Tips From Jason Calacanis On Outsourcing

Having a nuanced approach and opinion on outsourcing can help you scale a bootstrapped startup

Photo by Eugenio Pastoral on Unsplash

Jason Calacanis is an incredibly successful Silicon Valley investor who has backed a number of startups, ranging from Uber to Robinhood. One thing his followers appreciate about him is his nuanced vision on hot-button topics, and having a granular attention to detail when discussing things ranging from NFTs and SPACs to remote work culture and HR. When it comes to startups, he’s given a lot of advice through his numerous channels, including some great perspectives on outsourcing.

There’s a difference between outsourcing to a company that builds apps, vs building a remote developer team. If you hire four developers in South America, or Europe, or Canada or another a region and they’re on your payroll where they’re your only own customers, well that’s different than if you’re having an outsourcing company where you’re one of X number of customers.

The outsource company wants to do the least amount of work possible, for the highest amount of pay.

Jason on This Week In Startups

I have been an entrepreneur for over two decades. Now that I’m in my late 30s I’ve had several opportunities to hire and work with people in Asia, particularly in the Philippines. Through trial and error I can 100% attest to Jason’s perspective.

When I was first starting my entrepreneurial journey, hiring out of the Philippines seemed like the only affordable, long-term solution I had. In the beginning there was a steep learning curve interacting with outsourced workers. I attributed to the axiom “you get what you pay for”. Later I learned that the same learning curve was true for staffing stateside. I have seen many great employees and contractors, and many bad ones, across the globe. Hiring the right people is truly a learned skillset. Regardless of geolocation, you not only “get what you pay for” but “reap the rewards of those you invest in”.

Jason’s observation about investing in building your own team, particularly for core functions, is spot on. Regardless of if they’re in the Philippines or if they’re in the states, using a outsourcing agency for key business functions is risky, because it isn’t in their best interest to work as hard as possible. When it comes to development, they’ll cut corners, leaving you with a product that may work on surface but fall apart under the slightest amount of stress.

In this article I’ll be outlining the value of hiring globally — meaning finding full time employees, not agencies. I’ll also cover ways to help streamline the candidate selection process, and ways to keep your remote team members engaged. If you’re looking to expand your horizons, open your talent tool, potentially save a lot of money, and work with professionals across the globe, read on!

The first thing you need to do is strike the words “workers” and “outsourcing” from your mental model while classifying your decision to hire out of Asia. In the last year we have been hiring several high-level roles out of the Philippines, and while some hires were disappointing, by-in-large the employees that make it through the trial period are exceptional. They are smart, have the highest level of accountability, and can pick up our pace very quickly.

This being said, there is almost no possibility that you’ll be able to hire good developers in the Philippines, unless you have a full-time, in-house Filipino developer on staff to vet and communicate with these team members. We have found success staffing remote developers who work for us full time in South Korea, but only because our CMO, Young You, ran his own software businesses there for 15 years. We make it a point to never hire agencies for development work, because in the few instances where we have, the work has not been up to par and we end up wasting more time and money than we saved.

I am very clear with startups I invest in that they should not outsource work to communist countries for security and IP reasons.

Most founders are actually really smart about this and know that full-time, vetted employees are the way to go if you want to build a large startup

Justin via Twitter

Running a global, remote company means the office is open 24 hours a day (no matter what time of day it is in the states), and having people accessible at all hours has been great for my startup. It’s probably not going to be for everyone, but I am very impressed and would recommend adopting international hiring practices to anyone.

The key to success with remote team members is communication and clarity. When hiring remote employees, you need to make sure you’re hiring people that can operate with the highest degrees of autonomy. It’s difficult to get a feel for a person’s work ethic and motivation solely based on an interview, but you can learn a lot from the way they communicate their ideas with you. Lack of communication is something you can not have with a remote employee, as it will become too difficult for you or your team to stay aligned if communication is only one-way. If you are looking for a remote employee, you need to do your homework and make sure you are clear about what you expect them to provide for your company. Being clear in your expectations will save you time and effort so that you can focus on the other aspects of your business.

The hiring process for remote employees should be as rigorous as the hiring process for on-site employees. If you are a small company — or potentially solo-you probably don’t have a full-time HR person, a recruiter, or even a recruiting process. Even if you’re running a small startup with several employees, you’re likely doing the main hiring on your own, and hire is amongst the hardest (read: most important) things that you have to do.

So, how do you find and screen for great candidates without adequate resources? One way is to set up filters for your candidates to pass, so you can screen a volume of candidates without spending the time interviewing each one.

Several screening tools exist, and can be folded into a larger (but still largely automated process).

  1. ATS. Consider automated screening using applicant tracking systems (ATS) to store and manage your resumes. There is a wide variety of options for enterprise-sized companies, but if you’re a startup you may want to consider a tool like https://breezy.hr/
  2. Personality Tests. Personality tests are not as helpful in screening for good employees as they are in identifying bad ones. There are many different personality tests available online, but most are highly subjective and favor certain types of personalities over others. I’m currently using Wonscore which is helpful in understanding a candidates traits, but we don’t use it as the end-all-be-all factor in our hiring process.
  3. Screening using social networks. The fact that so many people have social media accounts means that they are willing to share a lot about themselves. This includes their education, location, industry, work history and other information that is useful when screening candidates. While some advise against using social networks as a screening tool, often times you’ll gain significant insight into a candidate that you otherwise wouldn’t if you were assessing them on resume and interview alone.
  4. Zoom interviews. Zoom interviews are absolutely critical for hiring remote employees, regardless of whether you’re hiring for a high-level/full-time job, or a task-based contract gig. Being able to see someone’s face and investing the time into assessing cultural fit and other intangibles will save you a lot of time and stress down the road. It is very tempting for new entrepreneurs to jump on Fiver or Upwork and simply hire the cheapest, highest-rated remote worker, but I’ve learned (the hard way) that this is a highly detrimental, ill-informed practice. On the other hand, in-person/Zoom interviews are time consuming and cannot be done with all potential candidates, so pre-screening with some of the tips above can certainly help save you time and money.
  5. Background checks. The results of a background check can help you determine if you want to interview a candidate or disqualify them based on certain criminal offenses. However, background checks will not tell you if a candidate is trustworthy, or if he or she will be a good fit for your company culture. Background checks may not always be necessary for remote employees; however, if you hire an employee who will be interacting with clients or working in an office setting, you should consider running a background check on the candidate before bringing them on board.

Keeping remote employees engaged

The best remote workers are the ones that are engaged. As hard as it is, it’s up to you as the employer to keep them engaged. The best way to keep them engaged is to have a great relationship with them. Help them feel like part of a the team. You can use the tools of communication that you use with your on-site employees. Have regular meetings, and regular check-in processes in place. One on ones are critical, particularly at the earlier stages when culture and work-ethic standards haven’t crystalized in the new team member. To keep remote team members engaged, and to encourage them to do great work, you need to communicate with them regularly.

One of Jason’s messages is honesty and transparency. With employees, this means you should also be very transparent about your company’s core values* and goals. Don’t forget to share the victories as well as the defeats with your team. Transparency in communication is key in a remote environment. The most successful companies also ask for feedback and input from their remote team members. The best remote team members are the ones that give feedback and input. It makes their life easier, makes the whole team more efficient, and effective. Don’t keep remote workers at arm’s length, or they’ll end up drifting away and disengaging from the process entirely.

*A link to Calacanis’s blog, on Zappos Core Values

A Shout Out to Mikee Mascardo

Many of my perspectives on the value of Asian team members have been informed and inspired by one particular hire at Engaging, Mikee Mascardo (featured on our homepage at Engaging.co). He’s an exceptional team player, highly-intellectual and analytical, and a true rising star within our organization. Big thanks to him for engaging with the team at a high-level, and inspiring our entire organization to think more holistically about how we build teams across our global remote network.

Cal Chan is the CEO of Engaging, President of Trilogía, and Co-Founder of Vitamin Bounty and Active Wow

Father of two sons and four brands.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store