back. We started to realize that it’s our fault that that’s happening. You can’t just be vague. You have to say I need you to do this and here’s steps one to sixteen on how to complete that.

Andrew: When you give somebody sixteen steps you’re really breaking things down in an overly simplistic way. Don’t you sometimes find that people will look at that and say you know what, they’re treating me like an idiot, I’m just going to move on and figure this out myself. Or I’ll skip a bunch of steps and move on. Then one of those steps that they’re skipping, because they assume it’s basic, is critical. It might be simple, but it’s critical.

Stephen: Yeah.

Andrew: How do you deal with that?

Stephen: It’s kind of a culture thing I guess. It was my business partner’s idea; we used to have printed manuals and he one day said “Let’s do this.” He opened a Google Sites account and he started a Wiki. It’s all locked down, and we moved all systems and procedures into the Wiki. So the idea is we would document all of those steps, one to 16. If we sent it off to one of our guys and they did it, they skipped steps two and three, and it worked out fine, then we would update the Wiki and say, “OK we were a little bit too specific. We can pull those steps out so next time they don’t have to do those steps.” But if the guy missed it, and…

Andrew: How would you know that? I mean, you would just know that the project is done. How would you know which steps were missed and which steps were…

Stephen: Usually if they were missed, we would see they did what we didn’t want them to do, and we would look through and see, “Here’s why. You didn’t log into this, or you didn’t add this Google Analytics code, and that’s why the site’s not tracking now. There are a whole bunch of things that can go wrong if they don’t follow the instructions. We found that having the instructions makes it very easy for them to do good things and good work. We’re constantly trying to brain dumb them. I don’t want to be asked, nor does my business partner want to be asked the same question over and over again. So if someone asked him the question, “Well how do I do this,” he won’t answer the question. He’ll go into the Wiki, write an article on how to do this, and then send them a link to the Wiki saying, “Here it is.” So he thinks he’s taken that knowledge out of his head which only he had, put it into the Wiki, and so now the business has it. Next time that question comes up with a new employee, he shouldn’t have to ask Mike. He can Google it or search the Wiki and find that result, and solve the problem himself. It’s the same benefit of asking Mike, except you don’t have to bother Mike.

Andrew: I’m learning to do this too myself, because I’m working with so many people. I want to make sure that I’m clear about what I’m looking to have done. What I found is that text is difficult to describe what to do.

Stephen: That’s when I’ll do video and screen-sharing.

Andrew: You do screen-sharing?

Stephen: All of the time.

Andrew: You’ll do a screen flow, record your screen, and say “Boom, this is how to do it.”

Stephen: Yep.

Andrew: You know what’s worked for me? I use Skitch. Do you know what Skitch is?

Stephen: Yeah, I do it as well.

Andrew: It does a screenshot and it has arrows and text that you can point to, and it lets you quickly add it to a document. I keep an Evernote window up on my screen. Then I do what I need to do on the screen, and then every step I do a Skitch snapshot of it, I use arrows and text to explain what’s going on, and then I put it on the Evernote page. Then the next step I do the same thing, put it underneath, and so on.

Stephen: Yup.

Andrew: Then I had to get a URL that I sent to the person. I add a note to it, tag it so I can find it in the future if I need to pass it to anyone else. I send them the URL, and then they’ve got it in a way they can follow step-by-step with pictures.

Stephen: Perfect. That’s exactly what I’m talking about.

Andrew: Tell me what else I can do to improve that.

Stephen: One of the things we do is that stuff (video, Skitch, images) because you’re right. Sometimes looking at a long list of text is like, “I don’t know how to deal with this,” but with images, it’s much easier to explain things or you can say a lot more with just a picture rather than a huge paragraph to explain the name servers and how they work, or whatever. Like the stuff that we do, we try to update the Wiki.

It’s like you and I, for example, to set up this interview. I got emails from some of your team, right? So the team would say, “Hey, Steve. You’re getting ready for your interview. Remember to do this: restart your computer, shut down your programs. This is the Skype address he’s going to call on at this time in this time zone, and all of this stuff. I am assuming if it was our world, and it sounds like you’re doing the same thing, that’s all on a Wiki or in your Evernote system, so you can tell your assistant, “OK, we’ve got a new interview with Steve at 11:00. Here’s the details. Follow the instructions in the Evernote or in the Wiki.

Then they should know exactly what they should do to the point that if Andrea leaves, quits, or whatever, then you can plug me into your business. You shouldn’t have to give all of these instructions over again. You should be able to email me and say, “Hey, we’ve got a new interview with Joe Blow. Follow these instructions for the new interview. Ready, go.” Then I should be able to figure it out, and do what you want me to do without any problems. If there are problems, the way at least we look at it — if I screwed something up — we assume our instructions were bad. Right? You either have two choices: the guy’s the wrong fit, or the instructions are unclear. So we will look at their mistake, look at the Wiki and try to figure out how they misinterpreted that, and make it clear so next time a mistake like that never happens. So it’s a constant work in progress. It’s a lot of work, but the Wiki’s are, I think that’s how we can run our businesses. With a tight little team, and the…

Andrew: It’s a work in progress but at least it’s a progress. At least you are not always going back and doing the exact same thing, and saying, and trying to remember how you showed it last time so you can show it again.

And that person doesn’t have to go and hunt down the email, that sounds like with your system.

With my system they might have to hunt it down. So I need a better way for them to find.

Stephen: With have everything in there. With scripts in there like, if somebody’s credit card is declining, you would, you don’t ask me how to get the new credit card, you look in the Wiki and search declining credit card or quick collections, or whatever. There is a script there that says, hi, client’s first name, your credit card is, blab, blab, blab, this expiry date it is declining, we, this many payments behind. It’s all there, and it’s written by me or Mike, or one of our managers, so even if the outsourced worker or virtual assistant or what ever, his English is maybe not the best, it doesn’t matter, they’re cutting and pasting a lot of what they are dong, for certain things.

Andrew: What else, what else do we need to know about it?

How about how to find the right people, how do you do that, you don’t know anything about the Philippines. You’re somebody walking in there as a guy who is a foreigner, you got to assemble a team of employees that are going to work remotely.

How do you do that?

Stephen: So we learned a lot on that front for sure.

And one of the things we found invaluable was online video.

Where you get a resume, you got a hundred resume, so at the end of the day, they all look very similar. They all went to school, they all got a certain exposure in the work force. But it was tough differentiating between who was a good candidate and who is not such good a candidate.

So we started shooting videos with them. And you can hear somebody’s passion behind what ever it is they are talking about or you can hear they are just you know, this is their 50th interview, and they just want a job, they don’t want this job, they just want a pay check.

You can learn a lot by the way people sound, or their facial expressions and stuff like that. So that helped us a lot in recruiting the right people, for within our business, or to sell out to people like you, the business owners .

Andrew: The same thing you and I are talking right now. You had your headset on, with the mic you have, it looks like you’re experienced on Skype, unlike many of my other guests.

You got the headsets on, you just started the conversation with them and that’s how you’re feeling them out, that’s how you’re screening them.

Stephen: No. There is a screening process there, in the Philippines, so we got our recruiters there, they meet whole bunch of people, they churn through them, we do what we call four weeks of basic training.

So we don’t give anybody to any of our clients unless the virtual worker is passed through our four weeks of basic training. And part of the four weeks is set up to get rid of weak players. And the beginning of week two, we start shooting videos with them. And that’s where we start…

Let’s say you call me and said, hey I want somebody to help edit my videos, I’d send a video editor full time worker. I’ll send you a bunch of videos of guys who are video editors. And they would say, hey, my name is Joe, and I got a wife and two kids, and I love karate, and I went to this school, and I had this job before, or I’m excellent at whatever.

Andrew: How do you screen out people, you said you do things to weed out the people who aren’t going to be right, what do you do?

Stephen: So just like little things. Like all our training happen on the night shift, in the Philippines, so it’s our day time here, right now, we got the training, is happening.

And we do that. Because we want them to prove that they’re willing to work the night shift. Now, it’s one thing to say, you’re willing to work it, but like right out of the box, you’re working the night shift for the four week. Because client might say we want night shift. And so you could be working night shift forever.

So we want to ensure that they are actually willing to do it.

We got some things to sort of break the ice with them and they play a lot of game. It’s Charades, that kind of stuff to break them out of interview mode at the beginning, just to figure out who’s just the normal good person.

Where your resume looks good, that got you into the door, but now we’re just looking for a good human being. Like somebody that’s nice hard working individual. And a lot of times people are stuck in interview mode, where they are just ready to answer questions and they’re going to tell you their biggest weakness, they got that locked down. And they know what they are going to say that sounds good. But it is still a weakness.

We want to get out of that whole world. And just like, let’s hear who you are as a human being. And so we figured that out we put them through basic things like transcribing videos, because we want to see how their English is. And at the end, like the last third and fourth week, we actually pushed them into Uberto, and they do Uberto customer service. And so we’re doing that, to make sure like how do you respond when you’re having like a real live client asking me questions. A happy client or an unhappy client, or asking something that you don’t know. How do you react?

The great team players that we want, finish the four weeks. The one’s that don’t qualify or whatever, we let them go. And kind of our concept is we wouldn’t place somebody with you or another business owner, that we wouldn’t place ourselves, or we wouldn’t keep for ourselves. Or that we would keep for ourselves.

Andrew: And you wouldn’t be use . . . I understand earlier when you said why you got rid of the hosting part of your business. It made sense, and I understood why you transitioned and it wasn’t too far a leap to go from hosting to basically hosting websites for realtors. But here, you’re a tech guy who’s building websites for your customers. To go from that to outsourcing, in the Philippines, seems like a giant leap. Why take that leap?

Stephen: Well, we saw the opportunity, for sure. The environment of the world makes sense. We figured outsourcing is definitely the future. Right? And it’s not really outsourcing anymore. We’re just going to the world, where it’s a world economy, you know. Where if you’ve got a Blackberry that’s Canadian, you could be using a Canadian Blackberry driving your Japanese Toyota, and like, wearing your American apparel shirt made in L.A. Everything’s coming from everywhere these days. So, we knew that was where we were going. We wanted to just get involved in this world, and technology and cost of flights and hotels has made it so we can do this. As young entrepreneurs try to figure it out, where 15 years ago, or 20 years ago, you need a whole whack of money and a lot more expertise for sure in it. Where, we just went out there and we were lucky. Have you ever heard of the Entrepreneurs’ Organization?

Andrew: Yes. I interviewed the founder.

Stephen: OK. So, the E.O., I’m a past E.O. member. My business partner’s a member, and actually moved his membership to E.O. Manila. That’s where I’m going, to the E.O. L.A. Party on Sunday there. And so, the E.O. chapter in the Philippines has been unbelievably helpful. And that’s one of the powerful things about E.O. When we showed up we had millions of questions. There’s corruption problems, there’s all these issues we had to deal with. So we had the luxury of calling the E.O. Manila guys, saying like, okay, what do we do here? How does this work here? And they would explain it, or help us push through these random situations. They were a really great group to be able to tie into and get assistance for operating in a country we had no idea what we were doing.

Andrew: How much do you cut your costs by at Ubertor after you moved your people to . . . I was going to say after you outsourced your people to the Philippines, but after you started hiring people in the Philippines?

Stephen: Well, so you look at it from, if you sort of, they are two separate entities. So if you look at Ubertor hires this outsourcing business.

Andrew: Right.

Stephen: So, I got Ubertor customer service person here in North America, we’d be paying them $3,000 a month, plus their computer, plus their square footage of the office that they’re in, their share of the air conditioning, their share of the Internet. Where, when we hire, in this case outsourcing things done, it’s a $1,250 per month per person, and that’s all in. That includes their Mac, their monitor . . .

Andrew: You said, include a Mac? They have a Mac?

Stephen: Yeah. Our whole office is Mac.

Andrew: Oh, get out. That’s hard to find. I was looking for outsourcers and finding some that used Macs was damn near impossible.

Stephen: It is. We do it on purpose. We do it as a great recruiting model. Right? Because these guys love to work on Mac computers. They love to work on Macs, where most of them don’t have the opportunity to work on Macs. Most of our competitors, it’s like the ideas get them a computer that works. As long as it works, like, that’s fine. Where we operate in the Philippines, like we did here. Everybody’s on full-size desks, they’ve got Macs. Everybody’s got their own Mac. Most have dual monitors. Where it’s a lot . . .

Andrew: You pay for that? Yeah, we do. You buy Macs for all these people?

Stephen: Yes. [??]

Andrew: I wish I knew when I was starting out. I’ve got someone who has a Mac, but I know when I was looking for help I needed Mac people, and it was really, really hard to find.

Stephen: Yeah, well we’ve always been a Mac-based shop. We love ‘em. We love the idea of Macs. And you could just see, in the Philippines everybody, they just couldn’t afford to have them so they never really had the opportunity to use them. So, now in our office, it works as a great recruiting tool, because the workers go home and say they love the new Mac, or the new software, the [??] monitor, whatever. And that actually brings new applicants to us, saying, I want to work for this company. This is crazy.

Andrew: Well, congratulations. Thanks for doing this interview. How about we end it with one piece of advice for entrepreneurs who want to cut costs by sending some of their labor overseas. In fact, before you give that, boy is the U.S. and Canada, the Western World is trouble when it comes to employment. It’s so easy now to outsource. And frankly, if we start outlawing it, if we start barring it somehow, then companies are just going to shift overseas. I would, if I couldn’t hire people overseas, I’d start looking for ways to just move myself overseas. There’s so many beautiful freaking countries on the planet right now, you know. They all have Internet, they all have great . . . many of them have Internet, many of them have great resources. If you’re not allowed to move your people overseas, companies will start moving themselves overseas.

Stephen: Totally. And I see it happening all the time.

Andrew: I do too. I was living in Argentina and I would see people who were starting companies there. I would see people who came there just to try to work cheaply for a little bit and then said, “Screw it, why do I need to go home? I’m just going to enjoy my life over here”.

Stephen: Yeah

Andrew: They have headaches over there too, every country seems to have its own headaches.

Stephen: You will always have headaches, there will always be headaches.

Andrew: There always are headaches, but there are advantages too. People are now starting to shop around to see where they can get the best environment and the best people. You don’t have to live in the same city and country that you were born in, and you don’t have to build your business there. Anyway, if somebody wants to do this, give them one piece of advice if they want to start outsourcing.

Stephen: I think the key is that systems and procedures are important. Just to assume that somebody is going to know what they are doing and rock for your business is a problem. You are never going to be ready to start outsourcing. One of the beauties of getting a virtual worker, is that it almost forces you to get a little bit more systematic. You will realize that you can’t just pass this person a piece of paper and say, “Do this, file that”. It will force you to do it. You start thinking- “The E-Myth” is a great book, by Michael Gerber. You run your business like a franchise. You start thinking about systems and procedures. If you, as the owner, or the managers, drop dead or quit, could the business still run? That is why we choose to use the Wiki’s. Having good systems and procedures, and building on that base, is invaluable.

Andrew: Let me ask you something, before we go.

Stephen: Yeah

Andrew: Is it possible to see your Wiki? Can you bring a Wiki up on your screen right now? You can use Skype screen-sharing to share your screen once you have it up. Can you show it in place of your video on our screen right now, just so people can understand how you do it?

Stephen: I don’t know, I’m sure we could.

Andrew: Let’s take a look, find a document that you feel comfortable sharing with the world. Load it up and we will do screen-sharing on your side, I’ve been thinking about this.

Stephen: OK

Andrew: I know when we do courses, all we do is show the screen, show the screen, show the screen. It’s really helpful to see how someone works. If we can even do it, I think, for one- I’m just rapping here and talking while you are doing that for the people who are mp3 listeners- but I think if we even show one screenshot, it will be beneficial.

Stephen: So I just click on share, full screen, and that should do it?

Andrew: Yeah, let’s take a look.

Stephen: Are you sure you want to share the screen?

Andrew: I hope this works.

Stephen: We’re going to find out.

Andrew: We’re testing this for the first time, I hope we are recording properly. There I am on your screen. I am going to maximize.

Stephen: I see, I was sliding over here.

Andrew: If this doesn’t work, then it doesn’t work and it’s fine. OK, there you are. You can really minimize me, you don’t need me anywhere near that big.

Stephen: So, this is just the main page of the Wiki.

Andrew: Go even smaller with me, nobody needs to see me twice that big, especially.

Stephen: Really?

Andrew: OK, so I see, this is the main page. It says task pending, it shows what people are working on, and hypotheses.

Stephen: Yeah, systems and procedures. Let’s pop into procedures here. We’ve got it all broken down into cold call scripts, chat audits, chat etiquette, and daily plans. So, all of our guys do…

Andrew: Let’s take a look at chat etiquette, or something that has some images and text.

Stephen: I wouldn’t know off hand, I would have to dig.

Andrew: OK, or anything actually.

Stephen: Here is 5-15, for example. All of our guys do-if I hired you and said, “Hey, I need you to do your 5-15,” you would say, “what’s a 5-15?”. I would tell you to check the Wiki. You would log in, check the Wiki and see that 5-15′s are weekly reports submitted every Friday by each team member. They are no longer than five minutes for me to read and fifteen minutes for you to create. If you want more detail, you would click into that.

Andrew: Let’s click into that, let’s have a look.

Stephen: Yeah, and it breaks it down. So, you would answer the question, “What did you do this week? The morale of your department and you, and then Kaizen”. We are kind of big on the Kaizen thing of suggesting something that will improve your job, your department, or the company. There is one idea a week, 52 ideas per year from each one of our team members. We get some crazy ideas, some great ideas…

Andrew: Dude, this rocks man, I see. So, even the people who are low-paid employees who you turn to because of the price; because they are so deep in your business, they can have great ideas. You are saying not only can you, you must. Every week, give me a great idea.

Stephen: Yeah, and some of them are just like, “I need a new chair, my chair hurts my back and I would be better with a new chair”. I would say, “Great, new chair it is”.

Andrew: Or, maybe not, but at least you know.

Stephen: Sometimes, it is like before, what we were talking about. Here are these steps, 1 to 16. I have been doing 1 to 16, but I feel like it only needs to be 1 to 12, and here is why. So, if we look at that and we decide, “You’re right, we are doing extra steps that we don’t need to do”. We would update the Wiki with the new information. We actually have a little bonus system. If we implement a Kaizen, these guys get bonuses. We want them thinking about how do we make the business better? What can we do to improve everything? So there’s this…

Andrew: I think we need to leave it here, and say this to you. I am going to ask the audience, if you want to- And I know I do, so maybe I might override them. Guys in the audience, if you want to see a whole session with Stephen where we bring him back and we ask him to teach us how we can organize our business like he does, and come up with these great management techniques like asking people to come up with a great idea every week, let me know. I am going to solicit Stephen relentlessly. Stephen, would you be open to it if people gave us feedback on how they want to do a course with you? Would you be willing to show us how to organize our business, how to systemize it the way that you did?

Stephen: Sure, yeah.

Andrew: Alright, I want to know how the audience wants to do it. My vision is just my vision, but I will share what it is. My vision is, we create a brand new site, on Google sites, for a fictional company, or maybe we take someone from the audience and we take their company. We talk about all the different systems they might want to create. We suggest things like how you do the Kaizen method with your people. We walk them through it, they see how you create it, they learn how they could create it too. They could organize their business for the people that are working with them, and even just for them.

Stephen: Yeah.

Andrew: Dude, this rocks, thanks for sharing your screen. You know what, it took a little bit of courage for you to- First, there’s a lot in this interview that people don’t recognize took a little bit of courage. The fact that you even came on here and you revealed a little bit of your revenue. I know you are not comfortable with that at all, so I appreciate that. To show your screen and say, here is our home screen, I don’t have anything to hide, guys. Take a look at the way we do this system. I would be a little nervous about it, I probably would go over to the perfect page and then show my screen, so I appreciate you just jumping in there and showing it all.

Stephen: No problem.

Andrew: Cool, I hope to have you back.

Stephen: Hopefully it was helpful.

Andrew: It was, it was very.

Stephen: Cool.

Andrew: Thanks a lot.

Stephen: Thank you.

Andrew: Thank you all for watching

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  • Artem

    Thanks Andrew… It was quite interesting interview! I am also interested to know whether Stephen used some local (Philippine-based) outsourcing company or hired directly himself? I am quite confident they needed some help from a local companies to help them preselect candidates and the question is not only how Stephen selected staff for his projects but also how did who chose right Philippine partner? What were the key-success factors … 

  • http://www.stephenjagger.com Stephen Jagger

    Hi Artem, 
    We actually became an outsourcing company in Manila.  Its our office, our gear, our team, etc.  You can see more about our operation here – http://www.outsourcingthingsdone.com ( check out the video at the bottom of the page )
    I hope that helps explain things.  
    Thanks
    Steve

  • Matt Gorecki

    Fantastic interview.  I’d love to see a follow up video focused on Stephen’s management/processes ideas.

  • http://www.freelanceful.com JamesF

    Nice interview.. I’ve heard great things about Philippines for outsourcing instead of other countries because their culture and work ethic better matches ours here in America.

  • Anonymous

    Wonderful Interview.  Good courage by Mr. Jagger to show his screen.  I liked that he didn’t try to profit off of the setup fee but used it as a way to afford a sales team and then eventually eliminated it. Wonderful interview and look forward to the follow up interview.

  • http://www.stephenjagger.com Stephen Jagger

    It is very “Americanized” there.  Everyone speaks English, lots of Western brands are there.  Great place to check out if you are ever in that side of the world.  

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  • Bill K

    Andrew, this was quite inspiring I must say. What Stephen has done I have been trying for several years now with limited but enjoyable success. I have a stealth outsource op in the southern Philippines which I set up to do my own projects but now also do outsourcing work which now finances my own projects. I am interested in a seminar with Stephen should that come about.

  • Gerald

    Nice interview Andrew Stephen is great guy but his prices for outsource workers is a bit on the very high side of things…..but I do understand why he’s trying to make a profit but for small businesses like us here at mixergy we will be out business with those numbers…..still great interview…

    Gerald

  • Trin

    Great idea for a course.

  • http://www.stephenjagger.com Stephen Jagger

    Hi Gerald, 
    Thanks for your feedback. We are on the higher end when it comes to outsourcing, but we do provide value for that dollar amount.  Our team is all on Apple, most with dual monitors, large desks, etc.  $1250 a month for a full time worker with a university/college degree working on high end gear is reasonable rate for the quality of team members that we provide.  Happy to chat if you had questions.  Thanks for your comments and glad you liked the interview.  Steve

  • http://www.stephenjagger.com Stephen Jagger

    Where is your office Bill?  

  • http://www.wsiqualitysolutions.com/ Gregg Towsley

    Andrew, this is a great idea. I would love to see this breakdown.

  • http://twitter.com/josablack Andy Josuweit

    Awesome interview, I love the hustle mentioned in the first few years of building the business. (Currently 2 years in and a very similar position.)

    Also, here is an awesome book on building systematized and scalable business systems – “Work the System” – by Sam Carpenter

    http://www.workthesystem.com/

  • http://twitter.com/josablack Andy Josuweit

    stephen – love where your heads at with systematic business creation… spent 1 month in dumaguette last year checking out some outsourcing shops, i need to make a trip back soon! (No one can ever get enough tanduay, sizzling bulalo, and karaoke.)

    also, as someone who wants to move into product development (saas), do you think it is possible to build a skilled team of developers in ph? how would you rate the quality of dev work?

  • http://www.stephenjagger.com Stephen Jagger

    The dev quality is ok.  We have been able to find a few great quality devs and have them working with one of our North American devs who moved to Manila.  We are working on finding more now in PH as well as Vietnam.  Good luck with your biz, let me know if I can be of any assistance. 

  • Bill K

    Gensan, Mindanao
    Are you living in Manila?

  • http://www.stephenjagger.com Stephen Jagger

    No, I keep a condo there, but am in North America right now.  We currently have a small North American team living there managing the office. 

  • Andy Drish

    Andrew – This was a killer interview.  Lots of gold in here.  Doing a course on this would be extremely beneficial.  I’d buy for sure. 

  • http://smcyvr.com Mitch Baldwin

    90 Million English Speaking Citizens. 
    = No language barrier as is the case in other countries I have outsourced to.
     

  • http://smcyvr.com Mitch Baldwin

    Great interview Stephen and Andrew!

  • Tim Heath

    Great interview Stephen.

    You mentioned the 515 report which is a brilliant idea, we have employees over 4 countries and whilst we have weekly project meetings, I would love to get some kind of similar report at the end of the week.

    Can u post the main parts of the 515 report here, so we can see exactly what you require them to fill in? Or is it as simple as what have you been working on, what has been competed and 1 idea on what to improve?

    Thanks Tim

  • http://www.facebook.com/cklinorg C.K. Lin

    omg. love the idea of 515.  stephen that’s genius!