E123: Under the Hood with Rob Hampton Part 1 – How to Effectively Manage Filipino VAs

Have you ever hired a Filipino VA and was so pleased with them that you felt like you hit the jackpot? They're incredibly talented, they get things done the way you want, they're just downright fantastic. With them helping you out, you get more time to focus on business direction and you couldn't be happier. But then, and seemingly for no reason, your incredible VA suddenly disappears. What just happened?

Rob Hampton, our guest for today's Under the Hood episode, experienced just that. This, along with many other problems such as declining work quality and failing to communicate regularly, is not an uncommon problem in the outsourcing world. But building a team of loyal Filipino VAs is not impossible. It boils down to one thing: understanding their culture.

We've managed to put together a team of awesome Filipino VAs who've been with us for a while now. They've done tremendous things for our business and we would not have grown so much in recent years if not for their help. Rob and I discuss how to build such a team, and how to manage VAs in a way that fosters a long-term relationship.

In more detail, we discuss:

• what his niche is and how he came about selling on Amazon
• his early experience getting betrayed by his own supplier and how he bounced back from that
• his experience hiring Filipino VAs
• cultural differences between Westerners and Filipinos
• how much freedom to give them while still holding them accountable
• rules to set when working with a VA for the first time
• pay structure, and whether VAs should be paid a fixed monthly/bi-weekly salary or paid hourly instead
• benefits such as 13th month pay, paid time off, and company lunches
• tips and best practices on communication

Hiring people is challenging, but when you hire someone with a different culture from the other side of the globe, things get a lot more difficult. Filipinos in particular are known to be loyal and have a knack for making people happy, and it's not in their nature to knowingly do things that will disappoint you. If you put in the effort to understand their culture, traits, and customs, they will stick with you and do wonders for your business.

Resources mentioned:

EcomCrew courses
Under the Hood
Episode 96: Our Philippines Team – Hiring and Maintaining a Team of Rockstar VAs

If you want to be featured on your own episode and get free business advice from us, sign up to be an Under the Hood guest here.

This is just Part 1 of my conversation with Rob. In Part 2, we discuss how to effectively scale his company and reach his goal of $1 million revenue this year. Stay tuned for that on Thursday! Until then, happy selling.

Full Audio Transcript

Mike: This is Mike, and welcome to the 123rd episode of the EcomCrew Podcast. Don’t forget you can go to EcomCrew.com/123 to get to the show notes for this episode. And for this episode we're doing our sixth rendition of the Under the Hood segment with Rob Hampton. So glad he could join us today. Rob sells musical electronics. We're going to dig right into that after this introduction.

But I also want to remind everybody that you can go to EcomCrew.com/underthehood to be on your very own episode of the EcomCrew Podcast, and do the Under the Hood segment with us. I've really been enjoying doing these. We're starting to run out of applicants for it. So, definitely head to EcomCrew.com/underthehood to sign up today.

We have a few of these in the can, but I definitely want to get some more done. I really enjoy doing these as I said, and again today Rob Hampton on the podcast. I want to thank him for coming on. Hopefully he got a lot out of this. I really enjoy doing these as I've said before. And we're going to dig right into Rob's interview right after this introduction.

Mike: Hey Rob, welcome to the EcomCrew Podcast man.

Rob: Hey Mike, thanks so much for having me, really excited to be on here and chat with you.

Mike: No problem. I'm glad you were able to come on. So just so everyone knows, this is our Under the Hood segment where I interview podcast listeners and try to give them actionable advice on their business. And the format of it basically is me asking questions of the people who come on first so I can get an idea of their business, and be able to give them advice depending on kind of where they're at in their life cycle of their business and stuff like that.

So I get a good understanding of their business and then we go into them interviewing me phase, and trying to answer as many questions as we can for them. We try to do these in about an hour and either make them a 30 minute podcast, or two 30 minute podcast parts to kind of equal the hour. So without any further ado, let me just jump right in. The first question I've been asking just more of a personal curiosity from this person is how did you get into ecommerce?

Rob: Yeah, so I actually got into e-commerce a little over three years ago. My dad was selling some stuff all wholesale, and he had some stuff that there were some issues with mapped violators and he was just wanting to offload some product. So he actually said, hey do you want to see if you can sell this on Amazon?

He was selling all on eBay. And I said, yeah sure I'll give it a shot thinking maybe I'd be able to sell the stuff that he sent to me over the course of a few months. And it all ended up selling in the course of about a week. And so that definitely got my interest peaked very quickly, and so that launched a journey into wholesale. And I did wholesale for a little over a year and actually sold that business to get startup capital to do my own brand.

Mike: Okay so the wholesaling you were doing, you were buying from existing manufacturers that either didn’t have MAP pricing or regulations about selling on Amazon, and then just sold their stuff on Amazon for them.

Rob: Yeah and I ended up kind of more than just being another seller you know one of one hundred on one listing. I was really pursuing the route of how can I add value to their brand by what I'm learning from guys like you with listening to podcasts, and how can I make the listing better. So I would go to these brands and I would say, hey, I see you’re selling this product, can I improve your listing and take care of all of your Amazon sales for you as a wholesaler? And so that was kind of my approach, and it worked pretty well.

Mike: Got you, and I think three years ago there was definitely a lean for that. I think that that's even been arbitraged now. I’m not sure if arbitrage is the right word but it's become a lot more competitive because there's a lot of people that go out there and try to find these types of companies, and now those ones that haven't had their brand improved are becoming fewer and fewer.

And it's a shame because I mean we've done it for a couple of companies ourselves in our niches where we have relationships, and it's been it's been great for us. But yeah there's definitely not a whole lot of those out there, and at the end of the day you still don't own the relationship. There is no guarantee that it’ll continue.

Rob: Yeah very true.

Mike: Cool so I guess then about two years ago it sounds like you sold the wholesale business, raised some capital and then dove into what I'm guessing was a private label brand?

Rob: Yep, and now the private label brand is kind of morphing. I'm doing a hybrid model of private label and original product development. And the goal is that I will move entirely original designs in the future, and the private label stuff is kind of funding that.

Mike: Got it excellent. So let's talk just real quick, what niche are you selling into?

Rob: I’m in the electronics category.

Mike: Okay electronics. Excellent and so it's been about two years, so let's talk about sales each of the two years, what did you do? And I guess it would have been 2016 and then where you were at for 2017.

Rob: Yeah 2016, I think total revenue was probably right around 100,000, and then this year has been a major down year because I ran into some issues with my manufacturer. I was selling a Bluetooth product. And Bluetooth has come to right now quite complicated. You need to get a license from Bluetooth for a number of different things.

And so I jumped through all the hoops for Bluetooth, and then my manufacturer ended up seeing how well I was doing on Amazon, came in, undercut me, and actually ended up using all my Bluetooth licensing information. It was just this whole debacle. So I spent the last six months kind of recovering from some of that and just launched a original design that was similar to the original private label about a month ago and launched another private label product about three months ago. So I’m probably all that said probably at about forty five maybe 50,000 for this year, and hope to finish at around 60.

Mike: Okay. I’m sorry to hear the struggles you had there. Unfortunately business is never just a straight road up. We've had our share of struggles and it sounds like you're at least kind of on the other end of that now, and I definitely wish you the best of luck in 2018.

Rob: Thanks.

Mike: And as far as margin on that, on the on the 50K let's say or 60K you plan on doing in 2017, what are you netting on all that?

Rob: About 30% on average.

Mike: That’s definitely a great net margin man, so you're looking at a 15K profit on your 50K?

Rob: Yeah.

Mike: Excellent, and do sell just on Amazon, or do you have other channels as well?

Rob: I sell on my own website which is hosted through Shopify as well as eBay. But I would say about 90% of my sales come through Amazon, and the other 10% through my website and eBay.

Mike: Okay so 90% there and I put like a five on eBay and five on your own website.

Rob: Yeah it’s about that.

Mike: Got you okay. And moving through like 2018 and 2019 like what are your goals? Do you have like a revenue goal you’re trying to get to; are you doing this full time right now? I'm guessing at 50K you're probably doing this as a side hustle, is your goal to be able to do this full time or what are you thinking there?

Rob: Yeah, so this is a side hustle right now. I am hoping that about eight months from now it could be a full time thing. And I actually really appreciated Dave's kind of reverse engineering your goals in a couple of podcasts back. And I'm taking that approach where I’ve decided, okay I want to do a million dollars in revenue next year, so here's the steps I need to do, and here is the amount of products that I need to do, I need to launch to reach that. So that's next year's goal is a million in revenue.

Mike: Got you okay. And as a part of like extrapolating that out, have you been able to determine if you have the cash flow to be able to do that, because that's a big jump to 10X yourself or more for next year?

Rob: Yeah that's definitely something I'll be needing to figure out. So far I’ve bootstrapped everything and I haven't taken any loans out, but I will probably be looking into either a business loan or potentially an investor. I’ve had a couple of people approaching me about investing. So I am very softly exploring that idea as well

Mike: Got you okay excellent. So I guess let's kind of dig into some of the things you're struggling with a little bit. I might have some more questions from me later, but I think I have a pretty good overview. I mean it sounds like you’ve been at this for a couple of years. You had 100K first year, a little bit down here this year. You have two private label products, so it's primarily from just a couple of SKUs.

You're looking to grow to a million dollars next year which is going to require more capital, more SKUs, and just kind of growing the brand. And right now you're doing as a side hustle and looking to eventually get in the full time. So it gives me a pretty good understanding of what you're doing. You were kind enough to share with me the exact niche, the exact products you're in. So I was able to look at that for a few minutes and get a little bit better understanding of exactly what you're selling.

So I guess probably a good time to just start hitting me with some questions and let me see how I can help.

Rob: Yeah cool. So I think as I'm thinking about scaling and I'm realizing just my own time limitations, I'm realizing one of the first things I need to do is get more of a team around me. That said, we’re a small startup, and being completely bootstrapped financially it’s definitely not going to be local. So I'm primarily looking at the Philippines, and I know you have experience there.

So I've actually hired some Filipino workers in the past for a couple of different things, a little bit for product research in the wholesale category and a fair amount for graphic designers. And so I have a little bit of experience with it. I've used onlinejobs.ph primarily, but none of the relationships have lasted long term, and I think that's my fault. I need to figure out what are the cultural differences that I need to just communicate better, work with them better.

So to give you a specific example, I had a graphic designer who is just fantastic. The guy was absolutely incredible. But his communication just wasn't very good. He would not respond for a few days, and I wouldn't know what was going on. And so I ended up being fairly direct with him and just saying, hey, you do a fantastic job, but when you drop off for days at a time I don't know what's going on, and here is the negative effects of that for me. What can we do to make this better?

And I definitely got the impression that I kind of embarrassed him. And from what I've heard about the culture, embarrassing is definitely a huge issue. So yeah that would be one example of I need better cultural understanding I think, but at the same time I need to be able to keep employees accountable obviously. So what would be your thoughts there?

Mike: Was he a full time guy or just like a part time contractor?

Rob: He was full time.

Mike: Yeah, that's interesting. I mean I think that obviously there was like unwritten commitment I guess if you're hiring someone full time that they wouldn't have a problem with the responsibility and getting back to you. I mean it really is kind of not excusable in my mind. From as far as cultural difference things there, I mean embarrassing somebody I mean I think that that's probably not something to do in any culture. But I'm not sure that just being direct with somebody like that is necessarily embarrassing somebody. I think it’s just being direct and open and honest, and if they can't handle that, that's probably not good.

I don't know, our team in the Philippines just does an amazing job. I think the culture there is awesome. But a lot of it stems from just my general feeling of like how to treat people in general, but also how to adapt to other customs and not make them adapt to us. So I mean the things that I've instituted there and let it be very well known is that they're working from the Philippines, we need to adapt to that stuff. So it's the 13th month pay as a for instance, their holidays, their hours.

I've also learned that they love food. So they always say if you feed us well, we'll treat you well kind of thing. So we do a lot of company lunches and things like that. And it helps because we have a team and they are all there together. But just like our team here in the US or anywhere else that would have a team anywhere in the world, we try to reward them for doing a good job and letting them know how much we appreciate them. I think that's really important.

For me one of biggest issues or the thing that's really helped is having just a great manager there. So someone that understands me really well, who can communicate all that stuff on a day-to-day basis. So it's not just a couple of random employees here and there. Having one centralized office with a manager I think definitely helps keep that culture in check, because she's communicating with me all the time, and making sure that they understand how much we appreciate everything they do.

But we hold them — I mean it wouldn’t be acceptable as if they didn't come to work on time, and didn’t get their job done, didn’t communicate with us. So I mean we’d make a change. I think everyone there knows that. Just because we're nice and respect them, and treat them well doesn't mean that we don't also expect a high quality work from them in exchange. So it just might have been a bad luck thing kind of for you or whatever.

Maybe it's just as you hire somebody, setting those expectations on day one so you’re not necessarily putting them in a position of embarrassment could help. Just saying, hey look, these are the challenges I see. I'm here, you're there, you're working these hours, I'm working different hours. We need to make sure we're communicating well. I mean we put Basecamp in internally to help with this.

That's something else you could look at just having tasks and assign things in Basecamp. So instead of me having to constantly wonder what they're doing, we have like daily updates. They type in and give us an update on what they're working on every day just at a high level, and we assign tasks within Basecamp with due dates and have comment chain on things so we can communicate back and forth. That certainly seems to help. So that might be something else you could do as well.

Rob: Yeah, so I have set up some systems in place for project management. I’ve been using Trello for assigning tasks and that sort of thing. I haven't moved over to anything like Basecamp or Slack for communication, but I'm thinking I'm probably going to need to go that direction because Trello is not really built out for that quite as well. So I’ve mostly just been using Skype for actual back and forth communication.

So how about — so you mentioned understanding their working hours and that sort of thing. Another thing that I've run into is I hired another guy and really wanted to give a lot of freedom. I'm looking to have time, freedom, and flexibility with having a business. That's much of the reason for pursuing something like this, and I want them to be able to really enjoy what they do and have freedom as well.

So originally with the couple workers I’ve hired, I’ve told them, hey, you set your own hours as long as you are working 40 hours a week, and you'll be salaried for 40 hours. I don't really care when you work as long as you get the job done. And with the few people I've had it hasn't seemed like that lack of structure has worked out so well. Has that been your experience? Is a lot of structure better I guess would be the question?

Mike: I think it is. I think that this is a universal thing whether it's a Filipino employee or someone in the US. I don't know, I've done a hybrid of all of this or one way or the other over the last 15 plus years since we've been in business or hiring people. And I love to just tell people they can come work any hours they want, I feel that you need to be a special kind of person to really be able to pull that off. And most of those types of people are entrepreneurs, they are self motivated and driven.

I think the average person looks for that structure, and I don't think that that is in a negative connotation in any way. I just think that it helps to — this is a job that probably compartmentalize things, and know that they need to be there certain hours versus being a self-starter and just doing things any time that they feel like. That's more of an entrepreneurial mindset.

And there’s different mindsets and personality types that fit better for different types of jobs or circumstances. I don’t know, I think it's better to just say like these are your hours, you set the hours that you expect them to be there and get daily updates or whatever based on what they did during those hours, and it probably would work out better.

Rob: Okay yeah. Do you try and overlap the hours that also that you and your team are working for an hour or two at the same time every day?

Mike: Yeah, that's actually a very important thing that we do. So they come in at 7:00 AM Filipino time which is either 3:00 PM or 4:00 PM our time in California. And the reason we do this is we're in the office in California till five, and so we get at least one hour half the year, and then two hours the other half of the year with them. And I realize that 7:00 AM is a little bit early. We want them to be able to work basically nine to five if we could, but we had to kind of push it a little bit to that 7:00 AM number.

And as it turns out, they're actually quite happy with this because the traffic in the Philippines especially in Cebu where our office is, we've been there a couple of times and seen it first hand is like just ridonculous. So it actually helps them significantly being able to come in a little bit earlier, and actually a couple of them have been electing to come in even earlier like at 6:00 AM on their own, because it's better for them. They get into the office a lot easier and then they can beat the traffic on the way home.

But for me like that's one thing I’m like not — there's lots of things I'm willing to bend on to try to help with customs and productivity and just them being happy in general. But that's like the one thing I'm just like you guys have got to be there at 7:00 AM. So we have our guys in our office are able to work with you for at least an hour a day, which is more than enough time. If you have discipline at 4:00 PM every day to talk to your Filipino counterparts, that's more than enough time to get everything done that you need for the day.

And then for me like I also just because I am who I am and how I am, I'm on Skype until I basically go to bed. So like if they have any other questions that they need from me — and they try not to bother me with too much stuff, but if they need something, I'm there on Skype to answer it whether it be six o'clock at night or ten o'clock at night, I can still help them out.

Rob: Is most communication going to be written through Skype, or do you actually call from time to time?

Mike: We do call from time to time, but the vast majority of it is written. The phone calls that we do are once a week. We have a company meeting that's a video phone call. And if there's anything that needs like any type of screen sharing, so like if we're demoing something on how to — train them on how to do something, we'll do a video call and screen share with them at that time. There's a conference room in our office that they'll do that from just so they cannot be bothering other people in the office. But yeah, for the most part it's just chat, there's no need to do a video call just to kind of see their face I don’t think.

Rob: Yeah okay, but you do a weekly video call for a whole team meeting sort of thing?

Mike: We do, yeah everyone in the California office and everyone in the Philippines office all gets in, in one of two rooms, either one room here or one room there, and we have a team meeting.

Rob: Yeah, that's been something I've been thinking about implementing as well. Cool, one other question on the Filipino team side of things is pay structure. Do you generally — would you recommend hourly or salary?

Mike: I think salary is way better. I mean these are people that are looking for stability and a long term commitment, and salary definitely conveys that like a lot more than hourly does. We ask them to work five nine hour days with an hour off for lunch, so it's a 40 hour a week job. And it's just a salary position.

Rob: Okay cool, yeah that's what I've been doing. It's just the time hasn't actually been adding up to 40 hours. So I've been wondering if maybe they're just not as used to a 40 hour work week, but it sounds like they are. And maybe I've just had a couple of one offs and I need to improve on my communication I think.

Mike: Yeah, I don't think that that's a problem at all. I think in fact from what I gather most of them are working six day weeks for traditional companies over there and longer than eight hour days. So we give them a better quality of life than I think that they're used to in general.

Rob: Got you. What other sorts of benefits, bonuses, I know you mentioned 13th month, what sort of things do you think through there?

Mike: Yeah so I mean that the 13th month pay is — it's actually interesting when we lived in Costa Rica they had a similar program there. But basically it's the first year that they're there it's prorated. So if they work six months, they get half of it and then obviously if they're there for the full year they get a full month's extra salary in the month of December. So we just pay them that in one lump sum on December 1st. So they get paid for the month of the — from I guess the month of November on December first, and then also a full 13th month.

There are some other things we're looking through, some challenges that we're trying to work with. Not being a Filipino company we can't offer like the social security equivalent of what they have in the United States or Medicare type equivalent what they have in the United States. So we're looking into that and trying to see if we can potentially long term provide even more benefits. But we are still struggling with that because it's not easy obviously putting all that infrastructure together.

We give vacation time. We're really good about family time if there's like a family emergency. Unfortunately we're dealing with one of those like right now. One of our employee’s mothers unfortunately just passed away. So we're trying to make way for dealing with things like that. A lot of Filipinos don't live on the same island as their relatives do. This is a pretty typical thing where the Philippines is made up of thousands of islands literally, and a lot of them come from some of these smaller towns and villages to come to the cities to work.

And relatives get sick or they need to go home maybe and spend time with them, we make sure that we allow for that. One of the saddest things I remember the first time I went there and we were interviewing was just noticing a lot of people don't seem to stay at a job more than a year. I just saw a lot of job hopping.

And I remember asking about that like specifically, and almost every response was, oh my mom got sick and I had to go back home, and they wouldn’t give me the time off, so I had to quit my job. Or my dad got sick, my brother got sick, whatever it was it was almost always like a family member having like an ailment, and the company just being like screw you, there’s like another person in line. And that's certainly not how I would ever want to be treated, so we don't treat them that way either.

And again making sure that they feel like they're part of the team and are respected. I think a lot of times what you see happen in American cultures especially Americans that don't travel the world and understand like how the world works is there's just a position of like being cocky or arrogant, because we're Americans or whatever.

And what's really like quite frankly pisses me off that people act that way and that kind of prevails and when they hire a Filipino making significantly less than a US salary and not thinking about like you how the world is globalized and everything is relevant, and that these are human beings just like any other human being in the world and they should be treated that way. And unfortunately I think a lot of westerners don't do that.

So not to say that you would ever have done that, please don't take it that way, but just be thinking about that because a lot of other western companies are like maybe treated them that way that they expect that and it takes some time to earn trust that you're not that way. And that certainly hopefully is going to prevail now that we've been able to go there and visit them in person, and they know like how we work and how much we do respect what they do, because they do an amazing job.

Our Filipino team, without them I mean we would literally be probably half of what we are now in terms of sales, because they've been able to help us so much, and our team has done such an amazing job for us, and we let them know in every chance we get like how much they mean to us. So I think that that type of stuff is really important. And when you're not there in the room, it makes it that much more difficult. So we do the best we can there.

Rob: Cool, yeah I think that definitely answers the questions I was thinking through with the outsource team, that was really helpful.

Mike: Awesome. And that's a wrap at least for now. We're about halfway through the interview with Rob. We will be back on Thursday with our second part of this interview. Again if you have any comments or questions, you can go to the show notes for this episode by going to EcomCrew.com/123. And don't forget you can also be on your very own episode of the EcomCrew Podcast in the Under the Hood segment by going to www.EcomCrew.com/underthehood. Until the next episode everybody happy selling, and we'll talk to you then.