Small Business Interview: JobRack Founder Neil Napier on Outsourcing – Small Business Show 119

The Small Business show, episode number 119 for Wednesday, May 17, 2017. Greetings folks and welcome to the the Small Business show here at BusinessShow Co, the show by, for and about small business owners here in Durham, New Hampshire. I'm Dave Hamilton and in the San.

Francisco Bay area, I'm Shannon Jean. How goes it, man?

It comes and it goes. It's good, actually. Yeah, it's, it's hot here today. It's, you know, it's been like cold, cold, cold, not cold, but, you know, 50s, 60s, maybe not even 60s. And then suddenly today it's in the 90s.

So that's cool, that's good. Gets a weather update from the home office in Durham. Yeah, that's it. That's cool. He. This is my time to do the segue into our guest that's joining us today. We talk a lot about employees and talent and contractors and that kind of thing. Finding reliable talent, always a challenge for any company, whether you're hiring them or doing some outsourcing stuff. Our guest today, Neil Napier, he had the same problem like you and I, Dave, when you find a problem, he does what any good entrepreneur would do and he started a business to solve it and he started Job Rack. And we're going to talk to Neil today. Welcome to the show, Neil.

Thank you, Shannon. Good to be here.

Yeah, thanks for joining us and hanging out with us. You're coming to us from Finland today, is that right?

I am indeed. And I'll tell you, it's late in the day here and it's still quite bright outside as it is in summers.

Ah, yeah, that's true. When does the sun go down over there?

Around tonight. I think it's about, I think 10pm is when it starts to get dusky, I guess. Yeah.

Get dusky.

Yeah.

That's wild. Well, that's great. Well, give us some background. We want to talk about your business history and we want to talk about Job Rack, what you did and what led you to job rack. And then tell us how long Job Rack's been around. Just some basic background stuff.

Sure. So I come from a very, what I would call a middle class background, which means that about four years ago I had no motivation to even do my own business, let alone do freelancing. But because of necessities, I lost my job. That I was quite happy and it meant that I had to get a freelancer gig on the, on the side basically to make some money. So I started doing writing and then copywriting and I realized that, you know, Being a freelancer means that you can actually like in, you know, in any case, work from home and still get paid for it, but you still end up being responsible, you know, for your own time, how you manage everything. And you are at that stage exchanging time for money. And I just, you know, thought to myself that it would be better to be on the other side of that equation. So rather than working for someone and exchanging time for money, it would be better if I was actually the one running a business. So I started a digital marketing company where we created different kind of software applications for various marketing companies out there. And I realized while doing that that the kind of people I was working with, the kind of people I was employing initially, I had really good feedback about them as you do, because when you hire someone, everyone's pumped up, everyone's excited, but then problems start to happen. I mean you, things start to crack up. So initially when I first started, I just like everyone else, had this mindset that I'll go to Philippines, get someone for 400, $500 a month and I'll just get them to do VA work, which I don't want to do myself. Now they are quite good at that over there. But the problem I had with hiring from the Philippines was that they always had some or the other issues that would come up, you know, and it would just disrupt our business. And we realized that we were having better luck by actually hiring people within Eastern, you know, which is countries like Ukraine or Russia or Poland, Serbia, Croatia. Because the thing is that for starters, the time difference is quite negligible for me and them. And then they can, if they work in their evenings, afternoons and evenings, they can work in the US time zone as well. So they're able to liaise with a lot of our US based customers too. So that was a good thing. And you know, we talked to some other people as well. We asked them, hey, where do you go to find, you know, job seekers from Eastern Europe? And they said, oh, I don't know, I just post on upwork or someone recommended me, this person. And we spoke to. So we were at an event and we spoke to about 20 or 30 different entrepreneurs, business owners, and none of them gave, you know, a consistent answer. They all had different sources. So we realized that, okay, there was a big gap in the market. There are people who are looking for job seekers from Eastern Europe because of the qualities and attributes that those job seekers bring. But there's no central resource, there's no central place to find them. So you know, we wanted to basically tap into that market, which is why we create a job rack.

So did, did you, are most of your clients, where are your clients? Are they all over the world or are they mostly in, in Europe? Western Europe, where you are?

Well, actually they're all over the world. So about half of them come from the US about, I would say 30% come from Europe itself and the rest come from Australia and Asian countries as well.

So truly, truly running a worldwide business. Okay, so you, you just happen to have close and of course distance proximity to this Eastern European talent pool. And I hate to sort of distill it all down, but essentially that's your product that you are now marketing to the rest of the world.

Exactly. That's our asset. I mean, to be fair, it's a two sided marketplace.

Of course. It's a two sided marketplace, of course.

So that does present some challenges too. But it does mean that as long as we have a good, let's say jobseeker database in place, we can also offer that to our clients.

Right.

Situation.

Right.

So, okay, so going back to the, you know, number one, I love your story because it's, it's, you know, it's inspiring and it's fantastic to see, you know, or to hear that, you know, here's this problem and we're not the only ones having it and now, you know, how do we create a business around that? I just, I love that, the whole concept. So when these other businesses were trying to, you were talking to, or even your own, trying to reach out and choosing outsources. I mean, what are some of the kind of mistakes or common things people, these business owners need to look out for when they're trying to get some help outsourcing.

So when you're trying to find someone to help outsource some part of your business, actually the first mistake happens even before you reach out to someone, which is the lack of systemization in one's own business. So if you want to outsource something comfortably to the point that it can be done without you, you really need to systemize the steps. I can tell you I've done a lot of consultation calls with people approaching me and saying, I've got this, you know, project idea. I don't know how it will go, but I want to hire three people for it. And I instantly say don't hire anyone for it because if you yourself haven't gone through the process once, at least you're not really in a good position to give it to someone else because they will mess it up and you won't be happy with the results. So you'll blame the, you know, the outsourcer for that. Even though the process is to blame. There isn't any process, there isn't any system in place. So the first mistake actually happens, you know, while, let's say you're at home where you haven't even done any preparation, you don't even really know how it should be done and yet you think you want to outsource that. So that's the first thing we advise to anyone who comes to us to, you know, for consultation about outsourcing.

And can you, and do you help folks do that as far as like. Well, let's, let's, you know, develop this process and, you know, figure out what you really need before you go take that next step.

If it can be squeezed into like an hour long call, yes, certainly. But if it requires more, then we usually get them in some kind of mentoring program.

Okay, that's great. So there's some kind of resource for them that would help them. Because that's the first time I've heard that answer. And you know, often people are trying to, you know, pitch their services, but you're trying to get in front of that and give some guidance, which I think is important to be successful around the, you know, down the road and not to get, you know, to your point, get kind of blamed for, you know, if things don't go the way that they thought they were going to go.

Yeah, because we just don't want that ill reputation that, oh, I hired someone from Eastern Europe, it just didn't work out. They didn't know what they were doing. So my job is to kind of, you know, help that process of transition of, you know, giving one person's work to someone else. And how can we do that as seamlessly as possible?

Yeah, that's great. I love that. So do you think that, you know, most businesses have aspects of their, you know, requirements and procedures and things that, that lend themselves to outsourcing?

I think so. I mean, I'll give you, you know, example of my own business in this case. Let's say if I wanted to do a consultation call with someone, of course there's no one better than I am. And I'm not saying that because of my ego. It's just because I've been in business long enough to know how outsourcing needs to be done. So I can explain that better to anyone than any of my employ. But you know, over time, if I do get someone to grow In a role, if someone shadows me for a few months and they attend every call, every consultation call that I'm doing, they will get better at it. You know, with experience, they will get better at it. But I think, you know, for that kind of job, where it's a more strategic decision, it does lie with me. It is something that only I can exercise expertly within, within my company, within my setup. But having said that, I do think that if you, let's say, have, you know, if you build a system, what you do, if you've done it enough number of times, then I do think that you can break everything down into a formula. And I say that also because I have an engineering background. I have a strong affection for breaking everything down into systems and formulas.

Yeah. So it seems like the successful outsourcing is having it laid out beforehand. So the business owner that's seeking help knows what they want and managing the expectations of what's going to happen. Is that right?

Precisely. Yep. And let me give you one more example which I think would be very relevant here. So think about outsourcing an article. And I know the quality of the article is subjective, that's a given. But imagine it like this. The way I create an article is that I would record an audio and it would be a 10 minute long audio and I would send it over to Rev.com to get it transcribed. And when I get the transcription back, I can edit it myself to basically turn it into a blog post. So, you know, a thousand word blog post. And between, you know, doing that audio myself, emailing rev.com and then editing at the end, it takes me about two to three hours to get the whole thing done. And of course I'm happy with the result because it's my own voice in the article. Now if I wanted to hire a content writer to write something just as good, I have a KPI, what's known as a key performance indicator. So I know that it took me about three hours to do the entire thing from start to finish. If I hire someone and pay them, let's say even $10 an hour, I'm willing to let them work at it for 15 hours because I'm okay with $150 as an acceptable price in this case. And if after that price, I don't get a good article, I know clearly that that relationship won't work. But if I get a good article in 12 hours, I know that that person is better than what I anticipated. And over time, they can reduce that time from 12 to 10. And eventually to three, but that will, of course, take a few months to a few years.

That's great. So it's not just getting in there, but then monitoring it and having that KPI, those performance indicators, and measuring it over time to be sure it's the right thing to do.

It helps a lot because business is all about analytics, I think, at the end of the day.

Sure, that's great. So when you were getting started with Job Rack and everything, how did you market the business? How did you get your first customers? And then how do you get your customers?

It was an interesting one, actually, because at that time, and even now, we are part of a digital forum online. It's called Dynamite Circle. It's a forum for a lot of digital nomads who travel around the world and who also run some sort of business or freelancing service. And I was part of that group. So we initially tapped into that group to get first batch of customers. You know, we got some feedback from them as well. We, of course, had to give out a great offer that we have never given since, but that was a good start that we got. But I will tell you the interesting thing we did to on the other side, which was to get job seekers. Now, I don't know if you know this, but there's a story about Airbnb. When they got started, they basically wrote on the coattails of Craigslist. So what they would do is when someone would put up, you know, property to rent for a few days, or if someone was looking for a property on Craigslist to. To go and stay for a few days, they would. Basically, they had built a bridge between Craigslist and Airbnb so they could post on Craigsl and drive people back to Airbnb. Now, eventually Craigslist caught on, but, you know, took them a few months. But Airbnb just grew, like, dramatically over that time. So they wrote the coattails. And for some time we did the same thing with what was previously Odesk. You know, initially when we needed a lot of people coming into a platform for applying, to apply for jobs, we basically took the same job, put it up on Odesk, and. And, you know, when someone would apply, they were back to Job Rack. Now, of course, you know, it's kind of a gray area, but then for a while it worked. And then Otis caught on and they said, well, you can't do this anymore. So we stopped. But that's, you know, when you're starting out, you need to find these little tricks in the beginning to make sure that you can take off without spending a lot of money. Bootstrap, as it were.

That's great. That's a great story. I love that. Yeah, that's very good.

So.

Looking up on your website, I see that you offer some training webinars for job seekers that want to use jobrack. How did that start? Was it a problem that you saw, or give us some background on that?

Sure, yeah. So one of the biggest problems with different freelancing sites such as Upwork, is that people who apply to those jobs don't really read the job post, or even if they do, they don't really write a good covering letter. So what we wanted to do was to actually educate, you know, job seekers and show them what's the best way to apply to a job or how should you do an interview, you know, and again, ethical, actual methods that they can implement to improve the chances of an interview and then improve the chances of a job. So really, some. Some of the employee clients, some of our clients came to us and said that, you know, the employees are good, the job seekers are good, but they don't write really good cover letters. It would be nice if they actually explained, you know, their background clearer. So I thought, hey, why not turn this into a web class, which we can do once a month, and actually educate the job seekers and show them how to approach a job properly, how to sell yourself for a job position.

Okay, so you're actually putting the middleman, for lack of a better term, back into this process that it's sort of been pulled out of, that maybe wasn't such a good thing to do. Right. I mean, you're finding that having pulled the middleman out of this process with something like guru, where it's really just a marketplace, it doesn't allow for some expertise and some human guidance to be put into the process. And that's what you're providing. Is that guidance? Is that a fair assessment?

I think so, because our goal, again, was to just go beyond connecting people, because that part's easy. You set up a platform, you drive a lot of Facebook ads, and you can get enough of both sides in there. We want to go beyond that. We want it to be actually a good experience and not just a numbers game. I'll be honest here that if you post the same job on upwork and on job rack, you'll probably get three times more applicants on upwork. But at the same time, when you do select them in the end and when you're doing interviews, you'll actually find three Credible candidates on job rack and perhaps only one on upwork. That's just because of the quality of applicants that exist in our database.

Yeah, no, that totally makes sense. Quality over quantity. That's an easy sell right there.

Yeah. And you're constantly improving your product, your product being your assets. And the job seekers that you're introducing to these companies, you're just improving the quality of them. That's great.

I think that's a good lesson for anybody running any kind of business is taking a look at what you're offering and even narrowing it down so you're not forcing your customers to pick amongst the big pool. You're doing that work for them, in essence, by limiting and selecting and curating this, the. This, the. The pool of talent, if you will. I like it. It's smart.

Yeah, exactly. And I think Airbnb did a similar thing when they realized that when people were putting their home pictures, the pictures were just rubbish. So they would actually send, you know, someone with a camera to your home so they could take decent pictures of your home and then put them up on. Up on Airbnb. And I think it's all about delivering quality to, you know, the person who's paying the money.

Yeah, no, that's so true. That's right. Yeah. Airbnb. It's very smart of them to pay the nominal fee to a photographer to go and do that. That's right.

Sure, sure. And I can, you know, as someone who's. Who's outsourced a lot of projects over the years, I can tell you it's exactly right. Most of the applicants do not read what you really want done. It just kind of falls in their category and then. So I love that idea of fine tuning those results for businesses.

Yeah. I've done a lot of outsourcing, too, and it always comes down to me having to really almost vet 100% of the people that are interested, as opposed to the self vetting that should be done that you would think would be done not even by the people themselves or by the candidates themselves, but you would expect these automated systems like Upwork and Elance before it to. To do. To do some of that for you, but it doesn't.

So.

Yeah, no, they deal with volume. I mean, they don't want to bother with quality control too much.

Right. No, it makes. I get it, but it just. It's frustrating. Yeah, exactly. Yeah.

And you're really, you know, your quality, you're really curating a better product. And, and that's. That's a great Thing, you know, we talk on the show a lot about making sure you don't build your business just on price. And, you know, this is a similar thing where you're just. You're really building quality and curating quality versus volume. It's like, who cares if you get 100 responses when you really just. You're looking for one, that's a very good quality response. That's great.

I'm curious. I noticed on your website that you offer an affiliate program, which I always find interesting. Shannon and I have actually had a business where we made money off of affiliate programs, but I've never offered my own. I'm curious how that works for you. I mean, obviously, it's a part of your marketing strategy that it's interesting. I'd love to hear a little bit more about that.

Sure. Actually, if I'm honest, that's been a failure in this case, and I'll explain why. See, thing is, outsourcing isn't a sexy thing. I mean, it's something that you have to do. It's not something you want to do. It's something that is born out of necessity most of the time. Maybe you want some free time. Maybe a lot of workers come in and you want to outsource it. And when you start doing that, you have to train that person up. So it is something, unfortunately, that most businesses try and avoid, and that hurts them because, you know, they stay small. So because of this kind of attitude, it's been. It's been tough to convince people to be affiliates of our program. They're actually more likely to just be brand evangelists and talk about us to their friends and their peers, which they do anyway. But, you know, I guess the commissions are so small and not as consistent that they don't really want to be part of it. The affiliate program. I mean, if you think about it, how many people did you hire in the last year? I. You know, we fortunately did hire a lot, but most businesses don't hire more than five people in a year. And for that reason, it's not really, you know, a great idea to become an affiliate, I guess. So we're finding that slowly. It's. It's, you know, it's something that we are also thinking about perhaps stopping in this case, just because the uptake isn't there.

Well, there's a. There's a lesson in what you. In what you said there. You know, maybe it's better to just let them be brand evangelists. And we've certainly found that in various aspects of Our business where, where you take someone that's doing something for you, in this case, just promoting your brand, and you say, oh, I want to reward that work so that you're incentivized to keep doing it. And sometimes just the addition of that reward can sour the entire relationship. And it just, like all of the benefits end immediately.

Interesting.

Yeah, that's exactly it. I think they just felt like the reaction I got from one of the people I spoke with, I asked them to be an affiliate, and they said, I'm just happy to talk about you. I don't really want to get paid for this. It's okay. Don't worry about it. Because also, once you settle that relationship, it almost becomes like something they have to do, and they didn't want it to be bound by that either.

Exactly.

But you're better off sending them a T shirt.

Yeah, exactly.

Yeah, we should do that. Yeah. Yeah, that's right.

Good idea.

That's good. Hey, so, you know, our listeners know that we're. We always say we're big fans of mistakes, and I'm holding my quote, you know, fingers up in the air. But, you know, since we all learned so much, you know, what would you say has been the best mistake you've made with Job Rack? That you know, what's taught you the most?

It's interesting. So, you know, whenever you start a project, you go in with all guns blazing and you have the best case scenario in mind. Then we did that too. In this case, we thought we're going to price it at a relatively low price and we're going to charge monthly, and people are just going to love it because, hey, it's only like $39 a month. But as I mentioned earlier, if you don't want to do too many hirings in a year, you know, that $39 a month is a lot. So we actually spent a lot of time trying to convince people to register for rec subscriptions with Job Rack, and it just didn't work. I mean, it just really didn't work because this didn't fit the paradigms offer of a typical, you know, recurring platform. Now, the exception to that is that there's a job platform called online jobs, or pH, which is, you know, for Filipino job seekers, they do recurring, and for them, it works really well. But the funny thing there is it only works well because the job seekers don't stick around for very long. Eastern European job seekers stick around for between, you know, 12 months to 18 months at least. So for that reason, they don't need to hire. So. So we realized that, you know, recurring just wasn't working. We did a few interviews to try and find out why, and we realized that people were just, you know, staying in the jobs for longer so they didn't need to hire over and over again. So that was a mistake. But we realized that, okay, all we had to do now was raise our prices. All we had to do was make our prices match the expectations of our clients. And we did that. And to be honest with you, the revenue basically tripled overnight by us doing that, and it's been consistently at that rate. And I think it's just a big, big improvement, which we didn't factor in before.

No, that's great. So when you were talking about this subscription model not not working for you, is that for the company seeking the. To outsource or the actual job seeker themselves?

So we don't charge the job seekers, you know, our goal also here is to. Is to make, you know, create more jobs in Eastern Europe so we don't charge them. But yes, for the companies, you know, know, putting up job posts and trying to find job seekers.

Got it. That makes sense.

Yeah.

That's what I just want to clarify that.

So, I mean, I guess what I'm getting to is that recurring doesn't always work. Even though it sounds really nice to have.

It's awfully sexy. Yeah.

Yes, it is.

It is. And I mean, outsourcing isn't, so it doesn't. I guess there's a mismatch there, right?

Yeah. Yep. Yep.

That's great. So you talked about hiring a lot of people and growth, and it sounds like you're growing quickly, which is awesome. What do you think your biggest obstacle to success is? And. And what? What's your plan to overcome it?

I think it's the. Well, you know, to be very candid here, I think it's the ego of the entrepreneur that they think they can do it best.

That's a great answer.

We've had this problem. I mean, you know, we. Of course, it would be nice if we didn't have to convince everyone that, hey, you should hire from Eastern Europe or you should hire for this position, and here's why. But anyone, I mean, who watches this show, like, can I be a bit more vulgar here?

Oh, yeah, of course. People with big egos listen to this show. You're talking to two of them.

Perfect. Okay, so outsourcing is a bit like sex. You know, you think that like, like, you know, you think everyone can do it. They think they can do it best and no one else does it better than them. And that's the problem with outsourcing as well, that they think that they know how to hire the best person, they know how to keep the person in the best possible way. But it doesn't work like that. So, you know, the skills that you gain as an entrepreneur don't actually transfer to being a manager or to being a recruiter. And I think that's where a lot of owners go wrong. So they don't really realize the necessity of having someone for long term rather than having someone cheaper for three months or six months at a stretch. So I think that's a problem that we've had explaining to people why this is a wise move over the long term because they all have, you know, most of them have the short term thinking and this ego that stops them from listening to our advice.

Yeah, that's great. And it's like it comes back to education, you know, kind of back to that price thing where you're constantly trying to educate your customers about why cheapest isn't always their best solution. You know, it's the same similar kind of thing where you have to educate them into this whole process and yeah, I love it. So are you, you know, I know you're doing the webinars and things. Are you constantly talking about ways to overcome this obstacle, you know, with your team?

Yes. You know, in terms of actually educating clients, we do. I do have a Facebook group as well for job seeker, for clients, prospecting clients. And I try and share as much information as I can to keep them active, to keep them involved and let them know that we're always there for them if they need. We also have blog posts that go out quite regularly that talk about some of the things that these entrepreneurs, these potential clients, could do better. But in terms of talking to our team, I think we all have a very common goal with this, which is a good thing. Luckily, because I know quite a lot about outsourcing, we've been able to condition our team to focus in the same direction as well to build Job Rack to be a good thing for our prospective clients. I think in that sense, we're quite on track.

That's great. This is some really good stuff, Neil. Really, really useful to lots of folks that will be listening to this. So if you could go back to when, you know, when you first started Job Rack and give yourself some advice based on what you've learned over the years, what would you tell yourself based on your experience now?

I think we weren't as willing to do one on one calls initially with people, with prospective clients and even job seekers. I think had I actually spent more time, let's say, on the ground talking to potential employee, you know, employees and employers and gathering feedback from them, figuring out what was working for them and what wasn't, I think that would have been great. Now, luckily, a lot of our clients have been more forthcoming with advice and suggestions on what we could do better and we have integrated those changes into our platform. But I think it would have been nicer for me to be a bit more aggressive with marketing as well. So attending events, for example, and that is something we're looking to change at the end of the year to go to events and basically market ourselves a bit more. So I think, you know, if I, if I go back and give myself this advice, I think I would basically suggest being more aggressive with marketing and making sure that we communicate more with, with our clients and also our job seekers.

That's great.

Be more aggressive. That's good advice for any business owner. Well, I mean you, you rarely hear someone say, I regret that I tried that and learned something from it. More often than not, I regret that I waited so long to try that and learn something from it.

It's fantastic. Neil, like I said, some great stuff. You have some really good advice for business as well as outsourcing and a different way of looking at some things, which is great. We love that. What's the best way for our listeners to learn more about Job Rack and to connect with you?

I think the best way would be to just sign up on the website, just create a free account. At least you can create a free account and browse through the job seekers and get in touch with us. I think within the website you can also find a link to the Facebook group. So join us there, interact with us and we'll be happy to help you. Just consult for free if you need some help with outsourcing.

And I'm going to give you one piece of advice is when you're talking about your website, be sure to say it. It's jobrack EU folks. That's right.

You got it.

Thank you.

Yeah, of course. It's all about being aggressive.

Yes, yes, yes, it is.

Well, Neil, thanks again, you know, for joining us today. We'd love to check back with you and see how things are going and, you know, stop in from time to time and you know, keep educating us about outsourcing. It's fascinating story, man.

Good stuff. Yeah, thank you. Really good stuff. Thanks so much for joining us. Yeah, folks, you can find Neil at Jobrack EU. You can find us at BusinessShow Co and join our Facebook small business support group at BusinessShow Co Facebook. Until then, keep living the charm life. Thanks for joining us.

New Take it easy.