Bryce Maddock was 22 when he left his Wall Street finance job to start a frozen yogurt company in Argentina with his high school buddy Jaspar Weir.
Maddock was dead-set on the plan. He moved out of his Manhattan apartment and in with his parents, wrote a 40-page business plan, and bought a ticket to Buenos Aires.
It didn’t take long for his dream to get shot down. An ex-pat who’d opened a burrito shop in Argentina met with the pair and warned them not to make the same mistake he did. If they really wanted to make money, he said, they should figure out a way to earn dollars and pay employees in another currency.
Maddock went back home to his parents’ feeling demoralized, but not entirely defeated. He remembered sitting at his investment banking job, clocking 16-hour days copy and pasting data. He didn’t miss the work, but also, he wondered why he’d had to do it in the first place. Shouldn’t there be a way to delegate such tasks to someone who wasn’t being paid an investment banker salary?
Maddock and Weir decided they had a business idea on their hands. With $25,000 in savings between the two of them, they started the outsourcing company, TaskUs in 2008. The startup was not without its glitches, but in six years it grew from two to 1,200 employees, with clients including Whisper, Tinder, and Wikipedia. This year, revenue is expected to exceed $13 million.
How did TaskUs bootstrap its way to success? Here are seven lessons Maddock learned since founding the company:
When Maddock and Weir started TaskUs, the startup was essentially a virtual assistant service. People would contact them looking to outsource a task and TaskUs would reach out to call centers, hiring someone to do the jobs as needed.
They hired people across 16 countries from stay-at-home moms in the Midwest to college students in Pakistan. Managing so many people spread far and wide became a logistical nightmare as did monitoring the quality of work. When a task was done poorly, Maddock and Weir would often have to redo the work themselves.
What’s more, focusing on individuals as their core market didn’t leave much room for growth. Still they persisted with the business model for more than two years. “It was a model that totally fell on its face,” says Maddock.”Sticking with a business model for years that’s not making money is just foolish. You have to be willing to admit that.”
Maddock and Weir were 25 at the time and still both living with their parents. The company wasn’t making any money. They decided they needed to refocus. Instead of hiring people across countries, they looked at all the people they employed and realized they were getting the best dollar-for-dollar value hiring people in the Philippines. Maddock took a trip to the Philippines to set up a small office of five people there, allowing TaskUs to focus on employees in one centralized place.
Rather than focusing on individuals in need of occasional help, they also decided to target startups that had a potential to grow. Working with rapidly expanding businesses meant they could reap the benefits of that growth themselves.
Within three months, TaskUs had an order from a fast-growing startup that needed 100 people to take on a voice mail transcription project. The demand was great, but Maddock and Weir only had five employees and needed to figure out how to not only hire more people fast, but find a way to buy them all computers.
They decided to ask the client who’d come to them to finance the expansion with $100,000. It was a risky move, but it worked. “It was literally going to quintuple our business overnight,” says Maddock.
Most outsourcing companies in the Philippines are located in the capital, Manila. People often travel more than an hour each way into the city from nearby provinces and suburbs where they live. When TaskUs opened its first office in the Philippines, it was located in Cavite, a province outside Manila where its five employees at the time lived. “I wish I could claim this was some strategic brilliance, but we just went where our employees were,” says Maddock.
As the company grew, that location ended up being a big factor in attracting more employees. Rather than having to commute more than an hour each way to work, people now could work only a few minutes from home, which made the job appealing to new hires. TaskUs set up a management team in the area focused on building the office and hiring employees locally.
When TaskUs was first getting started, Maddock and Weir were wary to spend a lot of money upfront hiring a great lawyer and accountant for the company. But cutting those corners came back later to bite them.
“Having to jump through those bureaucratic hoops is really important,” says Maddock, who’d been quick to skimp on what seemed like non-essential expenses at the time. “It’s well worth the investment up-front because it saves you so much down the line,” he says. “That was something I did not appreciate as a young entrepreneur.”
It might seem oxymoronic for the head of an outsourcing company to talk about the importance of face time, but Maddock has learned the hard way that hiring people in a management position without first meeting them is a mistake.
When TaskUs brought on the first head of its Cavite office, Maddock and Weir made the hire based off a Skype interview. “We hadn’t spent enough time face-to-face to know that it wasn’t the right cultural fit,” says Maddock.
Two months later, when he visited the Cavite office, he knew fairly quickly that they’d hired the wrong person for the job. Now Maddock makes a point of visiting the Philippines office seven to eight times a year.
There are lots of outsourcing companies on the market, which should have made breaking into the industry challenging for TaskUs. But the founders knew they wanted to focus on a very specific market–young startups that care about having a good cultural fit enough to pay a bit more for it.
As twenty-something entrepreneurs themselves, Maddock and Weir were able to connect with other startups in a way larger outsourcing firms can’t. “Those businesses don’t understand startups,” says Maddock. “They understand 1,000 people on the phone talking to angry Comcast customers. … We’re a startup ourselves.”