Applying outsourcing in entrepreneurship or any business
August 29, 2019
Project EGG podcast
Today, I am being interviewed by Ben Gothard of The Project EGG podcast, I had a really good conversation with them. We spoke about a lot about outsourcing, but also about the earliest stages of a business journey. We also get a little bit philosophical with things. I really enjoyed this conversation and I hope that you get something out of it as well.
When I discovered outsourcing
Ben Gothard: Ladies and gentlemen, welcome to another exciting episode of Project EGG Show. Today. we’re still in Austin but now moved into my sister’s office. So shout out to you and you, rock. Thank you for lending your space to the project. Good show. Today we have Derek Gallimore serial entrepreneur. Welcome.
Derek Gallimore: Hi, Ben. thanks so much. I’m super excited to be here. And I’m loving your (inaudible)
Ben Gothard: I think we’ve had a little bit of an internet thing. Derek kind of cut out on us a little bit. I’m sorry. (inaudible)
Derek Gallimore: Now it seems right now, but, yeah, no, great. I’m super happy to be here and on this live chat.
Ben Gothard: Awesome. Awesome. So let’s jump right in it. skill, right the core of it. What is your story?
Derek Gallimore: Absolutely. Well, I’ve got a few stories that, look, my main drive and purpose at the moment is to help other business people, entrepreneurs, startups with outsourcing. So I’m based here in Manila in the Philippines. I’m an absolute entrepreneur at heart, serial entrepreneur, for better or worse, it’s an incurable disease. And I think, but I discovered outsourcing in about 2011. And believe that it is the most powerful, most transformative business tool available today. And I’m trying to spread that word.
Ben Gothard: Let’s start from the very beginning. Because when I hear other people who are serial entrepreneurs, I get like, insanely curious. How’d you? How’d you get into that? Like, what’s your story? Where did Where did you? Where did you get the whole entrepreneurial spirit?
Derek Gallimore: I don’t know, where it particularly came from. My parents weren’t entrepreneurial. They were a very sort of steady, middle class, and we’re always encouraging me to be stable and safe, and head down the middle of the path. But right, from a very young age, I got a lot of inspiration from movies, and I aspired to what I think then was the kind of wall street vibe.
Then I believe culturally, it kind of evolved into the whole Silicon Valley vibe, and startup and entrepreneurial vibe. There, I suppose, notably, started a personal training business when I was about 16. And I, looking back, there was just a lot of kind of activities that set me down this pathway to self-employment, and entrepreneurship.
Ben Gothard: So you’re talking about some of those movies? What, whether movies inspired?
Derek Gallimore: Well, to be honest, I’m not the best that movie recall and quotes from movies, but, the whole wall street thing called Wall Street, and just the kind of not so much overseas, that is a nine to five job, but the kind of the deal-making, the power broking the fancy suits, the, you know, the kind of as they were referred to them, like the Masters of the Universe, those kind of aspects were super, super exciting to me. And I was never a kid that was necessarily into sports, watching sports or music, or it was the kind of business scene that got me super excited.
Ben Gothard: That’s interesting, you bring that up, because I think, one of the modern-day, a little bit more modern-day. Examples of that are like The Wolf of Wall Street, or The Big Short, movies like that, where I mean, it’s intoxicating, that sort of lifestyle and how its portrayed. And I feel like, it’s so easy to get wrapped up into that game. Like, wow, this is everything that I’ve ever wanted.
It’s interesting that that, you know, it translated into something very positive for you. But I feel like that does have negative effects on people who, you know, they see like, in businesses, I’m just going to get fucked up all the time, and then just have this one sick idea and just be super corrupt and break the law, everything’s going to turn out fine. I’m going to be a billionaire. It’s I mean, it’s probably not the best way to go about it.
Derek Gallimore: And it’s that blend, isn’t it of you know, sort of the ends justifies the means versus being a good person throughout. And there’s a lot of kind of mixed cultures and messaging in there, you know? The Wolf of Wall Street, he’s a pretty bad guy and selling penny stocks and boiler rooms, and all that sort of stuff. But he’s glorified. And I’m sure a lot of people that read that book or watch that movie, a lot of kids kind of pretty inspired by that.
Then they’re probably trying to figure out how to do that themselves. But, you know, I think, think Silicon Valley, I think somehow they kind of a clean version of Wall Street. And then at least I have this narrative of their, that becoming billionaires by trying to save the planet and make it a better place. I’m not too sure how genuine that is, necessarily, but it’s an interesting evolution.
Ben Gothard: So you were 16, you started your first business, personal trainer. And that’s an early age to start your first business. How did you know what to do? Like, where did that idea come from? And why personal thing?
Derek Gallimore: I mean, it was an easy step into business because I was at that stage then super into the gym, and exercising and weights and hanging around the gym a lot. And you get this a lot with like gym bunnies that then progress into being a personal trainer. So for me, it was a, an easy step into this entrepreneurship. But you know, it introduced me to the fact that to be a personal trainer, then in this gym, you had to pay like an overhead fee, to buy their access license. So introduced me into sort of fixed overheads.
Then all the concepts of small business, you know, how do you promote yourself? How do you outshine, compared to all the other personal trainers in the gym? How do you build relationships? But also how do you differentiate your service and because what I found with personal training is, you know, you can’t offer that much different to your competitor. And also, you could offer the best product or service, but a lot of the decisions with personal training was made based on your relationship with the person like if you got on great, you could still be training them bad. But if you had you got on great with them, then the relationship would last. So you know, I learned interesting things.
One of the significant things I learned with that, as well as you are just, it’s not very scalable, because you’re only trading an hour of your time for a relatively high fee. But it is an hour of your time. And I observed that personal training, businesses or franchises were very difficult to then build to build a hierarchy of scale because, you know, it was based on this relationship kind of environment. And you can’t necessarily photocopy your relationship or your style. So it’s, it was on many levels of a really good lesson about the early stages of business and how to kind of scale things.
How do you scale a business?
Ben Gothard: That was tremendously powerful lesson that I feel like most people don’t ever get, but like, the fact that you were exposed to that lesson or growth, but I’m not trying to diminish the fact that it took a tonne of work and effort on your part, then like you expose yourself to that lesson at such a young age. That’s incredible. And I feel like that is a critical mindset shift. That it’s hard to see it when you’re in it. And you’ve just been doing it that way for so long.
It’s like, well, I have to go to work, putting my certain amount of time, why am I in business, but like I’m self-employed, I have to go and do that in order to get paid, well actually have to, you can structure your business in a way that you don’t have to put in time to change money. But I think that that is a profound lesson to learn. So once you learn that lesson and lessons, and you saw like, okay, this is going to be much harder to scale. Did you continue with that business or do to do something else? What happened?
Derek Gallimore: I mean, I was always sort of going down the street from and I was getting a degree at that time, obviously, I was young at that time, I left school a year early, and the most I went to university a year earlier. So I was sort of progressing relatively quick, I got a degree, by the time I was was 18, or 19. Now, so I came out the other end pretty quick. But then, you know, I went and got a normal job, because of the stability. And also I was kind of 19 I moved country at that time.
I moved from New Zealand to Australia. So there was still a bit of activity, and you still learn within that environment. But you know, I was always frustrated with the nine to five I was immensely sorting of, I remember any routine that you had to do whether it was, I don’t know, turn up the same day at nine o’clock hour every day at nine o’clock was immensely frustrating to me. And I think that’s a bit of a sort of ADD child mindset. I’ve settled down a lot now. But it’s just the routine of things. And I was always looking for my little projects, my little venture. The weights of (inaudible)
Ben Gothard: We had a little of a connection issue. The last thing we heard was you always had your little side projects.
Derek Gallimore: So I always had my little side projects. And you know, it wasn’t popularised the way that it was now in terms of startups and incubators, and accelerators and pitch contest. So it was more of a lonely journey where you just had to carve out your path, but I was always kind of exploring those things.
Ben Gothard: Wow. So you went into college early? And you got out early? That’s fascinating. How do you think that, first of all, how did you do it? Second of all, how do you feel all like that impacting being so much younger than everybody else you’re surrounded by?
Derek Gallimore: I mean, I was only really, I suppose one year younger, I skipped one year, but then I was also a young child in my class. So it was just the combination of those which probably made me 18 months younger than the average kind of thing. And, but I was always one that felt frustrated with a school that I didn’t fit in that, you know, a lot of the education, a lot of the lessons we were doing were pointless, which again, it’s sort of an ADD child kind of issue. I don’t necessarily think that it’s all accurate.
I was super excited to get out of school, and be an adult, right, from probably, as early as I could remember, you know, 12 years old, I just wanted to be an adult wanted to be doing adult things in the adult business. And certainly, from my first kind of, you know, up until about 30, I always felt that I was at all things kind of thing, not trying to do more at all things ahead of my time. But now, I think it’s kind of caught up with me and a little bit.
Ben Gothard: And I’m curious, what was the decision of what you wanted to study in school? Because seems like you weren’t the biggest fan of it. And so you had probably something like, so what was that whole decision-making process?
Derek Gallimore: It was really just going along for the ride, and I think like your child or growing up, you have less, less control, less insight, and, into all these factors, and, you know, there are the sort of common courses you take, and I just took one of the common courses, safe courses, which kind of gives you a bit of foundational knowledge, but I didn’t really study that much, didn’t really absorb that much. So it was just really, I just saw it as almost a rite of passage and things that you have to do.
It was just that and I kind of did that goodbye as soon as I could, and kind of moved on. But I did, you know, I weirdly, eventually went back and did a Master’s, when I was in London because I felt that I just had to sort of hedge my bets with things. But, you know, generally, I’m sort of, I don’t want to encourage others to be but generally, I’m sort of relatively anti-institutional education kind of thing. I think that there’s a lot better education you can do on the street, or in apprentice in apprenticeships or kind of as you’re going through life.
Ben Gothard: So let’s say you’re back at the end of high school, or whatever, you whenever you’re making these decisions. So you have to plan a little bit and get it all. But let’s just say for the sake of the discussion at the end of high school, you can now decide, okay, I’m going to go do whatever I want. What’s your next step? How do you educate yourself at that point?
Derek Gallimore: I don’t know. You know, it’s very different now. Because there’s this massive ecosystem about startups and entrepreneurship and huge support systems, which is fantastic. And now, people go to university to be an entrepreneur, whereas when I think I was in education, and entrepreneur, and I think the true entrepreneurship is going down the path least trodden. And going against the grain, I think, fundamentally, you know, you look at Alexander Graham Bell that invented the telephone, and the guy that invented the electric light bulb, and all these people, they’re doing it by themselves against fundamental society saying it can’t be done.
I think now the system is changing, so that it’s becoming so easy to become an entrepreneur, that it’s actually really just like, a standard job, you sort of follow these processes, follow these steps, and then you’re an entrepreneur, and then you get funded, and then you have a start-up, and then it probably fails, and then you do another one. And now it’s just too mapped out. Whereas back when I was a kid, I think it’s a little bit like being in the closet, you kind of you has got to figure it out yourself.
It wasn’t so much guidance along the way, what would I do now, I would embrace entrepreneurship a lot more, it would be a lot more clearly defined. If I had a 2020 vision, I probably would have created like, a Google search engine, and then a Facebook kind of social platform. I mean, but you know, I think just embracing that a little bit more.
Ben Gothard: So that is very fascinating about the difference between entrepreneurship. What is this maybe 15-20 years ago? motion? And, and today, right? Which one do you think is better? Which one do you think is any other better is a subjective term. But which one do you think is better?
Derek Gallimore: I struggle when things get a little bit to institutionalize, and I think fundamentally, entrepreneurship is anti-establishment and contrarian, I think the fundamental definition of entrepreneurship is finding solutions to problems that haven’t been solved yet. And I think when the institution gets behind it, and then there’s this hard cut out path, when actually, it’s no longer entrepreneurship, and you will get, you know, a lot of people working on problems, you’ll get a lot of graduates going these pants, but I don’t think that it’s necessarily the best form of self-selection.
It’s good to have these support networks, all of these pitch competitions, and accelerators and incubators, and you know, Y combinator, they’re all incredible things. But I do sometimes worry that people now go down this path because that’s what everyone else is doing. And it’s not the right path for them. And they’re probably not that efficient in that scene. When when I was a kid, like 1520 years ago, the top of the top, they were all going to university doing finance, doing sort of maybe as a finance kind of, to get into the investment banks. And again, that was maybe my wall street kind of culture.
Now everyone wants to start in a $2 startup, you know, and that’s fine. But the startups are high risk. And if 99 or 95%, fail, then the averages are that if you start in startups, when you’re 20, you go through three startups, then the averages that you’ll be in three failures, by the time you’re 30, and then you’re picking up the crumbs of a career. Where’s you know, if you went into an investment bank, you would learn from the best bankers, you would you would be, it’s a bit like going into the army, you would, you would be put into this tough discipline this in this environment, and you would come out with a skill set. So I’m sort of worried about, you know, maybe 10 to 20 years from now, where everyone realizes this startup thing, you know, is a little bit patchy in terms of building good foundational skills, skill sets, discipline and things like that.
Ben Gothard: And that is a really interesting perspective. I’ve never thought about it that way.
Building a startup effectively
Derek Gallimore: It’s interesting. I mean, you know, and I have this thing because I’m in startups, I’m in my, my thing is the startup effectively, built businesses before I’m generally pro bootstrapping. But I just when there’s all this VC money, encouraging people to build and fail fast, then people don’t have as much skin in the game, they come up with an idea. They’re like, you know, I want to raise a million bucks. Three months later, they get tired, they hit a bump in the road, and then they wanted to start something new. And I think that when there’s a lot of money around, it’s great. But it’s sort of building a foundation of people just kind of throwing away ideas, money, opportunities, and things on them.
Ben Gothard: And that seems like, like a few layers of problems there. Because, one, it seems like so vast, in that you said, the people who that may not even be the best space for them, they get sucked up into that culture into that way of thinking, yeah, when I started, like, totally be an entrepreneur, but that might not be what the best in, I think everybody can be an entrepreneur. But I feel like you have to want, you have to want it because it’s hard.
I mean, it is hard. Maybe I’m doing it wrong. But it is hard. And like, I think to have people going into the wrong thing for them, like the wrong space. That’s not, that’s not a good thing. So you have people in the wrong position for that, right? That creates problems of its own because then the problems aren’t going to get solved, because money will be allocated to the people who asked for it. And a lot of those people are not the right people than that like you said that money wasted.
It’s the problems are going to be solved, the innovation is not going to happen as quickly as it could if the money went to the right people. But then you also have this whole, like a generation of people who probably don’t have the skills, or maybe they do but as you said, they haven’t been building anything sustainable, that continues to produce income for them. And so they have to keep starting up, but then the money may dry up so that there are a lot of problems there.
Derek Gallimore: Because not everyone is low. And it depends what you want to have a lifelike, you know, not everyone is going to be a high performer commits everything. And, you know, people shouldn’t necessarily do that person deserve just to have a good nine to five job where they go in, they do their work, and they come home and enjoy their life outside of the office. But a place like an investment bank can carry people, and they can still get a good career. And they can still do well, and they can still develop skills and still go on.
Whereas a startup, it’s, it’s, it’s all or nothing. And if you look at it, from a view, you see the point of view, they know they’re betting on horses, and they know that 95% will fail, but their numbers work out because 5% succeed. And then they make money. So their mission is complete. Whereas the 95% that fail, that is the vast majority of people that dedicate their lives and careers to this. And it’s just, you know, it is by definition of failure. And this is part of the normal system.
It’s a little bit of wire you, you spend the first 10 years of your career in failures. And these failures. It’s not just like, you know, it’s really hard work, and failure is depressing. And it’s stressful. You know, and you often don’t have the resources you need set for personal development and things like that. So, it is going to be an interesting situation, I think in 20 years when there’s been this whole sort of slew of kind of startup environments. Interesting.
Ben Gothard: Do you think there’s a nasty? Is there anything we can do to prevent that, or at least prepare for when that happens?
Derek Gallimore: No, I mean, you know, I don’t want to sort of pretend that I’m any kind of commentators sort of thing. But I would think it’s a trend, I think people will like anything, you know, Wall Street was a trend, and now no one wants to be on Wall Street. Because it’s kind of who wants to do a boring office job, I think it will just cycle around again, you know? And, something else will become popular. And a few people say, like, now people even don’t want to do startups or be an entrepreneur, because that is hard work.
People just want to be an influencer, you know, and the kids these days just want to be on Instagram or, you know, to sort of create a following like that. So, I think things do evolve. But yeah, but you know, it’s, it’s ultimately good for society to have this freedom and flexibility. A lot of economists said historically, that by this time, we shouldn’t need to work. And maybe this is an embodiment of that, you know, we start to chase more lofty projects, instead of, you know, 50 years ago, you would do an apprenticeship and go into a factory, and that was your life, and then you retire 40 years later. So maybe this is the sort of embodiment of more economic, self-actualization or something.
Ben Gothard: We’ll hopefully because those people are self actualize. And that would hopefully mean that they’re in the right place. Because before you get there, you have to get respect. And if you’re not good at what you do, ain’t gonna get no respect. So, hopefully, I hope and if that’s the case, that would be the best-case scenario, because I, if everybody’s doing what they’re the best at, and they’re feeling just rock solid on fire, totally crushing it.
We’re gonna have a very, very productive workforce. And that’s really good news. And like, we can all make the world a better place together. I hope that’s the case. I good. So I want to, I want to leave your story back into the narrative here because I feel like we went on a tangent, an epic tangent, but I want to go back to history. So you came out of university, you then enter the workforce? What position? What, where were you in the workforce? And then take us through the chronology until your next business?
Derek Gallimore: I mean, there was a last couple of years, really, I was just sort of bumping around fairly standard jobs. This is when I moved to Sydney, Australia from New Zealand, where I wear, it sort of grew up and trained. And then it was a couple of years, which then to me, was sort of 20-year-old or whatever, seemed like a lifetime. But it was just doing the standard office jobs, the standard sort of nine to five, the standard sort of things, which, which was informative.
During that time, I was also then also trying to explore and launch new ideas, just very sort of gently as a part-time thing. And then by about 21, I think I went to South America for a year. So I traveled around South America, I did the whole backpacking thing. And yeah, just basically kind of rocked around South America, kind of by being in there enjoying myself. That was a good
Ben Gothard: That’s awesome. Let’s talk about that year. Let’s talk about that year, where we’re all the places you go, what did you see? What was your experience?
Derek Gallimore: It was amazing. I mean, I flew into Argentina went to virtually all of the countries in South America, went to the bottom of Argentina, flew into one of the areas went to the bottom of Argentina, and then worked up through Chile, and then across to Brazil, and then sort of up, obviously, north and then went down the Amazon and Venezuela and Colombia. And yes, I go did that for a year, which is quite relatively common in Australia, New Zealand to do this sort of this overseas experiencing.
It’s awesome. But by the end, you know, I was still anxious to make my mark on the world. And I cut the trip short, and only did about sort of 11 months, because I’m wanted to kind of get on with my adult life, my serious life and start building things. So flew from South America to London, which was the next kind of trip. And then, you know, that’s where things by a lot of luck and chance and a lot of grit kind of started to gain a little bit of traction then so
Ben Gothard: well, let’s talk about that traction. What exactly that?
Derek Gallimore: Well, so I got to London, by then I was super hungry to establish something. And, you know, I was looking at the property market, the property was super red hot at that time in London. And after six months of being in London, after backpacking, and not having any credit record, I managed to buy my first property in London and started renting that out.
By about 24 years of age, I was a landlord, and, you know, managing this, this house of tenants in central London, so that that’s when I sort of got a little bit on the radar in terms of, you know, what I felt kind of achieving things. And then within six months, I had bought another place. And then within about three months, I bought another place, and sort of then got into this whole property development thing. Kind of took off from there over about the next kind of six to eight years, I suppose in terms of property development.
Ben Gothard: So you’re backpacking, and have no sort of credit for the past, what 11 months, and then you go and you somehow can borrow money or get a loan or something to purchase your first house? How did that go down?
Derek Gallimore: It’s crazy, radiant. And look, I think all of us are blown by the winds of luck and timing and, and the environment. I caught the tail end of a massive property boom in the UK. If I got there three years later, I wouldn’t have been able to do it. If I got there three years earlier, I have probably been worth you know, 100 x more now. So where I got their credit was still relatively easy to get, like these non-status loans. But yeah, I hadn’t, you know, I, I hadn’t been to the UK before I was born there. But I had no credit history. I was (inaudible) and I got a job and I’m worked double jobs.
Ben Gothard: Derek, you gotta cut out a little bit. All good. You said, you were in you were born in the UK, but you had no credit.
Derek Gallimore: So I was born in the UK, but I had no credit. And then when I got to London, I worked double jobs, I saved as much as I could and then bought this property. As soon as I could, went to a lot of mortgage brokers trying to get mortgages I refused a huge amount of times. And then eventually I was able to get the mortgage, I found the property that fit within that sort of criteria. And then I was sort of, I suppose I had made that first big leap kind of thing.
Ben Gothard: That’s incredible. So you started getting houses, houses, and so you’re building up your portfolio? What happened after?
Outsourcing from London
Derek Gallimore: So I mean, I built a portfolio, it was going crazy at that time, that was about 2004. I think I’m forgetting my, my dates now. But it was going crazy. At that time, you know, property growth was going about 25% per year, so you could refinance, I was then refinancing and buying more properties. I was then renovating properties, I was then splitting as you did in London, you would split big houses into three apartments or whatever refinancing.
By about 2008, I bought a building of about 10 apartments, which was super exciting, and sort of my biggest thing. And by then I had about, I suppose 21 apartments, you know, worth kind of, sort of towards, I don’t know, about 10 million bucks, I suppose. So it’s going well, and then the financial collapse happened, which obviously, hit the US and, and the UK. As soon as I bought that place, there was a run on one of the banks, and that was on TV with people lining up outside. And so an amazing time to live through. And remember, I was safe, though my properties were safe, I was able to make repayments, I wasn’t exposed to the downside.
It just meant that financing really, basically froze, and I couldn’t then continue doing what I was doing. So I had to look for a new avenue, a new, I suppose, job and new business. And then out of that, I got into service departments or kind of corporate housing, as they call it in the US, that was 2009, which was the kind of same birth year as Airbnb. So you know, it was quite interesting.
Then over the next nine years, I built this service department portfolio up to about 250 apartments in Central London. And we then basically evolved alongside Airbnb, in terms of usage and popularity and things like that. And then in 2016, I had to shut that company down. So that was the full cycle of that. But I bootstrap this company up to about 20 million in revenues, annually. And but then, because Airbnb based started flooding he market with extra stock, there was huge margin compression. And we really couldn’t make the numbers work. So I ended up shutting that down, which was, which was.
Ben Gothard: So then, so you built this empire? And then you shut it down? What did you do after that? Did you just go lay on the beach? And, you know, hanging out for a bit? Or did you immediately get back into?
Derek Gallimore: I mean, it was very hot, it was about sort of nine years in building this. And by then I had had two very significant successes, you know, obviously, with my property, and then this business, and I was, I don’t know, maybe, whatever, the early 30s. So, pretty successful, then, obviously, in the kind of downward spiral of this business, that was a really hard sort of 12 to 18 months, where you’re obviously trying to rescue the business, you’re trying to pivot, you’re trying to do everything you can you’re trying to fundraise.
I also sold a lot of my properties to put into this business to try and save it. And then it didn’t, you know, and I close this down, I lost millions of dollars, I lost the last nine years that I invested in into this business. It was really, really, really hard. But, you know, you learn a lot, super, super stressful, super horrible situation to be in. But then as soon as it was over, I felt quite energized. Again, because it was the prior sort of 1218 months that were just exhausting and horrible. And you do your best.
I did go to the beach, I went to Spain, south of Spain, and kind of sitting on the beach for a while, and started building my next businesses then. But it was only a matter of a better word week. I was exhausted. But after the business shut, it was my energy came back. I felt my creativity came back. And I could start kind of exploring again and more the creative side of entrepreneurship again. So within about a week, I was super, super energized. And back on the horse.
Ben Gothard: What a roller coaster.
Derek Gallimore: I know. Right. That’s entrepreneurship.
Ben Gothard: So what would you say? having built something that big? And then having gone through such a difficult time? It’s like, like, you know, like, we were saying the earlier question, what were some of the biggest lessons that you took away from that?
Derek Gallimore: I mean, as you live in learn, and like, one of my biggest lessons is not to do that, again, like, I’ll try and avoid kind of losing my company’s my all of my assets. But, you know, there are billions of factors. And there are billions of decisions that you make within the process. I don’t want to be too vague. But I think it’s very difficult to consolidate stuff into a little book and say.
This is how you make a million dollars, this is how you prevent losing a million dollars, because there are so many factors but, and but you learn a huge amount, through going through things through the experience of things. And, you know, I believe, after 20 years of business now, that I am a very seasoned business person. And I think, you know, you only learn when you’ve been burnt and scarred, you learn incredible things, then, you know, one of the major lessons I learned was the power of platforms. And this is now why I’m applying the platform business to my new industry, which is outsourcing. We in service it’s not to go too deep into it, we were a supplier.
We provided the service of the service departments, we had very heavy capital, expenditure, very heavy, fixed costs, huge sort of commitment upfront to infrastructure. And I saw these platforms like booking.com, and Airbnb come in, they don’t need to provide any hotels, they can just concentrate on the sales cycle, they’re effectively very cost-efficient. They don’t have any investment in any infrastructure. And they can take the vast majority of the margin. So you know, that was one of the big lessons I learned. But obviously, that’s not the sort of universal lesson that anyone can take anywhere kind of thing.
Ben Gothard: So that, but I think that is valuable because you’ve been on the side of creating the supply. And, you’ve seen the platform-centric business, just be the middle person, and snap up a lot of that profit margin. I mean that, like if somebody’s listening, and they’re like, should I go on the supply side? Or should I make it, make it platform or marketplace or something like that, or this could be could help them make that decision? I think that’s very helpful, especially given all the context, the context of your story. So let’s talk about that. Let’s talk about outsourcing business. And you built it what exactly it is, let’s get into the details.
Derek Gallimore: So I mean, I’ll give you the sort of spiel, and then we can dig in a little bit deeper. But, you know, outsourcing has been going 25 years, it’s always really been, it’s just staff augmentation. So you’re getting instead of staffing in the US or the UK, you’re getting staffing in another country. That is significantly cheaper, maybe 70% cheaper, historically (inaudible) the big conglomerates that could access this. And it’s been going 25 years, and it’s a very proven model. And it’s highly successful used by all of the big companies.
But in the last 10 years, it’s been accessible to small and medium-sized businesses. And, but they’re not aware of this opportunity yet. And they’re not aware of how they can harness outsourcing. And it’s my mission now is to show small and medium-sized businesses that we are in a globalized economy. There are 8 billion people on this world on this planet, there’s probably about for three or 4 billion earning less than $1 a day, there is an opportunity to equalize salaries, which is a huge opportunity to get incredibly well qualified, hugely committed people working for your business at a significant discount to what you would be paid locally.
Fundamentally outsourcing is remote based working, taking advantage of the cheaper environments that some people live in. And it’s a win-win. And it’s a move towards a globalized economy, where we are choosing the best people based on their merits, not on where they were born, or, you know, the sort of lottery of life. So, super interesting. We have as I said, outsourcing has been going 25 years, but there’s no aggregator platform to help people explore, and search and discover and learn about outsourcing. So so we have created this platform.
Ben Gothard: Well, I just want to say I’m a massive proponent of outsourcing. And working with people from all over the world, like, I would not be able to do all the things I’m doing. Like, I have a team that helps with Project egg. And basically, what the way I’ve set it up is that obviously, I’m here right now this is me. So I’m doing the interview, right, but the way I have it set up is with technology software and a team.
My team can then take the interview the content, and build the graphics, do all the internal stuff, get it published to the right platforms, make sure everything was taken care of, to whereafter, after the inner light after this interview, I’m pretty much hands-off. And I’m so grateful that my team exists and that they have chosen to share some of their time with me. Because it is like a huge weight and a burden off of my shoulders that I can focus on the important things, like being present in this conversation. And, being able to speak to incredible people, I feel like that’s what’s going to move the business forward.
Now, the little back office stuff, but the little back over stuff has to happen. To happen. So I’m a huge problem with social. So you said you are the new the platform is diving into outsourcing. So are you more education-focused or more providing? Like, let’s dig into that? What exactly are you doing?
Derek Gallimore: Look, it evolves. We provide a spectrum of services, without getting too confusing. It’s a little bit like Alibaba, how they originally now they’ve changed what they do, they do everything now. But originally, they aggregated Chinese manufacturers, these Chinese manufacturers basically would have had bad websites or no websites, they generally had bad English and didn’t know how to connect their business to the west. And Alibaba came and aggregated that it put them into a listing made pricing a simple so that consumers could understand that what was on offer and engage easier with them. And then Alibaba in the west, obviously, helped promote fundamentally Chinese manufacturing to the smaller, medium-sized consumers in the west.
Now, you know, it’s a very similar analogy, because there’s always been Chinese manufacturing outsourced from the US for maybe 30 years, 40-50 years. But Alibaba kind of opened it up to the small manufacturers, to the small and medium-sized enterprises in the West. And it kind of facilitated easier communication, easier education, and understanding, but also trust as well, you know, radical scale. Yeah, absolutely. And so, you know, the market can not only make the marketplace can not only make things easier, but it can create a market. And you see that today in the US, you can get a 13-year-old boy watching Shark Tank, he comes up with an idea, he can get online and have his idea manufactured for him in China, that could not have happened 20 years ago.
It’s because of these platforms that facilitate things and make it easier than they kind of create a market that maybe wasn’t there before. So what we do in terms of outsourcing is quite similar. Outsourcing is relatively advanced, what I mean, it’s very advanced, but generally, their online presence and their sort of online marketing aren’t up to scratch, and it isn’t where it should be. And outsourcing is one of the only industries in the world where the suppliers are in one country and the consumers are in another country very similar to Chinese manufacturing. You know, because if you want to find a plumber, you know, it’s a local market, local, local, whereas if you need to find an outsourcing supply, and you rely on these platforms to help connect people. So that’s what we’re doing. And we help facilitate this.
Now, people don’t, a lot of people don’t know what outsourcing is they don’t know how to best harness it, they don’t know how to protect themselves and use it properly. And, and scale team so so we offer to search and exploration, but we also offer advisory and hand-holding and helping people structure their solutions. So we do the whole kind of range.
Ben Gothard: That’s exciting. Now it would seem like you probably need an educational component to you so that people can understand how to better utilize the outsourcing opportunities or to better take advantage of the right outsourcing opportunities. Firstly, because I know so many people that they talked to me about this, I’m like, okay, but you can charge like 200 an hour for your time.
But you’re doing something that you could instead pay somebody $20 to do. If you just outsource, say, you know, sensually come in here, hey, $180 per hour. That’s a good trade. the math works in your favor. I feel like there are so many people who maybe they just think that is out of their budget. Or maybe it’s just too complicated. So, I think they’re, I think they almost have to be an education side of it. How are you tackling that? That piece of value?
Outsourcing is delegating work
Derek Gallimore: Look, it’s and this is where, you know, outsourcing is no different to employment. And people over-complicate what they think outsourcing is, and I just try and pull them back and go, Hey, it’s just employing someone except they’re not sitting beside you as they would have in the 1980s. You know, and now it’s done. You’re still colleagues or whatever employees or workmates, but you’re just then communicating through tools like Asana or Slack or Skype or, or messenger or all of those, you know, and this is why outsourcing is becoming more prevalent.
I believe that we’re hit this tipping point where suddenly everyone will be outsourcing is because in our normal day, even if you are sitting in the same office, you’re probably not talking and you’re probably coordinating your work through email, Asana, Slack, and blah, blah, blah. So it’s hitting this tipping point in terms of technology, enabling this new form of the work environment. But then it becomes apparent that why if you’re sitting in New York, New York’s a big city, I don’t know how many people it’s got, like maybe 10 million.
Why do you limit yourself to New York, when the US has 300 million? Does North America maybe have 600 million? The OECD has, you know, 2 billion I’m making these numbers up. But and why today’s modern world? Are we restricting ourselves to who can I find locally, when there’s this whole world market out there? And why get someone in New York for 10 grand a month, when you could get someone three times as qualified with a Ph.D., sitting somewhere else for three grand a month. And you know, this is a super exciting thing. But in terms of outsourcing how you do it.
That crosses over into sort of management, consultancy, management fundamentals, you know, how you build a hierarchy structure, how you delegate work, how you build processes, and process mapping it becomes quite deep, and a lot of people get stuck on outsourcing, not because it’s the outsourcing layer, it’s because actually, they’re going through this process of learning how to build a company, and manage people and build processes. So as an advisory, we have to sort of unpacking that a bit. And very commonly, it’s not the outsourcing is the bottleneck, it’s just people are going through this process of learning how to delegate and, and scale and build the business, which is a super exciting phase to be in.
Ben Gothard: It’s super exciting. And I think some so many people struggle with delegation, that, that’s like, I’m so happy that you’re doing what you’re doing this, I feel like so many people need it. And again, it’s one of those things where, let’s say we get everybody to start outsourcing, get their build their teams and have stronger, better organizations, and helps everybody. It is a win, win more businesses, more entrepreneurs can be successful, like, absolutely 100%.
Because we are the backbone of the world economy. Like, that’s what, that’s why I get so fired up about this. Like, that’s why I love doing the show so much. Because we’re providing value to entrepreneurs, aspiring entrepreneurs, beginner entrepreneurs, entrepreneurs who are already kicking ass like that. Yes. Yes. So I’m so I’m so glad that you do to do so.
Derek Gallimore: And it’s a huge opportunity, you know, because and look, outsourcing, let’s face it is a little bit ethically challenging people to go, what about jobs back home, the US people are gonna have to work for this. Look, there is an inevitability about the world becoming one marketplace. You know, I’ve read this thing the other day that when Amazon started in only 1999, there were 16 million people online, that was their potential audience.
Now there’s 3 billion so Amazon, if there was still only 16 million people online, Amazon would be a fraction of the size that it is now. And it’s because everyone is coming online. And there’s this world marketplace happening. And it’s good because you know, you can sell Project EGG, not to your hometown, whereas it previously would have been restricted to that, and you have a potential audience of 8 billion people. So there’s pros and cons to all of this, it also means that you can then access staffing from all over the world as well. People have to reframe this in that we are becoming one world economy, and it won’t happen overnight.
But in 20 years, because of all of this online communication, no, soon, we’re going to have virtual reality, a lot of easier interfaces, that we’re all going to be one marketplace, and you can’t stop it. But it’s not to say that outsourcing will hollow out employment, it just really augments the opportunities for you to become a profitable business for you to scale more for you to pay what make more profits, pay more taxes, but also for you and your staffing at home in the US to make more to do more valuable work like get the less work get the non core work done by non core people and get the highest value things done by people in the US and within your community. So, you know, it’s evolving, and it always has evolved and always will evolve. It’s inevitable, but it’s generally a very positive thing.
Ben Gothard: Absolutely. As I looked at my analytics a lot, Because I like to, I like numbers to understand. And what’s amazing to me, is that just in the past three days, or less a second, just in the past seven days, project, the project in the show has been listened to by people in over 50 countries. Crazy, deep deep.
Derek Gallimore: I can’t even name 50 countries.
Ben Gothard: That’s incredible. That is insane. To think about like, that is so weird to think that I’m sitting here speaking to a computer. And you’re not only are you on the other side of the computer, hearing me from your computer, like thousands and thousands of other people are hearing us talk. And people from so many different countries like that blows my mind at love about like the world becoming a global economy. Because, you can complain and say, Oh, well, that’s going to drive the price down have some work?
Well, but you don’t want to be doing that work English, that’s not the good work, you should be going for it. Yeah, like, what that also means that there’s going to be a world full of opportunity. So much opportunity. Like, for example, one of the people that help me out one, one person on my team, she is in the United States. another gentleman on my team, he is in India. And I have built out the system to where the gal here the United States, she’s more of like a manager level operations. And, and so she helps you really, and I’m so grateful for her. And if you’re listening, you know you are Thank you, you’re the best.
She has a huge bandwidth of like, mental capacity and in the work capacity, that like I paid her very fairly for that right. And so because of the globalized market, she can command a higher, higher value, she can keep me into higher-paying. And so she’s doing it right. She’s doing it right. And, but she’s embracing the leadership position and management position. And so when we have access as business owners, we have access to labor and help support that is cheaper than an alternative. Like, it’s the same quality, but it’s cheaper. For you, that’s just a no brainer. Unless you’re trying to waste money. You have to eat it. But that opens up the opportunity for the further for everybody else.
Derek Gallimore: So of course, but economic activity is good for everyone. And it’s changing and evolving what economic activity means, you know like podcast didn’t exist five years ago, you know, it’s crazy. And now, people are making money from podcasting. And it’s building a podcast economy, that is fantastic. That was not here five years ago. And, you know, there’s a lot of people around the world that are working like for you, and podcasters all earning money, putting fuel into their economy, feeding their family, and this is a brand new industry that it didn’t exist, you know, it’s incredible how things evolve, and people can very, you know, get fixated on what they’re losing, or what ending or the fears, but, you know, no one’s really celebrating the economy that’s about to boom, in podcasting, you know, and it’s crazier.
I use this example, in about 1890 the Greenwich Mean Time was invented, created, which was the standardization of time zones. And the reason why that happened was this was in England, because before 1890, what they invented steam trains, which meant that people could get quickly between cities, and the towns in 1890 didn’t have in the UK, which is one-time zone did not have standardized times. So you would go from one town and it might be 4 pm to the next town, and it might be 2 pm to the next town that might be 3 pm, they did not need to standardize times, because people never traveled between towns. And now, you know, people are travelling, like between towns all the time.
They standardised time. But now, you know, people, our generation are flying to countries every month or every week or every day. You know, and then as you said, like we’re on Skype and you could connect with and you’re connecting with 50 different countries, in one simultaneous kind of release is just incredible. And this is this movement towards there being one world economy. And one of the benefits to that as well as (inaudible)
Ben Gothard: (inaudible) But the last I heard was one of the benefits (inaudible)
Derek Gallimore: Maybe I’ve lost my train now. No, but one of the benefits is big cities have far more productivity, you get the best universities in big cities, you get the best innovation in big cities, you don’t get, you know, innovation in small towns. And that is because of the network effect. When you have good schools, they produce good workers, when you produce good workers, they produce a good business point. And, and it kind of comes an exponential positive feedback mechanism. What we used to have was a lot of villages, then they were collections of big cities.
Now there are countries, but eventually, we will have one world economy, which is 8 billion people connected. And when you have connections of a billion, then there’s going to be an exponential kind of enhancement in productivity in results in production. And it’s super exciting. And people need to see that as an exciting thing. Instead of Oh my god, someone’s going to take my job kind of thing. Because I do genuinely see it as it’s an incredible opportunity for humanity.
Ben Gothard: Absolutely. I love that you said opportunity. Because newsflash, everybody, if you don’t do anything about it, and you just can’t wait for it to happen, it’s gonna bite you in the ass. And that is when that is when you shouldn’t be afraid, if you’re not willing to do anything, you just want to kind of hold on to your ideology of like, what you think things should be, instead of looking to see what things are actually becoming, that’s what you should disappear. But it’s an opportunity, right? Because if you put in a little bit of work, to shift your skillset, or position yourself to be, you know, like a, like a leader, right?
A manager, if you can manage people if you can lead people tremendously valuable skill, right? But that, just that was a tangent, but you can position yourself and look ahead five years, like, what is something that’s going to be here, that may be more important? In five more years, position yourself, they’re positioning yourself to be an expert in something that you can claim as yours, right? Because a billion people, there will be so much opportunity, I mean, there already is an unlimited amount of opportunity. Like, even if every single person act on every opportunity that they saw moving forward, like, we still couldn’t possibly tap into all the opportunity, opportunity that there is in the world, right?
Let’s just put that out there. With a global economy. It’s like that, but on frickin digital steroids, like, That is amazing. That is amazing. And so you’re going to have so many more people who can buy your product or service? Or who you can work for? Or who you can work with like, oh, I’m so glad the conversation here, because we’ve never talked about this on the show. haven’t talked about recently. Amazing. Amazing, man.
Technology and outsourcing
Derek Gallimore: Now it is, it’s exciting, you know, there’s going to be a lot of change. And you this is the thing about changes that fundamentally change, good 51% of people benefit. Ideally 100% benefit, but there will always be wins and losses with any change, and this is why changes resisted. And if it is 49% that lose out, then that is a tough change. But the net result is still positive. And you know, throughout history, there’s this kind of evolution is continual little changes, and some people, maybe 51% win, sometimes 51% lose, you know, but it’s kind of this, this painful change evolution that we’re going through, but fundamentally, things are getting better, life is getting a lot better, you know, none of us have to go down coal mines anymore.
If you do, you’re wearing a sort of protective clothing, and you have machines to do the work for you. There’s life is getting pretty good for everyone. And, you know, it allows us to do things like this, which is more creative, more kind of exploratory, more cerebral. And you know, you’re then not even editing your tapes afterward, you can get that done by people. And I suppose that’s moving towards that self-actualization of work, where you can do the things that other kernels it’s sort of the kernel of the venue, and then the rest gets done for you, which kind of, it allows society to get closer to what they want to do. Always add value, and be more productive in that. So it’s exciting.
Ben Gothard: Super excited, and can’t even begin to imagine, when you when we start tapping into virtual reality, what that’s really because I could see a future and I’ve said this a couple of times before. I kind of see this feature where, let’s say you have eight remote workers, employees or contractors. Everybody can put on their little, you know, headset, sci-fi, sci-fi headset, like zone into it, right. But imagine like a virtual conference table where you can be like with all of your people, but they’re wherever they are the world, but you’re all together with virtual reality. So you could have like, a whole virtual workspace and the conference room.
I think that is coming. And I don’t think anybody’s thinking about that. I think everybody’s seen by virtual reality forever yell, I mean, for stuff like that, like, like more entertainment. But I think there’s going to be such a big push in the professional space in the business space to think about, if you could try on a pair of shoes online, without ever having them out. I mean, first of all, I think that poses a huge threat to a bigger threat to brick and mortar stores. But also, like, we’re talking about so much more productive. It’s almost like bringing on remote workers because they’re all there’s gonna be profound impacts.
Derek Gallimore: Sure. Now the technology is, it’s happening, it’s happening. It kind of seems slow. But I think if you look back in 10 years, you’ll go Wow, that was that’s changed that. But, I think the result is virtual reality coming through the, in terms of remote work, because remote work is is like a cousin to outsourcing. And there is this whole remote work movement of people just in the US may be working from there like, kind of traveling around the US or going to Bali or, or Thailand and having very meaningful careers?
Fundamentally, I’m, I think that in an ideal world, productivity is it at its highest. If everyone is sitting shoulder to shoulder in the same office, you know, I still sort of think that fundamentally, people work better, because, you know, people then work and, you know, like, I’m, I’m a pretty fit, disciplined guy, but I have never been able to work out at home. Whereas I go to the gym, and I’m like, well, everyone’s working out. So I suppose I’m going to work out and I’m sorry, that everyone sitting at home when they’ve got a sofa there, they’ve got Netflix there, they’ve got pop going, there’s a lot of distractions, that could hinder productivity.
So I believe that the old the ultimate is kind of sitting shoulder to shoulder in an office environment. And so I, you know, I don’t know whether this is sort of self-sort of affirming that I believe that ideally, you have two offices, you know, one of them is in your hometown, where you are sitting, you have a core of staff there. And then you have a sort of outsourced team, somewhere lower cost, ie the Philippines, where they are then sitting together as well. They can have their team meetings, they can get leadership, they can have their water cooler moments where they’re discussing work over lunch. And that then becomes very powerful. I think as technology improves, you know, as you say, we’ve got VR so we’re all sitting around a conference table, we’re kind of there, but not there.
Think then that that need for being beside each other will be diminished. But until then, I still think that there is the highest productivity when whenever on sitting around the same office because then you have that sort of organizational momentum and inertia and culture and things like that. Interestingly, I can see a future when there’s a lot of different pants, you know, a lot of different choices, a lot of different options, which is, again, super exciting.
Ben Gothard: Super exciting. And I think on that exciting note by wrap this on up. Derek, I want to thank you so so much for coming on the show today and sharing this time with me. It’s been very special. And I just want to say thank you very much.
Derek Gallimore: Absolutely. Thank you. It’s been fun.
Ben Gothard: And to everybody’s watching, listening. I want to thank you all from the bottom of my heart. Your time is very, very valuable. and grateful that you decided, share with us today. Thank you. I love y’all. Y’all reason that I do this. And thanks very much. I’ll see y’all in the next episode. Thank you.
Derek Gallimore: Okay, that was me being interviewed by Ben Gothard of The Project EGG podcast, and I encourage all of you to go and have a listen to his Project EGG podcast if you like the sound of it. As always go to outsourceaccelerator.com/254 if you want the show notes for this episode, and if you want to ask us anything, then just drop us an email to firstname.lastname@example.org See you next time.