Derek: Hi. And welcome to another episode of the Outsource Accelerator Podcast. My name is Derek Gallimore, and this is episode number 178. So today, we are joined by Warren Walborn of Pentwater Group. Warren has an illustrious business, commercial, and entrepreneurial background. He’s even spent time at Wall Street. He now finds himself down in Mindanao, which is one of the secondary islands here down in Philippines. And we have real conversations about his business background and then also his thoughts on the emerging, if not booming, outsourcing sector here in the Philippines. So really interesting conversation. I’m sure you will enjoy. If you want any of the show notes or to get in touch with Warren, go to outsourceaccelerator.com/178.
Hi. And welcome back, everybody. Today, I’m joined by Warren Walborn of Pentwater Group. Hi, Warren. How are you?
Warren: Good. How are you?
Derek: Great. Great. Thank you. And thanks so much for joining us. You’re obviously, maybe people can tell by the accent, you’re from the US. You are based down in Mindanao, near Davao, which is one of the sorts of secondary or tertiary tier cities in the Philippines and have an outsourcing consultancy. So, I’m really excited to hear your insights into outsourcing. And also, you have a pretty stellar business career to boot from all sorts of different backgrounds. So really happy to have you on board. I suppose, initially, can you just introduce yourself and kind of explain to the audience a little bit about your business background and how you found yourself in Mindanao?
Warren: Sure. Well, I started my career really as an entrepreneur. Young age, starting businesses. And my dad, my whole family’s been this sort of serial entrepreneurs. And so, came from kind of that breeding. Until my parents saw to it that I had a good education. Got an undergraduate degree in economics from BYU in the States. And then went to Wall Street for a few years. Was able to get an MBA from the University of Chicago where I helped launch the…I was one of the founders of a program there called The Lead Program that launched the University of Chicago from…at the time, it was ranked number 11 in the nation, and business schools launched it to the number two position in the business school rankings. And accordingly, I was able to teach the first session, the very first class of that, as a student there, which was kind of cool. And so, had a wonderful experience there at the University of Chicago. And then went back to Wall Street and did some investment banking. Broke off into the energy technology field. A lot of investment bankers, they kind of [cut off 00:03:27] [?] of the Street and go off into industry. And I chose energy at the time when it was sort of not very sexy. And then Enron came along and made it really exciting and both up and down. So, for a time there, I was running an energy technology venture capital fund, $90 million. And we’re looking at all the different energy technologies that was a super cool experience. And then when Enron sort of blew up, the company I was with, it was a corporate venture group, gave me the biggest check I’d ever seen in my life to close my group. And went on to find a medical device company that we ran for a few years and sold. And then ran an energy technology company. And then, well, thanks to the EPA outline or product line, we closed that business after 12 years. And cross occurrence of various events led my life to the love of my life here in the Philippines. And so, coming here and seeing the business opportunities here, it was irresistible to get involved in outsourcing. It’s something I’d always been interested in from several years ago because I actually believed in the concept so much. From, well, really, I don’t know, five, maybe eight years ago, I started outsourcing certain tasks in my company that I was running, the energy technology company. We had hired some independent freelancers to do certain things and had a whole team of freelancers. We never used an outsourcing BPO company per se, but if we had known about you, Derek, we would have probably had an easier path to do that.
Derek: Right. Yes. Yes. Yes. Well, I often say it like this. A lot of people out there, they just really need an easier on-ramp into outsourcing, but it’s still a little bit ambiguous at the moment, which I think obviously people like ourselves but also you and consulting groups and just people that are just generally increasing educational levels and awareness levels has got to help the sort of general businessmen ease into outsourcing. Yes.
Warren: Yes. Yes.
Derek: Fantastic. And so that’s quite a sea-change. Right? And obviously, you’ve been at the forefront of a lot of sectors. You’ve been at Wall Street. You’ve been in energy tech and in Chicago University with the kind of business programs. What is it about outsourcing then that kind of captures your imagination? I personally see it as sort of probably one of the most transformative and powerful business tools out there, but how do you kind of assess the whole outsourcing opportunity?
Warren: Again, as a serial entrepreneur, I love seeing opportunities in the market. I think I haven’t had a chance to…I’m behind in my email, but I saw a blurb of an article that either you wrote, or somebody wrote and published on The Accelerator about 35 million SMEs are about to discover outsourcing…
Derek: Yes. [Crosstalk 00:07:21].
Warren: …in the coming time. And so, I like to say that we’re trying to be ahead of the curve and recognize this and help people find what we found. And we have clients that are just able to completely dominate their industry because they outsource. And they focus on the important stuff, and they’re able to outsource things to us that they shouldn’t be spending their time on, really, frankly. And they’re certain things that we can do better because we can allocate, we can put a lot of resources on these things, on these tasks. And it helps the company’s focus on growth and other things that they need to focus on with their US-based talents. Our thing is we’re not trying to take jobs away from the US. We want the US-based jobs to get better because, ultimately, there’s a lot of things that SMEs, all companies, there’s a lot of things that don’t get done. There’s just not enough time. There’re not enough resources. But they’re important things that need to be done. And a lot of companies are trying to pawn off customer service. Hey, what’s basic customer service is? Let’s face it. Customer service is time intensive. Costs a lot of money and a lot of other things like that, marketing things. We’ll get into some more of those things later, but there’s a lot of stuff that’s just knocking.
So, we’re big advocates. We’re excited to be at the forefront, we believe, of a major transformative experience in the minds of all these SMEs in the West. I have noticed that the term BPO here in the Philippines is a household name. It’s a household term. Everybody knows what it is. I go to the US, and I talk BPO this, BPO that, and I get these blank stares from people, like, “what does that mean?” And then I explain. I go, “It stands for business process outsourcing,” and they have to think about that term, put those three words together, “What does that mean?” And then they still, so it’s not a household term in the US. People haven’t come to grips with what the opportunity of this presents.
Derek: Yes. And what is the general awareness like? Because it was as you said, I write that article. We look to the numbers for about 9 or 10, the primary, high-cost English speaking countries, and there’s about 35 million SMEs in those countries with about 100 million employees, with about $12 trillion in turnover. And I would suggest that maybe only half a percent of those are outsourcing in fact. And I’m really quite staggered because it seems that people that are in the know are in the know, but then there’s the people that aren’t in the know, and you might as well be talking about kind of aliens in Mars. It’s just not on people’s agenda, isn’t it? And as you say, with a lot of operation stuff, there are things that need to get done, but people are busy. People are tied up. And I think that kind of outsourcing can often fall into that bucket. Yes. People might have an inkling about it, but they’re busy and maybe operations aren’t broken, so don’t fix it. So, it never really goes that much further. Yes?
Warren: Yes. Yes. Yes. It takes leadership. It’s going to take some serious leadership at the top levels of these SMEs to say, “You know what? We’re going to be better. We’re going to be better faster. And we’re not going to sit around with the status quo and tolerate these meager levels of growth. We want to be better, grow our profits, grow our business, grow our bottom line, grow our customer base, and this is the key to doing it.”
Derek: And everything is hyper-optimized in a mature market now, isn’t it? In the US and most of the world markets, everything comes down to the finest margins. And I think when there’s something like outsourcing out there, then I think it’s imperative that at least people properly assess this opportunity. It might not be right for them, but you’ve at least got to take a long, hard look at it.
Warren: Yes. And I don’t really know any business that this is not right for because everybody wants to grow. Everybody needs to market. And everybody needs information. I’ll tell you more about Pentwater later when we get into that, but one of the things that we can do for people is we can provide them information that has not previously been available to them.
Derek: Right.
Warren: It’s information that just enables stratospheric growth.
Derek: Wow. And I do, actually. I really want to deep-dive into what Pentwater does. I really want to get you back, and we can sort of deep-dive into those aspects. But just kind of back to an earlier point you made, it’s interesting that people I think often come and start outsourcing journey thinking that they’re going to save money and maybe they’ll cut staff and things like that, but actually, very quickly, they realize that outsourcing is about opportunity, isn’t it? And when you have access to abundant human resource at an affordable price, then the sky is the limit with your business with opportunities with research, with data mining, with gaining extra information, things like this. And it can really enable you to outcompete your competition.
Warren: Absolutely. Absolutely.
Derek: When you see some of the wins that your clients have within kind of implementing outsourcing to their business?
Warren: You mean impediments that they have?
Derek: No. Sort of wins. So, kind of, I suppose, strategies that they’ve implemented that kind of people see upside.
Warren: Yes. Well, I think one that just came roaring back here just this week to my mind was a client of hours that, a lot of people are out there pursuing that untouched customer potential. The guy that’s doing pay per click. They’re trying to get everybody that’s out there in the stratosphere, in the blogosphere, in the web that’s a potential customer. They want to find a way to grab that customer. And it’s expensive. It’s time-consuming. There was a time in one business that I was running, we were spending $7,000 a month on Google AdWords, and we weren’t doing it right. We just weren’t, so there’s consultants that do that. And there’s just a lot of money that can get spent on that. However, the biggest mistake that I made at that time, and really, I think a lot of companies are still making this mistake, is they got… everybody has a database of customers that they have already done business with. And what are people doing to maximize that list? To maximize the value of that list. To bring those customers back in and to market to them. And we have the answer to that. We have some very sophisticated tools that we’ve been able to implement for some of our clients that enable them to take that list and just monetize it, make lots of money from that list. And here’s the thing, Derek. It takes time. It takes human resources. It takes a personal touch. We’re calling people. We’re calling. We’re sending them emails. We’re reaching out to these people. And they’re like, “Wow. I’m not used to getting calls from the company that sold me my blah, blah, blah, whatever it is.” And a lot of times, it’s just a customer orientation call. A lot of them are just voice mails. But those people come back because they realize that, “Hey, there’s a company that’s looking out for me.” And it’s rare. I mean it’s truly rare because companies just aren’t, because they’re going after that pay per click. They’re going after that guy that’s going to be a Facebook customer or whatever the source is. They’re not monetizing their current list. So that’s a big win that we’ve been able to realize for some of our clients.
Derek: Yes. That’s huge, isn’t it? And I think businesses are so up against it in terms of the cost of resources and in terms of their margins. And everything is just kind of done with a bulldozer approach and kind of minimal hours invested in everything. And kind of there’s so much left on the table potentially, isn’t it?
Warren: Right.
Derek: I think there’s potential to explore with outsourcing and with BPOs and consultancies. So yes, super, super [crosstalk 0:17:13].
Warren: You said that very well. There is so much left on the table by so many companies. And you know what? They’re getting by with these new customers that come to them, but why not create extreme customer and brand loyalty? I’ve used the term before. Beats your competitors into a pulp because you’re hanging on to your customers. You’re not losing your customers. And yes, you’re growing your customer base, but you’re keeping the ones you got.
Derek: That’s super powerful, isn’t it? Thank you so much. So, Warren, if anybody wants to get in touch with you and know more about getting the most they can out of their customers or anything else to do with Pentwater Group, how can they do that?
Warren: Sure. Website is pentwatergroup.com. My email is just [email protected]. And we’re here. We’re cranking. I have a house in the US, so we’re there part of the year, and here in the Philippines part of the year. And so, we visit our clients in the US several times a year face to face and those that want to come here can visit us here. Not many do, but we’re here running the operation…
Derek: Fantastic.
Warren: …in the Philippines part of the times, part of the year as well.
Derek: That’s great. Thank you so much, Warren. And I want to get you back, so we can deep-dive in exactly what Pentwater does.
Warren: Super.
Derek: Okay. That was Warren Walborn of Pentwater Group. If you want to get in touch with Warren, then go to our show notes, which is at outsourceaccelerator.com/178. And of course, if you want to ask us anything, then please email us at [email protected]. See you next time.
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