TalkingLocal – Interview with Paul Stinemetz

TalkingLocal – Interview with Paul Stinemetz
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In the latest edition of TalkingLocal we are joined by Paul Stinemetz of Endlessrise.

Paul Stinemetz EndlessRiseEndlessrise is a leading white-label online marketing outsourcing business based in the Philippines. They were founded in 2009 and now have over 300 staff members based in the Philippines, where Paul lives, works, and breathes the outsourcing market.

Paul originally studied biochemistry, but soon moved into online marketing. After setting up his own business in Puerto Rico, Paul moved onto the Philippines, where its warm culture & strong affinity to the United States proved to be the perfect place to start Endlessrise.

Endlessrise were the first company in the world to exclusively service resellers for SEO, online marketing and web design. With a competent & dedicated team that grew from 10 to 300 employees in just 3 and a half years, Paul’s know-how of setting up and managing an offshore operation is second to none.

For those thinking of setting up an offshore operation or even just considering using an outsource company, then his expert knowledge can be invaluable.

Key Discussion Points

  • The challenges, advantages & pitfalls of running an outsource operation
  • Why the Philippines is such a growth area for outsourcing & offshoring
  • How to keep outsourced staff motivated & loyal
  • How to successfully implement management structure
  • Key advice for anyone setting up their own offshore operation

Keep a look out for more in the TalkingLocal series coming soon. We’ve got some key interviews with big personalities from the local search world lined up – so do stay tuned! You can also keep up to date with the latest TalkingLocal videos on our YouTube playlist.

Video Transcription:

Myles Anderson: Hello, and welcome to TalkingLocal. In this series of insightful interviews I get together with some respected local specialists to find out more about the topics that they know a lot about. The interviews are short, but in depth, which means that you can learn a lot without us taking up too many of the precious hours of your day. Today I’m delighted to be joined by Paul Stinemetz, President and CEO if Endlessrise. Hello Paul, how are you doing today?

Paul Stinemetz: I’m doing great Myles, happy to be on.

Myles Anderson: Great, thanks Paul. Endlessrise is a leading white-label online marketing outsourcing business based in the Philippines. They were founded in 2009 and now have over 300 staff members based in the Philippines, where Paul lives, works, and breathes the outsourcing market. Here at BrightLocal, we have a big offshore operation also based in the Philippines. The process of setting up that offshore operation has been one of the most challenging, but also one of the most rewarding, for us. But, my knowledge about setting up and managing an offshore operation, my knowledge in doing that, barely scratches the surface of Paul’s know-how, which is why I’m talking to Paul today.

Over the next 20 minutes, I want to understand about the challenges, the advantages, and also the pit falls of running an outsource and also an offshore operation. So, if you’re thinking of hiring a virtual assistant, or setting up your own offshore operation, or even just considering using an outsource company, then you can learn a lot from this man today.

So Paul, before we start going deep into the logistics of off-shoring and outsourcing, can you tell us a little more about Endlessrise? What do you do there and also the journey that you’ve been on over the last five years?

Paul Stinemetz: Sure thing, thanks Myles. Well, you know, I started out in online marketing because I was going to college for bio-chemistry and decided to try and figure out a way to produce a re-occurring income structure for myself and I actually moved to Puerto Rico because I wanted to go surfing there and I started my own online marketing company. So I started contracting companies out of India to do the work, and this was five years ago, so the online marketing re-seller structure was not set up and it ended up being a disaster. I was put in a situation to where I either build our own team stateside or I produce an outsource entity, and I realized there was such a need for a legitimate outsourcing program that was exclusively white-label to re-sellers that I should pursue that opportunity.

What I did was I picked up everything and I moved myself and my small crew over to the Philippines and I set up a small operation to start with and because we were exclusively serving re-sellers, we started to grow exponentially because the re-seller has clients and they bring more clients and we bring on more re-sellers and over the last five years, it went from ten employees to 300 employees and it’s been a real wild ride. So, that’s just the very short version on how I got over here and how things got set up. How we went from ten employees to 300 employees, that’s a different story.

Myles Anderson: That’s great, you know I love hearing about that kind of background in businesses and how they often grow from a kind of simple idea, or lack of a service that meets your needs, it’s also a great way to start a business based on knowing what you need, and therefore what other people are likely to also need.

So Paul, you’re obviously based in the Philippines, and you know that we’ve got an operation in the Philippines as well, and I really do like coming over there and working in the Philippines, but why did you chose the Philippines and why do you think it’s such a growth area for outsourcing and off-shoring?, and how does it compare to say India which is also another large outsourcing destination?

Paul Stinemetz: Well, whenever it comes to outsourcing or, we call it BPO (Business Process Outsourcing), as an industry it starts with labor rates, so that’s one of the reasons a lot of people comes over here to set up an outsourcing firm is because the labor rates are good. You save a lot of money and it’s on par with India in terms of labor rates.

So, that’s one of the main reasons people set up over here and why we set up over here but of all the countries that would have similar labor rates, the reason why we chose the Philippines, firstly one of the main reasons I chose it was because of the culture.

Outside of the rates, then you’re talking about the people. The culture here is very western; it’s surprising how western it is since World War II, really. The English language here is a number one necessity for us because we handle a lot of writing and also phone support. It’s a real hot spot for call centres as well because of the English language that’s over here. In fact, the average speaking talent of English over here per person is much better than it was when I was in Puerto Rico, which is part of the state, so people learn English from the time they’re in kindergarten on up.

The western culture is very strong over here, which means that American and even music from the UK and the movies and television is really popular and that helps to hone English skills, and of course the writing is taught from kindergarten on up.

Also, Tagalog, which is the native language over here, is based on the Latin alphabet which is the same alphabet as English, so it’s a lot easier to learn from Tagalog to English in writing because it’s based on the same alphabet, whereas if you were to try to learn Spanish, it would be easy for you because it’s based on the same alphabet. If you’re going to go and learn Chinese, it’s going to be much, much more difficult. So in regards to setting up over here versus India, India’s native language is not based on the Latin alphabet and it makes learning and writing English much more difficult. I think that’s one of the reasons why you get better writers over here.

So without a doubt, writing skills over here is much better. Spoken English over here is much better. There’s a big trend over here of Indian call centres setting up and BPO’ing out to the Philippines, so you get Americans and people from the UK outsourcing to a BPO in India for call centre talent and they, in turn, are BPO’ing out to the Philippines, and I’m seeing actually a lot of Indian call centres setting up here. So if you want to look at it in terms of English skills, it’s not debatable. This is the number one place.

In terms of culture, I think it’s probably one of the happiest cultures I’ve ever been around; everybody seems to be very happy, very accepting here. When I first moved over here, the President was female so it’s a very liberal culture at the same time, a very accepting culture.

Work ethic wise there’s a standard, very hard work ethic. People are very family oriented, very geared towards taking care of their families, siblings are responsible for putting their other brothers and sisters through college and taking care of their parents, so work ethic is extremely hard and there’s less holidays than there are in India so that’s also a benefit. Yeah. So, it’s all wrapped up into one, so that’s why we set up here and it is fairly friendly to set up a foreign corporation over here at the same time. Some countries, you cannot own a foreign corporation as a 99.9999% shareholder, which leaves you vulnerable having to share 40% of shares to someone who is from the country that you are trying to incorporate. In the Philippines, you can own 99.9999% of your corporation, which also is a big reason why we chose to set up over here.

Myles Anderson: That’s very interesting, I totally agree about the kind of culture there. From our experience we’ve found everyone to be very hardworking, very friendly, and it’s interesting about the very family oriented society where you can have one person working for your business, and the salary you pay them can actually support five or six people within their family. In other words, it works in two ways: one it’s very positive for that family to have a secure income, and also it means that you get a very loyal kind of employee base because it’s not just themselves that they’re funding through working for you, but it’s also their extended family which kind of keeps them hooked into you, which I’ve found has been a great way for us to retain staff just to really look after them. In terms of recruiting staff over there, what skills and traits do you look for in an ideal employee when you want to bring them on?

Paul Stinemetz: What skills and traits do we look for? You know, interestingly first of all if we see on someone’s background that they did a lot of freelance work, maybe they were working from home, working off of Freelancer, Odesk or something like that, that’s a big red flag. Usually we don’t hire people that come from there because they’re used to a work-from-home environment. They’re not used to a structured office environment. So, that’s probably a big surprise to a lot of people because a lot of people are out there looking to hire people on Odesk and Freelancer, but we don’t hire them.

In my opinion, the best employees that you’ll find don’t work off of those sites. The traits that we look for are, work ethic is what we’re looking for. We’re looking for people who don’t bounce around from job to job, depending on the position. For a technical position, of course we’re looking for more technical expertise. If it’s more of a non-technical position, we’re looking for fresh grads out of college. For fresh grads out of college, we recruit from specific colleges over here that we know produce great employees.

The Philippines is not a first world country so you do not have first world education over here, so the difference from one college, to another college, to another college is not what it is in the UK or Australia, or the States, or Canada. It’s dramatically different. I mean the difference between actually needing to do your homework and get graded on it, and not needing to do your homework and get graded on it. So, we know what colleges to hire from – that’s a big one.

It’s really difficult in an interview to pick on work ethic traits but we always ask the right questions. In interviewing, it’s a skill. You ask them; first of all, we like to ask people if they’re ‘lucky’. It lets us know their disposition in life, if they’re a positive person or a negative person. We always ask them if they’re lucky. If they say ‘yes,’ they pass that test. Then, we always ask them the different situations in terms of how do you get along with other employees? That’s one of the things that we focus on the most when we’re looking to profile them if they have technical skills because if they don’t get along with their co-workers, then we can’t have a good culture and it only takes one bad egg in a department to ruin the culture that’s encompassing of it. So, that’s really the broad question around things. I’m not sure Myles, were you wanting me to address how we recruit people?

Myles Anderson: No, no, that’s great. I just want to understand how it might differ from recruiting in the UK or in the US. But no that’s great, I understand. It’s interesting to talk about how there are such differences in education standards from college to college. Also, that you might have relevant experience but if it’s based from home because they don’t have that kind of sense of structured office background, so that’s really interesting Paul.

How important and how time consuming is the management aspect of this?

Because, imagine you put yourself in the shoes of someone like myself or someone else who’s looking to maybe start an offshore operation. Yes, you can get guys to do the jobs, but there’s always a concern about the kind of quality, the time management aspect of keeping them involved in doing it and that can be quite time consuming. So, how much of a management and structure layer do you put around your kind of base teams that you’ve got there?

Paul Stinemetz: Oh, a lot; it would surprise you. What you have to understand about any service-based operation is you understand a lot more as you get bigger. It costs you more money as you scale. If you’re running a 10-person operation, you know, per quantity of employees per service, it’s a lot cheaper than if you’re running a 100-man operation because you have to start factoring in more management. We’re structured in that each team has a team lead, and then it has a supervisor, and then we have a manager. Out of 300 employees, we have 32 managers, so we have a management committee on top of that.

We have shift managers that manage the shifts and the attendants and the infractions and then on top of that of course, we have our entire HR. For a small business to relate to us, it’s a little bit different but everything from us comes from the HR tier-down. So as you get bigger and bigger at some point in time, you’re going to need an HR manager, and that’s going to dictate all the training for all the management that you have inside of your company. So, we go from our HR director down. We actually employed the former international HR director from DHL and then below her, we have our management committee, and then below, there’s all of the managers.

Now, from the managers to the team themselves, the managers are responsible for making sure that people are on time. They’re responsible for quality control in the work, they’re responsible for making sure that the work is completed, and they’re responsible for creating training materials, maintaining training materials, and training new hires. They’re also responsible for screening new applicants, hiring new applicants, and firing non-performers. They’re also responsible for establishing KPIs on their team. So if you’re going to run a team, how do you track them?

If you have a team that’s responsible for writing, well, how do you track how much they’re supposed to get done each day on grading them on their performance? So managers are responsible for tracking and establishing key performance indicators, in other words tracking the performance of each employee. They’re responsible for, in the very beginning monthly evaluations, annual evaluations, and performance check-in evaluations with the employees. They also have to do one-on-one check-ins and they coach them on their attendance, so management is extremely time-consuming in a larger operation.

Myles Anderson: You mentioned there a second ago about the kind of firing of staff or kind of letting those go who don’t perform. Are you quite ruthless in terms of how you appraise, grade, and retain or let staff go?

Paul Stinemetz: Personally, yes, extremely. But, my personal viewpoints on it are not what are practiced in this company. We follow the Filipino laws. There are very strict laws on letting employees go over here and I follow our HR director’s disposition on that, I don’t handle it. If an employee’s not performing, then we put them on a performance improvement plan. We tell them how much time they have to hit different marks on improvement or else they would be terminated, so we always put people on a performance improvement plan if they are not performing. We give them a chance and we make sure that we communicate that to them very, very clearly.

In terms of everything else that can let you go from the company outside of performance, there’s an entire user manual. You have to stack up your infractions. You’re suspended once, you’re suspended twice, and then you’re let go, so we’re actually very gracious with how we deal with employees on giving them a second and third chance before we let them go.

Myles Anderson: Okay. I guess that’s probably a little bit different when you’ve got contracted employees to say, employing an outsource who is essentially a freelance contracted to you. Do the same rules and laws apply with that kind of set up or is that only when you’ve got your permanently contracted staff?

Paul Stinemetz: Well, as the laws apply, whenever people go on Freelancer and Odesk to hire people from the Philippines, that’s not legal believe it or not. But as it is as a contracted staff, let’s say that it was done the right way and that contractor actually has their contractor’s license and they document with their receipts to you, what they’re being paid and they pay their taxes on it and that sort of situation, there should be an official contract in place, right? You should follow the terms of that contract, and so if that contract states that you can let them go at any point in time, then upon non-performance, you could cut them on the spot.

If you wanted to, absolutely, and I would if those were the terms. Absolutely as soon as they were not performing, I would cut. Typically in an outsourcing relationship with Odesk or Freelancer or whatnot, the process of letting them go is usually really quick and usually there’s no official contract in place stating their KPIs or how to measure them, so it’s all very informal which is also what makes it difficult to scale.

Myles Anderson: Yeah, so I guess you’ve got that kind of informality which is the benefits of are that it’s easier to set up, easier and more nimble to manage if you need to downscale it, but you probably haven’t got the kind of longevity of contracts in ability to scale based on that, so I guess that’s an interesting kind of watershed if you were to decide which way they want to go.

How do you keep staff motivated and loyal? Is money the key factor there? or are they typically interested in lots of other benefits? Given that they live quite in a very family oriented culture, do they look for things like medical benefits and health care or is it really just about the money?

Paul Stinemetz: That’s a very good question. The money needs to be on par; in the ballpark range, right? The short answer to that is absolutely not, it’s not all about the money. It has a lot to do with benefits. It really does.

It’s the same thing with you if you wanted to get a job, and especially if you had a family. We provide health care to our employees, we provide a career path to them, but benefits are a big deal, you know, how much vacation leave do they get? How much sick leave credits do they get? what’s their healthcare plan that they’re getting? What’s their annual bonus that they’re going to be getting?

Those things are extremely important to them as the benefits they can look forward to. In terms of what motivates them, each department has an annual team building that we put them on, depending on the team, depending on their performance. They might go out for a dinner or our teams have done different things from load up on a bus and go out to the beach and spend a weekend in hotels on the beach. We do that for our entire teams at a time. They look forward to their team buildings a lot. Once a year, we have a really big company team building where we pull all the employees together and have that team building.

We have regular company in-house events, so people dress up on Halloween, we have Christmas gift exchanges, and there’s a lot of work that comes from the HR division in terms of how to keep your employees motivated on a regular basis. It could be small things, it could be big things, but the culture that you create inside of your company is going to be your largest factor on retaining your employees from the Philippines.

Myles Anderson: As your company grows, how important is it to kind of put in place the processes to optimize and to keep standards the same, and do you see that as an ability to substitute certain roles by investing in technology and systems? How much of your effort is spent on managing people and how much of it is spent on thinking about how you can automate a process that is currently done by a human?

Paul Stinemetz: This is probably what sets us apart for a lot of people, I mean we have a large in-house development team; we base the majority of all of our business on the people, on training people on processes. One of the reasons is because if you think about it, if you look back to SEnuke and some of the biggest SCO platforms in existence for doing the actual work, they’re all outdated, you know what I mean? If you were relying on that as a business, you would go out of business. The online marketing business moves so fast that if you’re trying to keep up with platforms to automate all of your processes in depth, you’re not going to be able to keep up, so we focus on man power processes and keeping our systems flexible. We do place probably about 15% emphasis in automating the most redundant tasks that we have that are there, but the vast majority of it is people training and processes, absolutely.

Myles Anderson: What communication tools do you use to kind of keep in touch with your employees or to kind of keep them engaged? Do you Skype for example; do you use Hangouts, do you use videos, or is it just a simple email based, or any kind of internal chat systems?

Paul Stinemetz: Well, of course to keep our employees engaged, we actually don’t have a single employee that works from home and we don’t have a single part-time employee. We’re in a high-rise in three offices, so everyone’s in-house, so everyone’s face to face in terms of keeping them together. We have an employee portal, so we give company updates in there. I personally do company updates on what’s new with the company. We load it in and broadcast it out to everyone’s desktops. Each team has their own chat platform that they can have chat sessions in but since we’re in person, everything’s in person, so that’s how we keep engaged in face to face, yeah.

Myles Anderson: Yeah, it’s kind of a different view based in UK but having a Philippines team, you know we were all on Skype and Hangout as well as I think with Slack chat, as the three main communication routes but yeah, I think you definitely have to work a lot harder when you’re not sitting face to face with your employees.

But, I’ve got just about two more questions if you will. Imagine a friend of yours, let’s say back in the States was looking to get themselves an offshore operation, what sort of advice would you give them about building their own team? If you can look back on the things that you’ve learned, this is a good friend of yours, give him some genuine advice, what would you say are the three things that you would say to them?

Paul Stinemetz: Well, first I would say don’t do it. If they were set on it 100%, my advice would be to make sure that you seek really good legal and accounting advice when you’re setting up. There’s a lot of international tax freeze and that you start off with a really strong HR director and a really strong in-house recruitment department and really educate yourself. In terms of the difficulties in setting up your own operation, I think it’s fairly significant, Myles, you’ve set up your own. You need to fly over here. You need to make trips over here, you need to put a lot of time and effort into it, and you need a skill. I think you have to have a really strong reason on why you would come and set it up.

A lot of people when they’re setting up international teams fail and the reason that they fail is just the same reason why you would fail if you set up a restaurant in your own local city and you never went into the restaurant and you sat from home and relied on other people to run it. Running things remotely is very difficult to do. Endlessrise would never have made it if I wasn’t here working on site 24/7 on it. You’d have to have really good skills in being able to retain people and you’d have to have the right people from the beginning to maintain that company, create that culture, and make sure everything’s running smooth. When you’re dealing with a culture that money isn’t the largest priority, having things fall apart can happen very quickly.

Myles Anderson: Okay Paul, that’s great. Actually I don’t have any more questions. That’s been really helpful. So, thanks again for taking part, we really appreciate you taking the time. What time is it over there?

Paul Stinemetz: It’s currently 10:40 p.m.

Myles Anderson: 10:40 p.m., so yes, you’re burning the candle at both ends I’m sure. Listen Paul, I won’t take up anymore of your time, so thank you very much and everyone who’s watched this, thank you very much for listening and watching this addition of TalkingLocal. Please do look out for our other recordings. We’ve got a number in the can already and we’ve got many more coming over the next few months, so thanks again for your time and have a good day. Bye-bye.

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