Warren Walborn – Inception of Pentwater Group

Derek:  Hi. And welcome to another episode of the Outsource Accelerator Podcast. My name is Derek Gallimore, and this is episode number 182. So today, we are joined by Warren Walborn of Pentwater Group. Warren has an illustrious business and entrepreneurial career and has even been involved in academics and Wall Street. So really interesting guy. We actually spoke to Warren previously in episode 178 if you want his full back story. But today, we are discussing more the Pentwater Group that Warren owns and runs and the opportunities in outsourcing. So, this isn’t an infomercial for Pentwater Group. This really is just diving into the services out there, outsourcing services and opportunities for business owners. It’s a really interesting conversation. If you want to get in touch with Warren or know anything about this episode or access full transcripts, then go to outsourceaccelerator.com/182. Enjoy

Derek:  Hi. And welcome back, everybody. Today, again, I’m joined by Warren Walborn. Hi, Warren. How are you?

Warren: Good, Derek.

Derek: Good. And Warren is down in Mindanao, which is one of the other 7,000 islands in the Philippines, near Davao, which is a secondary or tertiary city there from where the current president reigned for a little while. And yes, I’m super happy to have you on board. Warren, amongst sort of a stellar corporate and startup and commercial career, is now setting his sights on outsourcing and the future potential that it has. So, thanks so much for coming on board and chatting with us. I suppose, initially, do you want to introduce yourself? There is a previous podcast, so people can go back and listen to your background story, but just briefly update us how you found yourself in Mindanao.

Warren: Sure. Yes. Well, I started my career in investment banking in the finance world and moved into venture capital and energy technology and started several successful companies. And through a cross current of events in my life, found myself dating a woman from the Philippines, so came over here and married. And we now have a two-month old baby. And we’re very happily living here partly, we’re in the US half the year and here the other half. It’s an amazing market here, and I’ve just had such a great time learning about the business opportunities here. And of course, BPO is prime among all of those.

Derek: Yes. Yes. And I mean, I want to sort of get your kind of first eyes impression of the Philippines actually, but we’re here to talk about Pentwater Group. And it is interesting that you come here. And it is very much the kind of common industry, that everyone lands in outsourcing because it’s such a huge industry here in the Philippines. And it really is kind of quite an economic kind of hero or a miracle for the Philippines, isn’t it?

Warren: Right.

Derek: Certainly, for the last…

Warren: Yes. I understand it’s the…

Derek: …20 years.

Warren: I’ve heard it’s the number two source of GDP. Soon to be number one.

Derek: Yes. Yes. It really is significant. And I think it’s only starting[?] to grow. And so, I suppose, initially, into it, we’ll segue break [?] into Pentwater Group, but what were your initial impressions as someone that knew nothing about the Philippines compared and contrasted to your rival here and within the context of the business environment and outsourcing?

Warren: Well, broadly, the market here is developing. People here are highly educated but also very underpaid. The opportunities for employment here are quite limited. So BPO gives well-educated people here an opportunity to earn a decent wage, feed their families, and really enjoy life. There’s just a tremendous population here, but the BPO industry is kind of a household name here as opposed to in the West where you use the term “BPO”, and people don’t know what you’re talking about.

Derek: Yes. It really is a sort of economic backbone of the society now, isn’t it? And within that, I think there’s a huge amount of support. I mean, the country is bureaucratic, but there is a lot of support for BPO, generi[?] at the town halls and the government and workforce generi[?] are very enthusiastic for it as well.

Warren: Yes.

Derek: Which reduces friction and makes it very good for everyone involved.

Warren: Yes.

Derek: And so, Pentwater Group, it’s a consultancy. Obviously, you have incredible background with startups, with Chicago University, on Wall Street, and you’re now setting your sights on outsourcing. So, what does Pentwater Group do? And I suppose alongside that, what are the opportunities that outsourcing presents?

Warren: Well, what we’re doing for our clients is enabling them to outsource critical responsibilities that they either don’t have the time, they don’t realize they should be doing, or they do realize it and they just want to save money doing it. One of the things that we’re in the process of calculating, the actual true cost of an employee. And when you list all of the things that are associated with the cost of an employee, usually, people start with the wage and the taxes and vacations and benefits and all those things, but there’s really so much more to it because think about what the cost of office furniture and supervision and quality assurance and human resources, just payroll, workman’s comp. I mean, I’ve ran several companies, and I can’t believe the volume of costs associated with employing an employee. I think we listed probably 20 different cost components that are associated with employment. However, if somebody outsources, they can do that for as little as $6 an hour, and all they have to do is specify what the requirements are, what the objectives are for the employee. And perhaps, if they want, they can attend a weekly quality control session. Or they can themselves pull up on our system and listen to and do their own call, and listen to some of the calls because they’re all recorded. And so, the saving is just absolutely astronomical, but it also enables companies to do things that they just are not doing, or they may not be doing well or sufficiently.

We all talk about customer service and technical support, things like that, or kind of some of the big areas of outsourcing, and I think the reason for that is just because they’re very time-consuming. I have a customer that calls up, and they’ve got lots of questions. And it’s nice to have somebody on the other end of the line listen to their questions, make the customer feel cared for and heard. And we can do that for relatively low costs instead of… in some cases, in some markets, Derek, the cost for an employee with all of these things included, we calculated, approach is $75 an hour.

Derek: Yes. Yes.

Warren: All fully loaded with all of the paid holidays and the retirement plan. In some markets, it’s just astronomical. So, if you can do that for $6 an hour instead, the saving just makes a whole lot of sense.

Derek: Yes. It’s incredible, isn’t it? I mean, we’ve done a salary guide, which is getting quite a bit of traffic at the moment, but we’re actually trying to do a comprehensive kind of study of the actual cost of employing someone in the West. The sort of only problem is that it varies from country to country and state to state, but I think you can easily add on about another 50% to 80% on top of the salary for all the extra costs, the office, housing costs. It really is phenomenal, isn’t it?

It’s difficult to get people to compare apples with apples because they come over here then, and they look at the cost per hour. Everything’s included, but they kind of look at that as the base cost. And so, it’s difficult to get them to really compare apples with apples. What I find as well that people often overlook is they might get someone with you for $6 an hour producing this output, but actually, they’re not just getting the staff member an incredible discount, but they’re getting you and your organization to oversee the process. They’re kind of buying into your expertise, the expertise of Philippine outsourcing generally. There’s really a huge number of kinds of tacit or implicit upsides to employing people here, aren’t there?

Warren: There are. It’s amazing how far a dollar will go here because if you consider the costs that we have, we have supervision. We have quality assurance. We have IT. We have double-redundant telecom services whenever down. We also have all kinds of backup generators and things like that too, so that we’re never offline. And most customers don’t think about dealing with power outages, but if you were in a call center and you’re down for 20 minutes or something and people can’t take credit card orders, yes, it could amount to a lot of dollars. So those are important things that we take care of all of that. And so, it’s just the cost component.

When I was outsourcing myself, running one of my previous companies, I remember feeling, like, “Okay. Yes, I’m saving money. This is great.” But the more important thing is that my customer is served. And even more than that, I want to dominate my market. I want to own my market. And this just enables me to meet that need. This is a corporate need. I need to take care of my customers. And if I’m not doing it, somebody else will. And so, I want to be the one that’s taking the best care of my customer. So yes, I’m saving money. And the fact that it’s so inexpensive enables me to do all of these things that I find very important rather than doing marketing kind of on a haphazard way just going after new customers. We want to help people dominate their markets by not only getting new customers but retaining the ones they already have.

Derek: Yes, absolutely. And I think that’s why it’s so important that people come over here and take a look because people have a sense of, very commonly, that this is a bit of a sweatshop. It’s a developing country. And all the kind of outsourcing is kind of in line with that, but people come over here and see that it’s highly sophisticated. And to many instances, it’s often more sophisticated than the home operations because you have to have the redundancies and the backup plans. And it’s really quite a sophisticated operation just to get something off the ground here, isn’t it?

Warren: It is. It is. Yes. You don’t just start a BPO company out of nothing and expect to be able to be… it’s a major investment.

Derek: Absolutely. What do people approach you for? And what are your kind of key services? What things do you suggest for the customers?

Warren: Well, we get approached for a lot of the standard things. Technical support. Customer support. Data entry. What we then do is we introduce to them the other things that they might not realize are things that they can get from a BPO company in the Philippines, such as two big ones that I’ll mention. And I alluded to this earlier, we have a marketing support team that will enable companies to…see, a lot of companies are going after the paperclip. That new customer that’s out there, that’s out there on the internet somewhere so they can just inbound market. And that’s a great strategy, but everybody, every company has a long list of existing customers. Customers that they’ve already done business with. And where are those customers going to go to next?

If you want to dominate your industry, not only do you need to bring in new customers, but also keep the ones that you have. So, what we do is we have a complete marketing campaign strategy that… it is a la carte. Customers can pick which components that they want, but we’ll go out with phone calls to these customers, email marketing campaigns. We’ll start up a…they want to have, like, a newsletter or something like that, an email newsletter so they can just constantly be in contact with these customers so that the customers might not come, they might not call today, but they’ll know that, “Hey, the next time I need this service or this product,” they know who to go to. And they’ve got a phone number. They’ve got an email that they saved in their inbox from this particular client. It’s a major, major success that we’ve been able to provide for our clients who really haven’t been focusing that much on their existing customer base. Again, everybody’s going after that new customer, but the existing customers are getting ignored. So, I mean, that’s one of the things that we’ve been able to provide.

One of the other things that we’re really excited about is the ability that we have a new technology that’s enabling us to extract information from the internet, internet data that’s out there that’s open domain. It’s available for everybody to get at, but it’s complicated and its massive amounts of data. And so, it takes a great, we have some of the biggest servers in the Philippines constantly crawling through the internet for data for our customers.

And I’ll give you some examples. There’s one customer, they have a couple of keywords that people will search on when they’re looking for a particular product. And when people search on that, we’re able to extract, in many cases, an email address and maybe even a name and a phone number from that person who did that search.

Derek: Wow!

Warren: And so, then this client can market to them when they’re looking for that product. So cool. And there’s other companies that are doing this, but nobody out there is combining it with the resources of a BPO company that will then execute the marketing campaign which will involve reaching out. It’s time intensive, but again, the time, the cost, the time from a BPO service based here in the Philippines is very reasonable.

Derek: Yes, that’s incredible, isn’t it? It’s providing the end to end funnel with the kind of sophisticated data analytics. And usually, I imagine you just go to the sophisticated data analytics guy, they give you the data and send you on your way whereas, again, in the Philippines, you can kind of justify doing an end to end service with all of that sophistication on top.

Warren: Exactly. And a lot of times, the data they give you is not valuable. So, you might need, it might be the problem of the data gatherers doing something wrong or it might also be the problem that, “Hey, we’re searching on the wrong terms or there’s a problem with the program.” So, what our team will do is they will identify that right away. They’ll be able to say, “Hey, we’re not getting any hits on this. This is not generating anything. Something needs to change.” And we can fail fast and change the approach and find the right approach. And everything is about that.

I mean, let’s face it. I don’t know if many people realize this, but President Trump in the US, he basically won this election based on data extraction because he found the thing through his data extraction team that were big hitters. Initially, he didn’t care about immigration. That was not something that he cared about, but he realized that the hits he was getting on immigration, that really was a meaningful thing for a lot of people. And it’s those kinds of things that enabled them to actually win the presidency of the United States. So, the right data provides what we call unparalleled knowledge which ultimately enables power which drives growth. It just drives fantastic growth.

Derek: Yes, that’s incredible, isn’t it? It kind of provides you with the insight that allows you to navigate far better than your competitors. Get Donald Trump the key points that he then needed to attend to so that he’d gain the popular vote. Yes. That’s amazing.

Warren:   Right. Yes.

Derek: Fascinating. Now, that’s incredible. Thank you so much, Warren. And if people do want to get in touch, if they want to discuss these kinds of sophisticated processes more with you or want to know any more about Pentwater, how can they do that?

Warren: Sure. It’s just pentwatergroup.com, our website. My email is [email protected].

Derek: Amazing. Thank you, Warren.

That was Warren Walborn of Pentwater Group. If you want to get in touch with Warren, then go to our show notes at outsourceaccelerator.com/182. And, as always, if you want to connect with us, then email us at [email protected].

See you next time.