Big Talk About Small Business
Hosted by Mark Zweig and Eric Howerton. Our Mission is to inspire, empower, and equip entrepreneurs with the knowledge and insights they need to succeed in their ventures. Through engaging conversations with industry experts, seasoned entrepreneurs, and thought leaders, we aim to provide valuable strategies, actionable advice, and real-world experiences that will enable our listeners to navigate the challenges, seize the opportunities, and build thriving businesses.
Big Talk About Small Business
Ep. 102 - Nearshoring: The Future of Global Business
Ever wondered what happens when you combine the grit of Latin American talent with the innovation needs of US companies? Brian Samson's journey from San Francisco tech executive to nearshoring pioneer offers a fascinating roadmap for businesses seeking alternatives to traditional outsourcing.
Nearshoring—the practice of outsourcing to nearby countries rather than across the globe—emerged for Brian as a solution to the exorbitant costs of building tech teams in Silicon Valley. What began as a cost-saving measure in Buenos Aires, Argentina, quickly revealed deeper advantages that transcended mere financial benefits. The economic turbulence that forced restaurant menus to be written in chalk (due to hyperinflation requiring frequent price updates) had created a workforce that was inherently adaptable, resilient, and creative in finding solutions.
Unlike traditional offshoring to Asia, where hierarchical structures often separate clients from actual workers, Latin American professionals engage directly with US companies, offering unfiltered feedback and collaborative problem-solving. This cultural alignment, combined with conversational English fluency rather than scripted responses, creates partnerships rather than just service relationships. As Brian explains, "You're talking directly to the software developer... they have an opinion and they're very comfortable sharing it with you."
After scaling his Argentina-based development team to 80 people, Brian expanded his nearshoring vision to include a Recruitment Process Outsourcing business with 55 Latin American recruiters supporting US tech companies, and now Plug Technologies, employing approximately 85 developers distributed throughout Latin America. More recently, he's diversified by acquiring local home service businesses in Hawaii, applying business modernization principles to traditional industries.
Whether you're struggling with traditional outsourcing models, seeking to scale your technical capabilities, or simply curious about alternative business strategies, Brian's insights demonstrate how looking south rather than east might be the strategic direction your business needs. Ready to explore how nearshoring could transform your operations? Connect with Brian and discover the untapped potential of Latin American talent.
We are going to talk about nearshoring and the business that you're in. Honestly, I'd never heard that term until they said, hey, we've got this guy named Brian Sampson is going to be on our show. He's got a nearshoring company. I'm like what the hell is that? So?
Speaker 2:tell us about that. Happy to share more.
Speaker 1:So, yeah, I'm not normally in this studio, brian. I'm doing this solo because Eric, my co-host, couldn't be here today, no worries. So you're just going to be stuck with me.
Speaker 2:Mark, there's something cool.
Speaker 1:I just found out, you and I are both are both salukis.
Speaker 2:Oh, you're a saluki right yep, wow, we gotta keep.
Speaker 1:This is part of the show. Now we're gonna talk about this, brian good uh as, as we get into another episode of big talk about small, of Big Talk About Small Business, I'm Mark Zweig and I'm here without my co-host, eric Howerton, but I do have Brian Sampson as my guest, and Brian is, I just found out, a Saluki.
Speaker 2:Yep, yep, great times in Carbondale, illinois, man when did you graduate from? There 2003.
Speaker 1:You were probably right before it really started to decline.
Speaker 2:When I was there, there were 25 000 students yeah, um, we were kind of the last hurrah of the big halloween, oh yeah were you?
Speaker 2:yeah, you got to participate in that huh, yeah, they, uh, they canceled it for a couple years, like totally shut the campus down. You know, like if you live far away from home, you decide to figure something out. There's you could, you could not stay on campus. That place was crazy, yeah, it was, it was wild. And then they opened, they, they. You know, let's, let's give another try. And halloween was just the most. You know, still, 20 years later, it's like the most crazy couple days I can remember have you been back to carbondale since you got?
Speaker 2:um, so I actually live in hawaii today. Um, okay, and uh every argentina or somewhere uh, well, uh, I did. I Well, I did have a lot of experience there. But every year, my wife and our two young kids, we try to go somewhere for three, four weeks and show them something so they don't get too sheltered in Hawaii. Sure, they pick up some Midwest values, like I had, and my wife grew up abroad.
Speaker 1:So you take them to Krusty Carbondale and go. This is yeah.
Speaker 2:Now let me ask if there was a pizza place called Quattro's?
Speaker 1:Oh yeah, that was still there, I think the original one. I, if I'm not mistaken, was up at champagne urbana and they did one in carbondale when I was there. Yeah, it was deep dish. That was a big thing at the time, yeah, so we, uh, you remember summer times were pretty sweltering there.
Speaker 2:So, oh yeah, we took um, actually like late September, early October, I'm thinking we're going to see beautiful fall colors, but it was just as hot as it would have been on July 4th. So we were, you know, going back and forth between the air conditioned student center and five minutes in the stroller. That is funny, you, you know, that's where fainter hall is. That's where I used to do this.
Speaker 1:Yeah, but yeah, it was great yeah, fainter is one of the worst design buildings I've ever seen in my entire life. I I that opened up when I was there. Okay, yeah, but we were all like what the heck is? You got to go outside to get to another part of the building. What's that about? But anyway, it's so funny. I just recently rejoined the board of the College of Business there no kidding, okay, in fact, when I was on it, when you were in school down there, but um, but anyway, we could talk about Carbondale all day, but I, we did go to the Saluki ball as the guests of the Dean of the college of business.
Speaker 1:Um and uh, we were just down there here um uh in in uh spring and really recent yeah. It was recent, it was great. Uh's been fun being back in carmondale. Real estate is dirt cheap there. Did you happen to look at that?
Speaker 2:oh my gosh, I have uh, one of my all-time best friends. Um, I met while I was there and he decided to stay, you know, raise his family. Yeah, he bought this uh, 17 acre spread in uh carterville, which is right next door, sure, and uh, you know, beautiful house, 17 acre spread, and uh, you know he's his kids can run around, it's safe as lets his dogs out. They, you know, go in this big pond by his house.
Speaker 2:It's probably 300 000 for the whole setup, all of that yeah I don't doubt it, and you know I think about how expensive it is where we are. Oh my gosh, you know, every once in a while, you know the the simple life of southern illinois is is tempting I, I get it.
Speaker 1:I when I was there, I had a trailer. I lived out in giant city road yeah, yeah in uh wildwood mobile home court.
Speaker 1:You talk about cheap living. We paid 2230 for it and lot rent was 50 bucks a month. Oh gosh, I had no payments on it, just paid my lock rent. I rented out the spare bedroom to a dude for 70 bucks a month, so I was 20 bucks ahead. Oh my gosh, Look at you. And anyway, it was good times. But that's not what we're here to talk about today, although it is really fun. We are going to talk about nearshoring and the business that you're in. I honestly I'd never heard that term until they said hey, we've got this. Guy named Brian Sampson is going to be on our show. He knows he's got a nearshoring company. I'm like what the hell is that?
Speaker 1:So tell us about that I'll be the sure.
Speaker 2:more so, I'm sure you've heard of the term outsourcing and probably even offshoring before.
Speaker 1:I've been involved in it and I can say unfortunately on a certain level, but yes.
Speaker 2:Yeah, most people that are senior in their careers have probably worked with Asia sometime or another Usually India, maybe China, Philippines. If you've had an issue with United Airlines, you probably have called their 800 number and been connecting to the Philippines.
Speaker 1:I can always tell yeah, we had Philippines for outbound sales and some other kind of marketing support, and then India for IT, and then india for it and accounting. Yeah, yeah, so yes that was when I yeah, anyway, go on, tell us. So we've had yeah.
Speaker 2:So you know, late 90s you probably saw signs from, like the steven friedman. You know the world is flat. Call centers in India, all this stuff is kind of popping up. Us companies are starting to get arbitrage and leverage from offshoring work. So you know that's been going on forever. And what's interesting is so I've been in the nearshore world for about 10 years. Interesting is so I've been in the near shore world for about 10 years and you know, even in the early days of talking about it, I would first plant it around. Have you ever worked with you, ever done offshore before? And everyone had right, like, everyone had that experience. The next question is well, what was your experience? And no one was neutral. No one was neutral. They either thought it was the greatest thing that ever happened to them because they rewrote their whole code base for $4 or something like that. Right, or never again. Over my dead body, will I ever try this again? But nobody was like, yeah, it was okay, my wife in the latter category.
Speaker 1:Before she was my wife, she was my financial manager in the company. When I got it back from the private equity firm that destroyed it, it was taken over by its lenders and we got these offshoring companies, as I mentioned, to do the stuff that was done and she would be pulling her hair out and making calls at 1 am to India. Yeah, so you're right, people are opinionated about it. I have seen it work in some places. You know we've got some engineering firm clients that we worked with that have had great success doing stuff in India and places like that, excuse me, offshorings pretty mature right now.
Speaker 2:Um, the the labor part of it has really been commoditized. So if you're going to offshore, it's really about a race to the bottom with price, and that's that's where everything is. And if you ask anybody, well, why did you decide to put your team in India or the Philippines or Thailand? Cost Cost is always the number one driver, and in 2015 is when I started my near-shore adventure. Came home one day and I was working on a thesis and had an investor and uh saw this need for I was living in san francisco at the time saw this need for uh companies to build mvps minimum viable products for fintech companies. Yep, and uh raised a couple, but I realized that would get us nothing. In San Francisco, as we talk about costs of Carbondale, you know Sure.
Speaker 2:Yeah, you know. So we decided to keep sales in San Francisco but put our development team in Buenos Aires. I came home one day and told my wife, hey, good news, we got the investment. What do you think about moving to Argentina for a little while? And she's like, yeah, sure, so we we didn't have kids at the time and ended up living there for about a year. In Buenos Aires, which is just a big mega city with about 14 million people Not as many tall buildings as, say, New York or Chicago. There are some, but a lot of like what Paris probably looked like 50, 60, 70 years ago. And I saw this really interesting quality of life, you know beautiful tree line streets, amazing architecture, some of the best food I've ever had If you want the best steak of your life. I always tell people go to Argentina If you want the best Malbec of your life, go to Argentina.
Speaker 2:So you've got all these great things going for it and it's also dirt cheap. Why is it so cheap? Why are software engineers so cheap? Well, there's a lot going wrong for it, but it's not the fault of the population and I think that's what. If you don't travel or think about life outside the US, you'll see a news headline and kind of blame the people for the government's decisions. So the people kind of take the hit line like um, venezuela bread line or riots in wherever, or um, you know, I'll pick on venezuela again. The currency is, you know totally worthless, like the paper is a worthy thing anymore,
Speaker 2:but that's not the, that's not the people's fault, it's the leader's fault. And very similar to Argentina. They were one of the wealthiest countries in the world pre-World War II and then 80, 90 years of just terrible mismanagement, bad inflation, really bad inflation. So bad that when we visited and I've been there nine times many menus are written in chalk because they have to update the prices so frequently. Right printed menu is a real luxury there. Um, you know, and long queues, labor strikes, volatility, just it's really hard to do business. This podcast is running businesses. It's really hard to do business when you don't have stability.
Speaker 3:You don't have stability in currency.
Speaker 2:You don't have stability in government. You don't know what laws are going to back you up, sure. So as I started to kind of weigh these two things, I peeled the onion back. You know one level deeper and as we're talking about our frustrations with United Airlines and the call center and everything, I realized that it's it's not a fault of their own, um, and the byproduct of growing up in an environment like this is these people are flexible, adaptable. They've overcome really hard things in their life, starting from birth. You know like it's just hard, right. They have to overcome hard things In, I think, 2000,. Up until 2000, they tried to peg the peso to the dollar and then realized it was worth nowhere near what the dollar was. And to avoid what we went through in 1929 with the bank run, they had to lock up all US dollars. So overnight people lost like 80% of their life savings.
Speaker 3:So there's this inherent distrust but it's not their fault.
Speaker 2:So these are people that have had to become really creative problem solvers, really clever again, flexible, clever again, flexible, adaptable, gritty. And then I think about well, as an employer, aren't all those things things that I want in an employee, right? Yeah, of course, of course I do, sure, and most people I know do. And to top it all off, english fluency in Argentina is among the best in Latin America and it's US style English. It's not the scripted kind that I personally feel when I call the call center in Asia, and if I go outside the lines we're in trouble on that call. So I'll stop there, probably a little bit to unpack.
Speaker 1:No, don't stop. So this is why you decided to move to Argentina. Yeah, Because you saw this opportunity that existed to employ these people productively. Is that right?
Speaker 2:That's right. Yeah, so we grew a whole dev team to about 80 people there and it was great, it was absolutely fantastic. We grew a whole dev team to about 80 people there and, uh, it was great, it was absolutely fantastic. We had a culture that really aligned with the U? S, really really aligned with U S um clients, um, the uh, the.
Speaker 2:The team understood how the US worked, like how the US mind worked. You know, and many times companies they might say they want it done like a very specific way, but they understand like things come up and you have to look at software, for example, but it could be your marketing plan, anything. And that also means you want the people on the ground to share their feedback and advice. And you're in good luck with Latin America, where it's a little hierarchical but nowhere near as hierarchical as Asia. So if you were to work with a team in India, you've got your software engineer doing the work, but there's like eight bosses and then the big boss is who the US client is interacting with. It all trickles down, all trickles up. You never talk to the real software developer. That's not the case at all in latin america. You're talking directly to the software developer. There's not all those people in the middle because culturally they're okay pushing back right because, they've got all this passion.
Speaker 2:If they think your architecture or design or and I'm making the software specific, but this could be anything, you know, this could be your business operations workflow. This could be how you're setting up your call center, the tools you're using. Whatever, these guys have an opinion and they're very comfortable sharing it with you and also, okay, disagreeing with you, right not, everyone not everyone wants that with the partner. But yeah, but many do, many, many, many. They need to hear it.
Speaker 1:I've had limited experience with software development projects, but usually it's been bad. You always get told another six months, another six months, another six months, another 200,000, another 300,000. It just burns it up and then you never get what you want. But so, yeah, somebody who would be honest with you and give you feedback that you need to hear as an ignorant person like myself, that would be valued. I would appreciate that. Yeah, same.
Speaker 2:You know. Give me the feedback, give me, give me what's going on on the ground. Don't cover it up because you're worried.
Speaker 1:I'll yell at you for being the messenger that is very interesting uh thing that you just pointed out there. I mean you're right about india, that rarely do you ever talk with anybody who actually does your work, whether at least that's been my experience with the counting. They dole everything off to somebody else.
Speaker 1:And then the other thing is the caste system really has been a problem when it's competent people are not allowed to move up or be the one that you talk with. There are some good people that are competent, but you don't get to deal with them and they don't ever get moved up in the hierarchy of the outsourced service provider.
Speaker 2:Yeah, that's right. It's not a meritocracy.
Speaker 1:Yeah, it's not, and that's a very interesting point. So let's just back up for a minute now, so that you got started in this nearshoring. How did that happen in this nearshoring? How did that happen? I mean, did you just start this company because you thought argentina was a good culture, or were you part of another company, or what happened?
Speaker 2:yeah, I'll back that up a little bit because I think the story is a little funny and that. Um. So I was. Uh, you know, 2015 had spent, excuse me, had spent, excuse me, I'd spent, excuse me one second Mark.
Speaker 1:No worries.
Speaker 2:In 2015, I had spent five years in San Francisco. You know, I grew up in the Midwest and I was kind of getting tired of the culture there. It was really tech focused and that's all anybody ever wanted to talk about. Sure, it was good for my career but, you know, five years of long hours, people just wanted to talk about work and tech. So, um, and I also was thinking about grad school at the time and, you know, doing my mba. My wife happened, uh, to be american but grew up in korea and japan. Her dad was an expat for a hotel company, so he was setting up hotels out there. So she kind of opened my eyes. You know, I was midwest kid like, uh, you know we would go to wisconsin for vacation. You know, not hong kong, right?
Speaker 1:just just went there. Uh, two weeks ago it was an eagle river oh, yeah, yeah yeah, so where did you grow up? In did? Did you grow up in Illinois?
Speaker 2:Yeah, I was in the suburbs of Chicago. You know wonderful childhood Sure, but Midwest focused right.
Speaker 2:You know didn't really venture out. So my wife kind of opened the world to me. We thought, huh, you know it could be kind of interesting to try to be expats in Asia. You know that sounds really cool. You know I'd been there before and you know saw the modern skyscrapers of Singapore and Shanghai and this could be really cool, yep. So I ended up getting into this MBA program with UCLA Anderson, which most people know. There was a joint program and the other school was National University of Singapore and not many people on this listening might know, but NUS is the number one school in Asia. But you know we're so ethnocentric here in America, you know we don't. We don't know anything outside of you know Harvard and and stay right, yeah but anyway, I thought NUS would be my ticket to Asia.
Speaker 2:So I got in you know going back and forth between Westwood, california and Singapore and you know I ended up meeting the guy who would be my investor for this fintech business we talked about. And you know we were starting to talk and you know my first pitch to him was you know, he was running a big company at the time in China hey, you know how about you hire me as an expat in China? You know I could work for you. He's like well, how's your Chinese? Oh, zero, can I just give by in English? No, that wasn't going to work.
Speaker 2:So we started talking more and he really agreed with me on my idea around the need for MVPs to be built across the board with San Francisco and New York fintech companies. You had these companies that had product-driven, finance-driven leaders, no problem getting capital, pretty clear product vision and totally agnostic to how it was built right? So, um, okay, if I can't be an expat for you in china, maybe I can run this. You know we'll run this, you'll fund it. So, um, the world was kind of my oyster for a minute. You know like, well, where, where should I put this? And maybe I can make turn this into a whole expat experience. So you know, my wife and I are having a lot of fun like looking at the world map and you know and I'm talking to different- people yeah.
Speaker 2:Why, you know like, what would life be like in Taiwan? You know?
Speaker 1:what would life be like in wherever we do that with italy these days yeah, yeah, that's my wife's favorite is italy. And then you start looking at the houses. You go, wow, we can get a really great house in italy for the money.
Speaker 2:My god yeah, yeah well, now that this program is. You can like buy it for a dollar.
Speaker 1:You just got to fix it up those things are beyond rough and difficult to redo, though I mean those, those are ridiculous, but still, yeah, I, I know what that's all about, that fantasizing about living somewhere else yeah, so we had this world is our oyster.
Speaker 2:Yeah, and um ended up, uh, you know, after long conversations with a lot of people, uh, the dart fell on Argentina, so um came home that day, you know, to my wife and um.
Speaker 1:Now, were you living in Singapore or you're living in the US?
Speaker 2:We were in San Francisco, but trips to Singapore, trips to LA, a lot.
Speaker 1:Okay, yeah, you said Westwood. I was like that's, that's LA dude, yeah, yeah.
Speaker 2:Yeah, so, um, but we, you know we had a, an apartment, no kids, not a lot of strings. It was sure Much different than my life is today. You know we're, we're, we're pretty planted. You know kids get their schools, you know, but at the time, but right at the time, you know it's a, it's a different story, free and easy. Yeah, yeah, a lot of different. And, um, you know, I was lucky enough to have this wife who was very understanding and open to adventures and, um, it was just kind of ironic because, you know, originally I was looking at a place like Singapore, right, I think, is rated like first or second in the world every year, and ease of doing business, no corruption.
Speaker 1:It's beautiful, it's clean, it's yeah.
Speaker 2:Yeah, like stable, no volatility, the currency. I looked up a currency chart the other day and like 15 years in a row it's been like this with the dollar you know, just straight and then ended up in argentina, which is probably the polar opposite of singapore in every single way.
Speaker 2:You know, it's chaotic, chaotic, dirty. See, right, um, it's not that dirty. It's not like india dirty, but right, but it's. But it's dirty in how they do things. Like it's very corrupt, right, uh, very corrupt, um, you have no clarity. So, like, if you're going to go through the process of starting the business in Singapore, it's like three steps. You do it all online, gets processed the next day Right In Argentina. You know, I hired this lawyer named Mariano, you know bilingual down there, and I'm like, okay, like, let's do this for real, let's set up our real entity in Buenos Aires and go through, we'll have payroll and everything Okay. But you know, brian, it's not a guarantee. What, what do you mean? It's like a kind of a sit down to tell me there's no Easter bunny. This is a complicated place and only by the grace of God and the bureaucrat you're assigned to will your paperwork be approved. I'm like, okay, like whatever, mariana, you're just trying to build this up for me, maybe, so you can overbuild.
Speaker 2:But we prepare this packet and we go to this, we meet like three months later because it takes a long time to even get this appointment, and I'll just take an aside because it's kind of funny. So in the meantime, I wasn't waiting. You know, we still had people that we hired, so, um, I would pay them in us dollars. Now, the problem is you can't get us dollars easily in argentina, or you got to overpay for them. So, um, I would have to go to uruguay, which is right next door Argentina and Uruguay. For those that don't know, it's like the Switzerland of Latin America. It's safe, stable, secure. A lot of the banks are there, sure. So I would come home some days, you know, from the office in Buenos Aires. Honey, let's take a romantic trip this weekend to Colonia, colonia, uruguay, and take the ferry over. It's like this old, ruined site.
Speaker 2:But in the meantime, every eight hours or as long as I'm allowed to, I'm maxing my ATM withdrawals and getting US dollars. But we go out for a nice dinner. But anyway, back to the beer crowd, getting US dollars. But you know, we go out for a nice dinner, Sure, but anyway, back to the bureaucrat. So we're at this building that looks like it's like a regular DMV kind of building. You see all these nervous people wearing suits, you know, and these plastic chairs kind of sweating and this like big number. You know that they're calling the number. So eventually they call us.
Speaker 2:You know, mariano is like no confidence, just like really worried, carrying this binder full of stuff and hoping we get approved. So we sit down and the bureaucrats kind of go in through everything he got my passport, you know all that stuff. And then he, you know, starts to. You know it's Spanish. My Spanish got better when I was there but it wasn't fluent. So you know he's talking to Mariano, but I could tell, I could tell something was wrong. So he tells Mariano there's a problem. Brian doesn't have a power of attorney form signed. And I'm thinking, well, why do I need a power of attorney? I'm right here.
Speaker 3:This is me.
Speaker 2:Like I can sign everything myself right here and Mariano's like see, I told you, you know, by the grace of God, like sometimes they just make up rules and I think you know there had to be. You know there was some sort of exchange between Mariano and the guy to get us through that.
Speaker 1:Yeah, I got that, so you did get through that though.
Speaker 2:Yeah, we eventually opened up shop and started in this little dank co-working space and eventually a nice beautiful building, the house, 80 people. Meat is a big part of the culture there, so we had our own, what they call parrisha. You might know about parrilla, but they say shh in Buenos Aires instead of the L's like Y's, so we had a parrisha just right outside. We grilled steak every Friday for the team bar in the office. All this stuff. It was great and built that for about four years, and you're selling services to US-based companies with your team, that's right.
Speaker 1:And they're mainly software companies, mostly software companies.
Speaker 2:Mostly software companies that were mostly in the fintech space. We had a specialization and ran that for about four years. Revenues hit about $4 million and then we started to have a family. I was living in Hawaii by then. We we started to have a family. I was living in Hawaii by then and, with no kids flying to Hawaii and San Francisco, a lot is. It's fine, you know, like you do what you do, but once, once we started to have kids, I didn't want to do that anymore. You know it's it's a long, it's a long way.
Speaker 1:I've done that slog. I was on the board of a company in Honolulu and I lived in Boston. Oh yeah, yeah, that's a long, long slog, that trip.
Speaker 2:I get it, yeah I mean, even when you get to the mainland, you know it's five, five and a half hours. So, yeah, so it was pretty brutal. I didn't want to leave my young kids, my wife, at home for too long.
Speaker 1:But why were you living in hawaii? What drove you there? If your business is in latin, america.
Speaker 2:Yeah, that's, that's the question of the day. But um, we, we love hawaii. You know, I'd rather suffer, suffer on an airplane and when I'm and be, and live in a place that has the best quality of life, than than the inverse I got it Okay.
Speaker 1:So you're running this from afar now.
Speaker 2:Yeah, yeah. But you know, hired good leaders. You know, and that was actually an interesting point too with Argentina and actually, as I've gotten around Latin America, with Mexico, nicaragua, colombia, so forth, it's not just the first level talent. The managers and leaders are really sharp, they're really good, they're good motivators, they're good managers. You can delegate a lot. So I would. I would wake up and I would kind of read the trail of what happened while I was sleeping, right, and oh, a problem came up, because it's business Problems come up. But wow, like I'd see how they responded to it and most of these things were solved. They weren't just bubbled up for me to deal with when I woke up.
Speaker 2:They were solved when I woke up. Wow, yeah.
Speaker 1:That's unusual. Every business owner's dream.
Speaker 2:Oh, incredible yeah. But anyway, I ended up selling my stake in that company but was all in on Nearshore. So I set up two other companies over the last couple of years that are all in on Nearshore. So I set up two other companies over the last couple of years that are all in on Nearshore. One is an RPO company that stands for Recruitment Process Outsourcing, basically leasing referters.
Speaker 3:And in the 2021 hiring boom.
Speaker 2:That was a really good company to have. We had about 60 VC-funded tech companies as clients Everybody from Credit, karma to Superhuman some big names out there and we had 55 recruiters. Almost all were in Latin America and they could speak perfect English. The candidates in the US these were for companies that were only hiring in the US needed recruiters who could keep up with the demand of hiring. So they were really good at sourcing tech companies, really good at screening, doing all the write-ups, navigating, getting through the offers, and this is a really interesting opportunity because we set up a recurring revenue model.
Speaker 1:The RPO model is a recurring revenue model. That's. The RPO model is a recurring revenue model. That's right, yeah.
Speaker 2:Yeah, exactly, and not everyone knows that. You know they think about recurring like real estate agents. You know you, you make, make a placement, and then that, then you need to get something new, right.
Speaker 1:We had. Yeah, yeah, I don't want to cut you off on that, but I mean I've got experience in that. Swyke White is what preceded Swyke Group as the name of the entity. I mean going back to the 90s even. You know, our largest client was paying us $1.4 million a year for outsourced recruiting. Yeah, we did a lot of it. I can't imagine getting up to 55 people in that group. That's a. It was beautiful. Yeah, that's a real accomplishment, dude, and yeah, I get it. So it is a recurring annual agreement.
Speaker 2:Yeah yeah, we paid our people well, but the monthly margins were out of this world. So that was another $4 million a year revenue. Business, yep. And then the bigger one I have today. It's called Plug Technologies, plugg, and we're about 85, mostly software developers. But unlike the first one, where we had everyone in a singular office and focused on FinTech, we're mostly hiring senior developers that just want to work like anybody else from all over Latin America. So say, a company in California needs four Salesforce developers. We'll find them four in Mexico, but they don't even have to work at the same office, they're all just kind of working from home.
Speaker 2:Yep, we handle all the hardware. You know, that's one thing I didn't bring up. It's not easy to get hardware in and out of every country in latin america. Um, because you've got things like protection as a rule and you know it's a timely topic now with tariffs, right. But you know, not every country wants uh, once you bringing american hardware, you know um into their country.
Speaker 2:Or um uh, because you know um into their country. Or um uh, cause you know they want you to buy their own Sure, and or um uh, they just make it like exceedingly expensive, like a Mac book air you might buy for a thousand dollars. You know in the States costs $3,000, you know in Argentina. So um, so anyway, uh, plug handles all that, all the onboarding, compliance, dealing with all the different countries and, um, I've got a partner there who has been an expat in Monterey, mexico, so, um, we've got a lot of firsthand experience that we share with our customers. You know, it's not just stuff we saw on a blog, you know, we've kind of lived it. You know from the DMV stories, you know, and restaurants and chalk to. You know all the good things too.
Speaker 1:What about some of the laws? I mean, I've heard things like you can't let somebody go without paying them for a year. Yeah, have any of those things created problems for you.
Speaker 2:Very, very rarely. Just like anything, you've got to be good at hiring, you know. Now I will say something interesting in that senior talent in latin america more often than not prefers to be treated like an independent contractor. Okay, so they don't want to be on the books because they've kind of reached a certain point. Uh, mexico is a really good example. Um, so there's like a, like a housing benefit you get you know when you're um growing up in yeah.
Speaker 2:Well, um, so you get this like housing benefit where, um, you get like access to the uh to like a really um, favorable mortgage term, but once you use that, you've used it. So if you're like three years in your career and you use it, great, now you've got your house locked up. But now you're, you know, it's 10 years later in your career. You're senior, you speak good English, you solve problems, you got a lot of experience working with the US. You want to optimize for cash, you know, and that's what we're seeing. We see people that just want the cash. They don't want the health benefits and the mortgage benefits and the pension systems because it just doesn't outweigh the cash today.
Speaker 1:So they want to be independent contractors. So that gets you out of that problem. Yeah, the employment laws.
Speaker 2:Yeah, now I will say, I haven't so 10 years in Latin America I haven't gone out totally unscathed, but there's probably been less than five cases of dealing with bad actors.
Speaker 1:Wow, that's good. So so how do you bill your clients and get paid? Yeah?
Speaker 2:Yeah, typically in this world, cause we're we're really a staff augmentation company, you know, billing out a month-to-month basis, so usually it's going to be on a net 30 basis, so we're front-loading the cash to cover payroll and then we get paid. We've got a couple companies that are a little quicker than that, a couple that are a little older than that, but I think that's kind of the norm. We've been able to self-fund, that we have enough cash reserves to do that.
Speaker 1:That's great. Yeah, that's always been one of the problems with this kind of a business, and my experience is just the cash flow, the working capital, because some of these big companies don't pay for 60 or 90 days and if you need that kind of money for 85 people in your payroll, it's a lot of working capital, yeah.
Speaker 2:so yeah, we looked at uh factoring companies maybe a year ago and it sounds really, it sounds really good.
Speaker 2:We did not do it. Um, it sounds really good. It's costly, you know it's. Hey, it's just one percent a month, brian, um, but you kind of uh conceptualize like, okay, so well, you're actually just lending me my, my own money back, you know, and then it compounds, but by the you know 12 month, you know it's, I've basically been paying 12%. By the 18th month, now it's 18% and just gets worse and worse and worse, and you know, factoring is like the last course of working capital in my opinion.
Speaker 1:Yeah, most of the time.
Speaker 2:Yeah, so line of credit when we need it. We've been pretty fortunate in that some of my other wins in my career have been able to float us.
Speaker 1:So did you sell the recruitment company?
Speaker 2:The recruitment company is still active.
Speaker 1:It's a little more.
Speaker 2:Still own it. Still own 100% of it. It's smaller than it was in 2021, like almost every recruiting company, but we still have some tech clients I see.
Speaker 1:Interesting. So how do you repatriate the money, or does it ever go overseas? I mean? I guess it doesn't. You're paying money to people overseas but you're billing and collecting in the US. Is that right? Absolutely correct. Yeah, so that's not hard getting the money paying people.
Speaker 2:No.
Speaker 1:The country.
Speaker 2:Well, I've had to learn the hard way on a lot of this stuff, from the stories of coming back with this thick of US dollars on a boat to I think the first time I tried to pay somebody was a Western Union, because I know this is before a lot of the payroll companies you know have started to exist, but now there is, there's a lot of payroll companies, companies that specialize in all those things. So we've we've got we've got a few partners that we work with when we have to. I see.
Speaker 1:Yeah, that makes sense. I mean, it's one of the things I pretty much advise every small business owner to do, whether they're here or anywhere is get an outside payroll service provider. It's just not worth fooling around with. No, no, not at all. Take that off your back. It's cheap and they pick up the liability for paying the taxes and all that. That's right.
Speaker 1:It just doesn't make any sense to do it yourself. I mean heck. I even had a nanny on a payroll. In the Boston area there was actually a company that specialized in providing payroll services to people who had nannies. It was called Nanny Pay.
Speaker 2:Oh yeah, if you can believe that. I can believe that. I mean once you start to hear about bigger names being investigated for not paying their people correctly. You don't want to get into that, I want to be next.
Speaker 1:Yeah, so now you've got this distributed network of the software developer types, are all the recruiters still in one location?
Speaker 2:Recruiters have always been distributed also. Oh, they're also distributed.
Speaker 1:Yeah, so do you ever try to get together with all these people? Is there ever a time of the year that you bring them all together, or yeah, how do? You manage that um yeah, um.
Speaker 2:Well, I've been so lucky with having strong management teams. That's something I've been able to delegate to these guys too. They pick a location. A couple of years ago, everybody came in to Buenos Aires. Two years ago Atlanta. Another year was Mexico City. I made that one. That was a really fun one. But yeah, you know, I think, I think in this day and age, especially as you get all this pressure like this what I want to call it, like this slingshot that came right back, you know, with it went, everyone was in the office and then everyone was remote.
Speaker 2:And then now it's coming back. You know, return back to office. And I'm not going to lie. I think you can get a lot done when you're sitting next to somebody, but good talent wants to work on their terms. Sure, there's still a lot of good talent that just wants their home set up, and there's a big labor pool we have to work with.
Speaker 1:That's fantastic. What's your life like? You're living in Hawaii? Do you get up every day and work eight hours a day on your businesses or what?
Speaker 2:I'm just curious yeah, luckily, no, um, I've been pretty fortunate, um, the direction that um I've been going recently is, uh, I've never had anything here in Hawaii, you know, everything has kind of been over the interwebs. So the last year I've acquired two local home services companies One does cleaning and one's a locksmith company and then, you know, I'm looking at a lot of different stuff like landscaping. Eventually I'll work my way up to you, up to the big dogs like HVAC there's a lot of stuff like appliance repair.
Speaker 2:These are all things that I need anyway as a homeowner. Yeah, the way that I've been acquiring these is I acquire part, not all, and I make sure that there's an existing operator already in it. That's my equity partner. Yep, there's a lead locksmith, you know, and the locksmith business is a lead cleaner company, so they've got equity. But I've other people have told me I'm making this like a micro p things because, um, you know, these businesses uh, don't take credit cards, don't have a website, um, don't have yelp, don't have an organized payroll, and in six months we add all those things to them and all of a sudden, now they have Three times the size. Yeah, and three times the size and more marketing. Their valuation is also a lot bigger now too. So, small amount of money, no banks involved, light due diligence. Small amount of money, no banks involved, light due diligence. And I think this is a good way for me to diversify my portfolio and give me an interesting problem set to work on during the day.
Speaker 1:That's really cool. I've had other people. Well, I know other people who do this. I've had other people on the show here, like Richard Scott. I think he's bought like eight companies.
Speaker 1:Oh wow, he is consolidating some of them. He likes well-established companies that have been around a long time, with boomers, owners like me who are getting out and they're tired, sick, dead, divorced, whatever. And then he comes in and does all the things you're talking about puts them on a common accounting system, gets them organized they generally don't have any process for anything and starts doing the marketing and just fixes them up and in some cases he's he's merging them together. Oh, so he's got a. You know he started with a, with a awning company, then he bought a sign company, then he bought a glass company, then he bought a electrical or electrical contracting company, then then a glass company or whatever you know just, and then they're all. They're all related so they can share certain customers and clients and even people in some cases.
Speaker 1:Very smart, and it's been a good strategy. I mean it really is, because you know like, I mean I'm sure you'd agree with this. I mean the big guys, they just ignore all these companies. Oh, totally yeah, and you know the good thing too, too, is it's not going to be your house cleaner, is not going to be replaced by AI. That's the other element in the room. Yeah, exactly yeah, whereas your software coding business may be challenged by that at some point, right?
Speaker 2:Although, mark, I got sucked into a YouTube video last night about a hotel in China operated by Alibaba that has been entirely run by robots since 2018. Holy cow, yeah, so man, it's possible. Yeah, but I think easier to replace a software developer than a house cleaner, yep.
Speaker 1:Yeah, the quote dirty jobs, as they say. Yeah, yeah, there's a lot of money to be made in them. I think if I was going to school now, I may not go to SIU and get my undergrad and MBA there. I might just go get my plumbing license. Yeah, I think that's smart moves, but it's still part of our culture. Like if your own kid says that to you, he might be like well, I don't know, you should go get your degree. You never know, and I can see the side of that too. As we all know, our degrees aren't just to give us a vocational skill.
Speaker 2:I mean you know, yeah, it's really to just be able to think and network you know, yeah, did you meet your wife at SIU? No, I met her in San Francisco.
Speaker 1:Okay, I was just curious. I used to spend a lot of time in San Francisco. I had an office out there for more than 20 years. Oh did you? Yeah? Yeah, it was my second. It was like my home away from home, yeah, it's a beautiful city.
Speaker 2:It looks like they're cleaning it up a little bit now too we had.
Speaker 1:One of our key people, who still works for swy group today, lived in ross and that's about the coolest town I think I've ever been in. Yeah, or certainly one of them, but uh, out there in in marin, it's so beautiful. They don't even have mailboxes because they're unsightly there. They all have to go to the post office I can't believe that To pick up their mail. But what's fascinating, you've done this.
Speaker 2:Do you have 100% ownership of your businesses? Brian Plug, I have 90%, the company 100% and then the home services business. I have partial ownership with the other operators.
Speaker 1:Right. Do you maintain majority ownership of these things? Then these partial ownership Home services ones.
Speaker 2:I've structured it where, as an incentive, the other equity partner can become the majority.
Speaker 1:Okay equity partner can become the majority. Okay, so has it been a? I mean, you know, generally, if I was advising somebody and they're buying one of those kind of businesses, I'd say you want to have an asset purchase agreement because you don't want to pick up unknown liabilities. But in your case, how are you structuring that?
Speaker 2:well, we actually set up a new co. In every case it's set up a new co. Okay, yeah, every case we set up a new co.
Speaker 1:So I bring the cash and they bring their past customers and uh team, if they have it that's very interesting model and do you get involved at all, like mentoring these people, talking to these people?
Speaker 2:Yeah, not in like the day-to-day stuff, but weekly, monthly. I read a lot of what's going on. I'll read the emails, the WhatsApp chats. We've got online mobile apps for everything now, too, so I can see all the jobs scheduled for the day and the revenues, and, but without, without hassling them for it, I can just, I can just have access to it, and I think I think they appreciate it too, you know, because they, in most cases, they didn't have any of that stuff before they met, you know. You know, but I think the really fun part for me, and you know, is we're we're not, um, we're not just gonna, you know, make people pay us in cash on the table and yeah, we're not just hand to mouth. Yeah, yeah, you know, we've got real website, real logo, yeah, shirts with the image. You know that it doesn't cost a whole lot of money to do these things, but, um, it puts you nearly in the top 5% of the companies that do this in your town.
Speaker 1:I love it. I mean, to me there's so many opportunities in businesses like that, where they're totally mature markets. You don't have to do any market testing to know people like their house cleaned. I mean, we have our house cleaned every week. We've used the same people for probably close to 20 years. Yeah, you know. I mean we have our house cleaned every week. We've used the same people for probably close to 20 years. Yeah, and there's, you know, and how many customers have I gotten for them alone? Yeah, just in referrals. But you're right, I mean they're just all these little mom and pops and you see the primary woman and then your mom's there sometimes and then your daughter's there and then her sister's there. You know there's no real business per se, no organization to it.
Speaker 2:Definitely not something anybody would buy. Yeah, exactly, yeah, yeah, yeah, exactly. Have used the SBA loan and gosh, that was just. It felt like the. The risk just wasn't worth it. You know I, uh, I've acquired a fair amount of assets and you know I've got to put liens on all these things and personal guarantees on your loan, on your SBA loan and like the owners are leaving because I'm buying their business and like right, what do I really know here?
Speaker 2:you know, like I could, yeah, ask them a thousand questions, but like once you know, once they fulfilled their 20 hours of training, like you know what did I buy and I'm I'm on the look for 10 years on this thing. You know, know we could lose this house we have.
Speaker 1:So I've been there on those SBA loans. They wouldn't grab any real estate, yeah.
Speaker 2:So I almost thought, like man, I wish I could do this when I was 22 and had nothing, you know, sure. But anyway, you know, going down that path just made me like this is totally unnecessary risk. Let me just put you know my own money, my own due diligence, my own find my own companies, my own operators and it's.
Speaker 1:It's been a lot easier this way well, you're a really smart guy and you're really different. I mean, you're so relaxed over there, oh yeah, just talking to you. It's almost therapeutic Wow.
Speaker 2:I appreciate that it's got to be the Saluki connection.
Speaker 1:The various business models that you've developed successfully to bring in all these different income streams is pretty interesting stuff.
Speaker 2:I appreciate that.
Speaker 1:Mark, I commend you, you're a true entrepreneur.
Speaker 2:Yeah, ten years. This year will be my, you know, as an entrepreneur, I can't imagine doing anything else.
Speaker 1:Yeah Well, at some point we all become unemployable. Brian, that was me. I just had that discussion with one of my friends today, this morning, and it's so true. You know, after you do your own thing for so long, it's like you could never be put back into a corporate setting again. You know, you're just it. It's because you're not. You're used to the freedom that you have, even though it's a lot of responsibility, and you never are completely unhooked yeah yeah but in a way, you know, we, we all, would much rather bet on ourselves than bet on somebody else, right?
Speaker 2:Yep, exactly.
Speaker 1:Well, it's been great talking with you. If anybody wants to get in touch with you about any of your using any of your services, whether it's at Plug or your recruitment company, how do they reach you?
Speaker 2:Yeah, I think just not the, so we don't overcomplicate it. I'll just leave my plug. Information and then whatever they want to talk about, we can. We can flip it over. So that's plug technologies P-L-U-G-G and the website for that is P-L-U-G-G. Dot tech T-E-C-H, the website for that is pluggtech T-E-C-H, and my email is brian B-R-I-A-N at plugtech Awesome.
Speaker 1:Well, listen, it's been great talking with you today, my friend and I look forward to talking with you again and maybe I'll get you on the somehow try to recruit you to the advisory board of the Southern Illinois College of Business.
Speaker 2:It was fun being back there. I think that'd be cool.
Speaker 1:That'd be awesome. All right, brian. Well, thanks a lot and everybody, until next week. This is Mark Zweig, and this has been another episode of Brian. You got to help me out here. Big Talk About, talk About Small Business. Thanks a lot, all right, thanks, mark.
Speaker 3:Thanks for tuning into this episode of Big Talk About Small Business. If you have any questions or ideas for upcoming shows, be sure to head over to our website, wwwbigtalkaboutsmallbusinesscom and click on the ask the host button for the chance to have your questions answered on the show. Stay connected with us on LinkedIn at Big Talk About Small Business and be sure to head over to our website to read articles, browse episodes and ask questions about upcoming shows.