EFP 94: Pros And Cons Of Baselining Your Business in SEAsia

Justin Cooke

May 15, 2014

EFP 94- Pros And Cons Of Baselining Your Business in SEAsia

We’re huge fans of Southeast Asia and the fact that we’ve been here for half a decade shows proof of that. There are plenty of benefits that made us fall in love with this place and really allowed us to grow our business to where it is today.

But of course, it’s not all rainbows and butterflies out here.

Are There Too Many Disadvantages Basing a Business Out of Southeast Asia?

Today, Joe and I talk about both the pros and cons of baselining your business and living in Southeast Asia. Even with all the disadvantages of being out here we still are proud to call this place home. Over the years we’ve met tons of brilliant location independent entrepreneurs and have really seen growth in the expat community.

We’re not trying to force you to move out here but it’s definitely something you should consider if you want to take your business to the next level.

Check Out This Week’s Episode Here:

 Direct Download – Right Click, Save As

Topics Discussed This Week Include:

  • The mileage your dollars get you in SEAsia compared to anywhere else.
  • Expat entrepreneurial hubs and the benefits of community.
  • Spending less for talent of the same caliber of higher salaries you’d pay back in the states.
  • Cons of being in SEAsia such as being an outsider and common inefficiencies.
  • The cost of traveling and adapting to your surroundings.

Mentions:

Help Us Out:

  • “There’s a sense of ‘we’re all in this together’ in SEAsia that you don’t get at home.” – Justin – Tweet This!
  • “It’s hard to realize that you can design and build out the life you want because everyone is following a script.” – Justin – Tweet This!
  • “You get better pound-for-pound value with hiring local talent in SEAsia than most anywhere else.” – Justin – Tweet This!

Do you think the pros outweigh the cons? What would it take for you to start your business in SEAsia? Please leave your thoughts on SpeakPipe or comment below to start a discussion!

 


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Announcer:        Welcome to the Empire Flippers podcast. Are you sick and tired of gurus who have plenty of ideas, but are short on substance? Worried that E-book you bought for $17.95 won’t bring you the personal and financial freedom you long for? Hey, you’re not alone. Join thousands of others in their pursuit of niche profits without the bullshit straight from your hosts Justin and Joe from Empire Flippers.

Justin Cooke:                     Welcome to Episode 94 of the Empire Flippers podcast. I’m your host, Justin Cooke. I’m here with my business partner extraordinaire, Joe Hot Money Magnotti. What’s going on, buddy?

Joe Magnotti:                    We are having a marathon session today, baby.

Justin Cooke:                     We are, man. We are doing some work. We’ve got a great episode on line up. We’re gonna be talking about the Pros and Cons of Baselining Your Business in Southeast Asia. We’re not just talking about the Philippines. We’re talking about Thailand. We’re talking about Vietnam. We are gonna get into it. There are some dirty secrets that we’re gonna let you know about, what it’s like to build a business in Southeast Asia. Some of the things that you probably don’t hear some of the other places where everyone’s saying, “Oh, it’s fantastic. It’s wonderful.” It’s not all wonderful. We’re really gonna get into that this week.

                                                Before we do that, let’s do some updates, news, and info. The first thing we’ve got is we’ve reorganized our team a bit, Joe.

Joe Magnotti:                    Yeah. Well, we spent all day today reorganizing Zendesk. We’re possibly going to be adding live chat next week. No, we will be adding live chat next week. I’m very excited to see how the team deals with this. We’re gonna better deal with our customer’s issues, complaints, and better delivering the product to them faster, and in a more economical method that I think our customers are getting used to.

Justin Cooke:                     What I think is interesting is whenever you use a piece of software, Zendesk or Ontraport, or whatever it is, you set it up and you have the best of intentions, but you probably don’t set it up the way it was meant to be used, or with best practices because you don’t know it. You haven’t dug into it a bit. That’s one of the things we found with Zendesk is, we weren’t using a lot of the features and functionally that we could be using. We set it up in the best way we knew at the time, and then we were iterating on that, on a broken, not broken, but not ideal system, so revamping it gives us a ton of opportunities. Things we didn’t even know, or didn’t even think about doing when we started.

Joe Magnotti:                    Yeah, I mean the triggers, right, the automation, those things, they’re really point and click, but they take a long time to sit down and make sure that they’re working correctly. I think we got that done right now. For a piece of software that we’re gonna pay $300 a month for, we better have it right.

Justin Cooke:                     The other thing that’s interested is that, we’re going from a higher volume, lower price point with our support to a lower volume higher touch support team. We’ve been doing a lot of training. We sat down with our team this last Saturday, and just really hammered it out. We’re gonna be doing it again this next Saturday, this coming Saturday, and going over what that means, what white glove support really means, and really laying down the process that we want them to use considering the new process we’ve set up was Zendesk. We’re also using things like Slack for team communications. We looked at Hipchat and ended up going with Slack. We’ve got an interesting challenge ahead of us, but I think our team is up for it. Based on our last meeting, I’m feeling pretty positive about how everything has gone.

Joe Magnotti:                    Yeah. I’m pretty excited too. I think the collaboration tools will help, and that’s what our customers want. They want better responses faster, and moving to a 24 by 7 support with live chat I think that’s what people expect these days.

Justin Cooke:                     Next up, we’ve got our final interviews with the new apprentice, so we’re gonna be handling that early this next week, probably Monday, or Tuesday, maybe Wednesday of next week. We’ve got some really good applicants. I’m really excited to get them on the phone. This will be the first time you’ve actually talked to them. I think you’re gonna be pretty impressed too.

Joe Magnotti:                    Yeah. I would say, I hope you have good Cliff Notes because I am just out of the loop on this one.

Justin Cooke:                     Yeah, man. You could some reading while you’re in Manila relaxing this weekend, and get up to speed and be ready to go for early next week.

                                                Last point we wanted to mention is, we promoted our apprentice, so Vincent is now our marketing director. He’s done a fantastic job for us in terms of really growing our business forward, in terms of marketing, conversion rate optimization. It’s been great actually.

Joe Magnotti:                    I’ve seen him grow a lot too actually. How long has he been here now?

Justin Cooke:                     Six months, [crosstalk 00:04:05].

Joe Magnotti:                    Yeah. I’ve seen a lot of personal growth and professional growth from him alone. It seems to be a two-way street. We’re getting more out of him, and he’s getting more out of us.

Justin Cooke:                     Yeah, man. I’m really excited about that, so congratulations, Vincent. All right, buddy. Let’s move into the heart of this week’s episode.

Announcer:                        This is the Empire Flippers podcast.

Justin Cooke:                     All right, Joe. We were talking about this a little bit over lunch. We’re gonna be talking about the Pros and Cons of Baselining Your Business in Southeast Asia. But before we do that, let’s talk a little bit about what our experience was.

                                                When we came here from the US and it wasn’t like we came out here for the locational benefits. We didn’t even know some of the benefits, or some of the downsides, I think. We didn’t view it as Southeast Asia in general. We viewed it as the Philippines. It was either home in the US, or here, and we missed, I think, the broader picture that we see now, which is we don’t have to necessarily be here. We could travel. We could have teams in remote locations, and travel to them, or have them travel to us. We didn’t see that before. It was like, we’re either coming to the Philippines, or we’re going home. That’s it.

Joe Magnotti:                    Yeah. I think that’s because, and we’ll get into this a little later, but our networking wasn’t as good back then. In ’08, ’09, we weren’t as connected to the community, online or otherwise, entrepreneurial, and we were just on an island, so to speak.

Justin Cooke:                     Yeah, yeah.

Joe Magnotti:                    I think we’ve come a long way, baby. We are where we’re at now, and we know things a lot more than we did before. But yeah, you’re right. I really wanted to live in a foreign country and to be able to make dollars and spend pesos. I wanted that dream when I lived in Brazil.

Justin Cooke:                     Yeah.

Joe Magnotti:                    And I was able to fulfill that part of living here in the Philippines because I think that idea that you could have a much better life at $70,000 in a foreign country than you can in America is very true.

Justin Cooke:                     A dollar stretched further, and you can do a lot more. You’re a lot closer to different countries that you can travel to, and that was an exciting piece for us, but we still figured we were just going to be based in the Philippines. What we’re finding is there are a lot of expat entrepreneurs that are based in different hubs all around the world, and a ton in Southeast Asia. We’re gonna get into that. First, let’s talk about pros, man.

                                                The first point we have is that your dollar goes a long way, a really long way. For anywhere from $1,000 to $1,500 bucks a month is doable. I mean you can actually live, not amazingly well, but really well in places like Thailand, the Philippines, Vietnam as long as you stay out of the major international cities, and you’re not trying to live like a baller, or boss, you can live on $1,200 bucks a month, $1,400 bucks a month in profit.

Joe Magnotti:                    Yeah. I would definitely say that’s very possible. I wouldn’t recommend that as a long term strategy. That’s definitely a ramp up strategy. You’re in the really bootstrap phases, but definitely easy to do around the $1,500 mark.

Justin Cooke:                     You can go to Chiang Mai with $15,000 in the bank, and for a year knock out your business. If you want to get started, you have a year to catch up and start earning something. That’s with earning nothing, right. Maybe $10,000 although, that’s pretty aggressive. That would be pretty aggressive deal for $10,000 grand, but only $15,000 in the bank and you can really get started. Some people are like, “Oh, how much cash do I need in the bank?” I know to some people that might be listening to this putting together $15,000 grand to get your business started seems like a bit much. But the rest of you, $15,000 grand it’s not that much really to get a business up and running. I know everyone dreams of the, “I’ll just buy a Go Daddy domain and I’ve got my business started.” Well, that’s not really how it works. It is gonna take some money, some personal runway to get you there.

Joe Magnotti:                    Yeah. I think the nice thing about that kind of start-up is that if you do have limited funds, if you have $50,000 then you can spend $15,000 on yourself and the rest on the business, right.

Justin Cooke:                     The thing about this, I can take myself and two founders, the three of us can move to Chiang Mai with $40,000 to $50,000 in the bank and spend a year knocking out our business, live together, work together, have a decent lifestyle, eat well, eat some good Thai food, and knock it out, man. That’s pretty cool.

                                                Now, when you get into the $3,000 to $5,000 a month range, now you’re traveling plus you’re banking a bit of cash every month. You’re doing well. I mean you’re living a fairly good life in the $3,000 to $5,000 a month net profit rate. As your business matures, or if you’re at that point already, you can come out here and live really well, and pay for most things, and just be taken care of.

                                                When you get into $6,000 to 10,000 a month, you’re gonna have basically everything you need. Money is not a big concern, but you don’t think about, I just want to fly up here real quick. I’ll just go. It’s not that big of a worry.

Joe Magnotti:                    The other thing about living here that’s a pro in talking about your dollar goes a long way, is you get out of that consumer mentality, right. You don’t really want the next, and best computer, or the next best TV, or whatever. You don’t really want that stuff anymore, so a lot of your disposable income just gets banked. Then you say, “Yeah, I’m gonna go on a nice trip, and I’m gonna stay at a nice hotel room. I’m supply [crosstalk 00:09:02].

Justin Cooke:                     Splurge, it doesn’t matter.

Joe Magnotti:                    It doesn’t matter.

Justin Cooke:                     Yeah.

Joe Magnotti:                    You have plenty of disposable cash, especially in that 6 to 10k range, for sure.

Justin Cooke:                     Yeah, over $10,000 and you’re just banking. You’re banking. You can go to the nicest, best cities in Southeast Asia live there like a boss, and be banking plenty of money. You’re really starting to invest in assets at that point. Yeah, I mean I think it’s a fantastic place to get started in your business. But, even once you start to get some traction I still think it’s a great place to hang out, man. I mean could you imagine, let’s say you’re at $12,000 a month, and you’re in Ho Chi Minh versus $12,000 a month in San Francisco, or New York, or LA even?

Joe Magnotti:                    I mean I would say $12,000 in San Francisco, and New York, or LA. I’ve lived in all those three cities.

Justin Cooke:                     It’s okay.

Joe Magnotti:                    Yeah, you’re just normal. You’re not a baller.

Justin Cooke:                     Ho Chi Minh, yeah.

Joe Magnotti:                    In Vietnam, or-

Justin Cooke:                     Like a boss.

Joe Magnotti:                    … or Philippines.

Justin Cooke:                     You’re living like a boss.

Joe Magnotti:                    Absolutely.

Justin Cooke:                     You’ve got entourage. You’ve got everyone taking care of everything for you. You’ve got teams. It’s ridiculous.

Joe Magnotti:                    Yeah.

Justin Cooke:                     It’s ridiculous. Yeah, it’s fantastic. The fact that your dollar goes a long way is a huge, I think, value point.

                                                Point number two is that things are always buzzing in some of these expat entrepreneurial hubs. There’s action, right. People are working. They’re hustling. They’re doing interesting things. There is a benefit in being around other people that are doing interesting things on a regular basis. It does something for you. Now, you can get caught up in the networking where you’re too busy at the coffee shops talking rather than working, but you can easily pull yourself out. If you’re around the people that are really building cool shit, it’s not like you’re just hanging out and talking all the time. You’re actually building businesses together.

Joe Magnotti:                    Yeah, agreed. I mean I think that it’s you have to be around other entrepreneurs if you want to be successful. Doing stuff like that is easier here in Southeast Asis then I think in almost anywhere else I’ve been to.

Justin Cooke:                     These people understand you. They get you, right, because they’re doing the same thing. The cool thing is there’s a whole bunch of choke points that make this really easy to connect. When you go to Chiang Mai, and there’s over 100 expat entrepreneurs, well over 100 up there living working and building their business. You go to Saigon, we know a bunch of people in Ho Chi Minh right now building their business. You’ve got Bangkok. You’ve got Bali. You’ve got Manila. You’ve got Davao even, right, because we’ve built a bit of a community here. It’s so cool to have all these different hubs you can go to and connect with other people because you’re both building interesting, valuable businesses.

Joe Magnotti:                    Yeah. That’s what builds strong bonds forever, right. That’s what’s gonna make people life long friends is having that kind of venture together.

Justin Cooke:                     There is this sense of we’re all in this together, right. That you don’t get maybe at home, or around the old crowd that you used to hang with, the people that still have jobs and they’re going to the bar watching the football games. There is benefit to that, and it’s fun, but you’re in a different situation with other people that are building similar things. Some of that talk, some of that conversation, or what used to interest you, doesn’t interest you anymore because you’re in a new crowd and community that’s building a business and not just living your life.

                                                Third point. You are not a weirdo, either that, or you’re surrounded by other weirdos too, which makes it a lot better. I mean this comes down to the fact that everyone out here is a little weird, even the normal expat entrepreneurs are a little odd, right. They’re a little out there because they … everyone made a decision to leave and for various reasons come out here and start their entrepreneurial journey in Southeast Asis. It’s a different type of person that makes that decision, and that move. You’re running to people that are testing new Pomodoro techniques. They’re trying to hack their sleep schedules. They’re trying out this new weird diet. You get into these really interesting conversation that if that’s something that you’re into, you’re gonna fit right in because you’ve got a bunch of people around you doing the same thing, hacking themselves, hacking their businesses, and seeing what comes of it.

Joe Magnotti:                    Yeah. Business nerds, fitness nerds, travel nerds, I mean I think you get them all. You will fit right in if you like those things here, for sure.

Justin Cooke:                     There is also not the need, or the feel that I had in the US of keeping up with the Jones, right. Getting the new car, and making sure that I have all this, that, and the other, that it’s not as important out here, and everyone else realizes it too.

Joe Magnotti:                    Yeah, I mean we talked a little bit about that in the money section. But, maybe some of it is the fact that we don’t have access to that. I feel like I go to the mall and there’s just a whole bunch of junk to buy, whereas, maybe if we went to the mall back home and it would be more high end. That might be some of it, but I also think my priorities have changed just being out here. I don’t require a lot of stuff anymore.

Justin Cooke:                     I’m not, and I don’t think you’re this guy either, you’re not the minimalist. I’m gonna have 20 things or less guy. We’re just not that. But, we’re not also just buying crap that starts to fill up our house that we don’t care about. We’re interested in the things that we like, but we’re not just buying to consume. I think that’s a different approach that we might have felt before.

                                                Another thing that’s interesting is that, and I know some of our listeners will go, “Yeah Justin, sure,” but when you’re in the US and you’re surrounded by people working jobs and not really on the same trajectory, or journey that you’re on, it’s hard to realize that you can actually design your life. You can build out the life that you want. Because everyone else is following a script that’s been laid down for them, or that’s been passed down to them from earlier generations, so realizing that I can design my life, another lifestyle design thing, but that you can actually design your life and plan it out and start to hit milestones and things that you want to do. It’s just so much clearer out here than it was in the US. That’s how it feels to me anyway.

Joe Magnotti:                    Yeah. I think because you have freedom. I mean I think that’s what it really comes down to is here, because the monetary restriction have been removed, the job’s restrictions have been removed, the corporate ladder has been removed, it gives you a whole bunch of freedom in your life that you didn’t experience before.

Justin Cooke:                     It’s more difficult to realize that when you’re around other people that are following the scripts that have been laid out for them. It’s harder to feel it. It’s harder to see it. But, when you see other people, or when you talk to them on a regular basis that are building out the lives that they want, it’s a lot easier to see that you can do that as well.

                                                The fourth pro I wanted to talk about and, we talk about this a lot Joe, is basically buying your way out of life and business distractions. The real value in Southeast Asis comes in at, it seems silly, but not having to go food shopping, not having to do my laundry, not having to clean the house, or do all this stuff that … just maintenance stuff that you would do in the US, your commute, right, you don’t have to do all these things.

Joe Magnotti:                    Yeah, I mean I was talking to somebody about this today and it’s not really hard to do that here. It’s not hard to hire a maid. It’s not hard to get a service department in Vietnam. I mean these things are very easy, and commonplace here, and cheap. It’s very affordable, so taking advantage of that has freed up so much time in my day. It allowed me to explore other activities that I never would have had open to me before because I’d be too busy looking for quarters for the washing machine.

Justin Cooke:                     Right. You’re digging through the couch. Yeah, it’s just so much different out here. The other thing is we talked about coffee shops, and meeting up with entrepreneurs. You can do that, do your networking, but you can also go and have a cave day and knock some work out, right. Everyone totally digs it.

                                                The other day I was supposed to go play poker with Dan. We were gonna go play and have a good time for a few hours, and drink a couple of beers, and play some poker her in Davao. He texted me and he said, “Hey, are we gonna play poker?” I was like, “No man, I’m in. I’m knocking it out.” He’s like, “No, I totally respect that. It’s fine.” Everyone gets it because they do the same thing. It’s not like you have friends pressuring you, “Oh, you have to go out. You have to go do this,” no, because we’re all building business, so if you need to lock yourself in and knock some work out everyone gets it.

Joe Magnotti:                    Yeah. Well again, I think it comes back to the freedom. With freedom comes a lot of responsibility. I think you respect that, right. You come to know how much you respect that over time, especially related to your own life. You don’t want to give that up by blowing it, right.

Justin Cooke:                     Our fifth point under the pros, it’s a damn fine way to build a team. It’s awfully cheap for them here too. One way to look at this is that, you’re gonna get better pound-for-pound value with hiring a local talent in Southeast Asia than you are most anywhere else, the US, Europe, Australia. You’re gonna get more pound-for-pound value. Now, what does that mean? That means someone here, for example, in the Philippines in Davao specifically, you know what, for $300, or $300 bucks a month we’ll be able to replace someone for $1,500 to $2,000 a month back in the US. Someone for $700, $800 bucks a month will be able to replace a $2,500, $3,000 a month employee back in the US.

Joe Magnotti:                    Or what about working with a firm? I mean we’re having very good luck with our firm that we found here locally. I mean that’s something that back home would be extremely expensive, $100 dollars an hour [crosstalk 00:17:45].

Justin Cooke:                     We’ve done it, yeah. Our development team here, I think any works that’s above and beyond the scoped out project is $15.00 an hour, or something like that.

Joe Magnotti:                    That’s right, yeah.

Justin Cooke:                     That’s the firms’ rate, so they’re obviously making margin on that paying their people. That is fantastic. I’ll take that all day long. They’re really good. We’ve been really pleased with the work they’ve been doing for us.

                                                The other thing is too, and we’ve been taking advantage of this obviously with the Apprentice Program, you can export talent into Southeast Asia for cheap. There are a ton of younger guys and gals that are in Australia, and the US that would love the opportunity to travel and do what you’re doing. All you have to do is get the word out, and you can bring people over here. The benefit is they’re not gonna cost you as much. If they were staying in San Francisco, or LA it costs a ton because their cost of living is so high. You get them out here, and they could live a really good lifestyle for much cheaper than they could there.

Joe Magnotti:                    Yeah, I think this one’s huge. I only wish that larger companies would take advantage of it, maybe through virtual employees, or something like that. But yeah, I really think if you’re looking to bootstrap you could save a lot of money this way, and get good talent Westerners working on your team for cheap.

Justin Cooke:                     Yeah. Someone that comes from the same background as you, or has the same background as the customers you’re looking to serve. As I mentioned before earlier in the episode, taking three people and moving them to Chiang Mai, maybe it’s you, maybe you’re the owner, and you want to grab two people with you to come out to Chiang Mai. $40,000 or $50,000 all three of you can be taken care of for a year while you knock out your business. That’s pretty interesting, man.

                                                All right, enough about the pros, man. Let’s get into the dark side of building a business in Southeast Asia. It’s not all lollipops and gumdrops out here. There are some negatives too.

Joe Magnotti:                    Yeah. You really should do the cons first, but okay.

Justin Cooke:                     Now we’re going dark. We’re going dark toward the end, man. We’ll leave them with some bad taste in their mouth.

                                                First point is, you are always an outsider. There’s just no way around it. There are days that you’re gonna get stared at. You’re never exactly gonna fit in. It just doesn’t work.

Joe Magnotti:                    Yeah, I don’t know how true this is in other Southeast Asian countries, but I tell you, I play basketball locally two, or three times a week, and I still really don’t have any close Philipino friends. It’s hard to make friends here because you’re the foreigner.

Justin Cooke:                     Yeah. It’s not that they’re not welcoming, they are, but it’s hard to connect. It is that way in other Southeast Asia countries as well. Friends in Thailand are telling me very similar things, and Vietnam. It’s common. But also, not just that, but you get a different treatment too. In Thailand, you’ll get the foreigner price, so they’ll have different pricing. Sometimes you’re treated positively in a negative way.

Joe Magnotti:                    You’re front at the line at the bank here in the Philippines. Yeah, that’s the weird thing, right.

Justin Cooke:                     Yeah, they’ll let you go in the front of the line ahead of locals because you’re a foreigner. It’s really weird and uncomfortable. It’s nice to take advantage of benefits, but that seems like a pretty weird one, so it’s both ways. I mean other times you’ll have people looking at you because you’re a foreigner, and they’re whatever, they don’t like foreigners, or whatever, so you get both negative and positive difference in treatment, and that can be a little bit odd. It’s especially odd when you just want to be left alone. When you just go out, and you’re just like, I wish people would just ignore me and let me go. I wish I could blend in on those days, and then you just don’t blend in, man.

                                                Second point we wanted to mention, and this was one that was mentioned at DC Bangkok last year by James [Sherinprovo 00:21:13], I thought that this was pretty interesting, is that a lot of entrepreneurs out here can lose their concept of their own value. Things are so cheap, living expenses, and that type of thing, that you start to undervalue what your time is worth, so instead of charging $100 bucks an hour you go down the value chain. You go, “Do you know what? I can live just fine as a contractor charging $20 to $30 bucks an hour. Why don’t I just do that, and I’ll be so cheap compared to everyone else that’s connected.” Then you start to think, “Well, maybe I’m only worth $20, or $30 dollars an hour.” That could be a deep spiraling hole.

Joe Magnotti:                    Yeah. We see this more often than you would think. I mean I see this from a lot of guys that come out here and start to go down this spiral a little bit. Things will get very cheap for them. They realize they don’t have to work as hard, so then things get even cheaper, and they don’t work as hard. Their income goes down, and their expenses go down.

Justin Cooke:                     I’ll just write content for $15.00 bucks an article, right.

Joe Magnotti:                    Yeah.

Justin Cooke:                     I can knock one of those out in 45 minutes. I’m gonna be a content writer. They give up their dreams of being an entrepreneur and just get by as a low level contractor.

                                                The other problem is that you can’t downscale from here, right. If you’re living in Sydney, if you’re living in San Francisco right now and you come out of Southeast Asia you’d be like, “Oh my God. Things are cheap. That’s awesome. I get amazing value.” But, if you come out here and you start to go, “Oh, you know what? I’m really looking for something that’s higher value, less expense.” Well, good luck. You’re probably not going to find it.

Joe Magnotti:                    Yeah. I remember there was a guy from New York City that came out here to Davao. He just never asked for change on anything. It didn’t matter if it was 500 pesos, or 100 pesos, he just paid with the bill that he had in his pocket, and just said, “Everyone keep the change.”

Justin Cooke:                     Done, done. Yeah, it’s fine.

Joe Magnotti:                    Yeah.

Justin Cooke:                     But, once you come out, and then let’s say you start to go, “Give me back my change, or I used to give 20 pesos as a tip, I’ll leave four pesos this time,” or “How much is that beer? It’s 80 pesos. I wish it was still 70.” Then you start to get in this like wow, you’re battling over a 10 pesos beer, man? 10 pesos, that’s horrible. That’s really not good. You’re really downgrading here. You’re gonna be in trouble because you can’t afford to go down any further. This is it.

                                                Other people we’ve seen, and we call it, go native, right, where they fall into this trap of isolation. You’re on an island, right, especially in the Philippines. You’re on an island, and you don’t really connect with people outside of your location. You don’t really connect with other expat entrepreneurs anymore, and you just hang out locally, and just get down, and live cheap. People lose their entrepreneurial spirit by just getting island, right, going island.

Joe Magnotti:                    Yeah. I don’t think we weren’t guilty of losing their entrepreneurial spirit, but we-

Justin Cooke:                     Well, I’m not saying us. I’m saying that we know people that do.

Joe Magnotti:                    But, we were guilty of definitely being isolated for a year that we were here.

Justin Cooke:                     Yeah.

Joe Magnotti:                    We didn’t do enough reach out, or connecting, and being part of the online community, and really making sure that you met other people doing business both locally, and online made a big difference in my life.

Justin Cooke:                     There is also the concept, or just the idea that you can become a big fish, or even a middle size fish in a very small pond. You’re not in the big show, right. You’re not a marketing exec, or an attorney in New York, right. You’re not in the biggest game in the biggest place there is. I’m actually okay with that, but some people I think it bothers them. They feel like, “Oh, I’m playing on a smaller stage. I want the big stage.” Do you know what I mean?

Joe Magnotti:                    Yeah. I mean my uncle always used to say, “I’d rather be the small fish in the big pond.” I’d rather be the-

Justin Cooke:                     I totally disagree with that today.

Joe Magnotti:                    Totally disagree. There’s a great book on it. I can’t remember what it’s called, but a very good book on this kind of stuff, and why it doesn’t work. He was just saying. “I’d rather be the worst student at MIT because at least I’m going to MIT.”

Justin Cooke:                     Yeah.

Joe Magnotti:                    For me, I’d rather be the best student at a college that’s the B college, or even the C college, but I’m towards the top because things are gonna be a lot easier for me.

Justin Cooke:                     Yeah, it’s funny. This interesting point, and you’ve probably heard other entrepreneurs, or bloggers, and they talk about I want to be the dumbest guy in the room because I have the greatest value. I think that’s what your uncle is trying to say, is that if you’re the small fish in the big pond is that you’re surrounded by other big players, and you have an opportunity to go up. But from a lifestyle perspective, it’s better to be a bigger fish in a smaller pond. Maybe not at the very top of the food chain, but up there because it’s, I don’t know, it’s just better. It’s better, I think.

                                                I think there is the problem though that if you’re only surrounding yourselves with smaller fish you do end up into this guru status, or the top of the food chain, and there’s not as much learning that you have available, right, because you are at the top, or towards the top. You do need to surround yourself with mentors that are, I think, further ahead than you. They are a step or two steps ahead of you, so that you don’t lose that edge. You don’t get complacent in your business.

Joe Magnotti:                    Absolutely some drawbacks, but in general you need to be careful like you said. I still think that this was a questionable pro/con benefit.

Justin Cooke:                     Yeah. The third point I wanted to mention is that there are still some distractions and inefficiencies that you simply can’t buy your way out of. We’ve been dealing with that recently with some serious power outages her in Davao. I mean there I was, we were getting two power outages a day. One for five hours, and another for two and a half hours, so we’re talking seven and a half hours a day with no power. I can’t buy someone to turn the power on for me. It’s just gone. There is other things like government bureaucracy, and trying to deal with immigration issues. Not in the Philippines so much, but other countries where you have to leave the country. You have to leave the country. That’s it. You gotta come back. And just dealing with that time waste.

Joe Magnotti:                    I would just say the inefficiencies and bureaucracy in general. It just seems like you go to the mall to buy something simple, and it takes three different people. They’ve got to call the manager over because they never saw a credit card like that. There’s a line, and there’s only three people working behind the counter, but they’re only working one cash register. It just seems like there is a lot of that stuff here that you definitely have to just deal with and be very patient. Things break, and things don’t work as well. You can’t look up the plumber online when your sink is broken. This is not how stuff works here.

Justin Cooke:                     There are times when you just need to nod your head and smile and go, “Yeah, it’s a mess, but it’s fine. Well, I’ll get through this it’s just another crazy wacky experience.” The people that come out here and get all really flabbergasted, and angry, and frustrated because this doesn’t work. I mean that happens to all of us sometimes, but if you’re that type of person I think this could be a very difficult transition for you, right.

Joe Magnotti:                    My first three months here was tough that way until I just learned that you have to accept.

Justin Cooke:                     Our fourth point is that poverty is always around the corner. This can be a bit of a depressing topic. But, you’re in a nice place and you’re enjoying yourself, and you’re at a great, nice, beautiful, amazing coffee shop with good wifi, and you hop in a taxi and go around the corner, and it is just destitute.

Joe Magnotti:                    Remember the first time we were here in Davao in 2008, we stayed at the Marco Polo. We open the window to our penthouse place, and we look down on a squatter area with tin roofs, and stuff.

Justin Cooke:                     We were like, “What is this all about?” Remember on the airport, or from the way to the airport to the hotel, we were driving by and we saw some tire burning, and kids with no shoes running around. They were cooking food, or something. We were like, “What is going on? What kind of place are we at, man? This is pretty crazy,” and it is.

                                                But, it’s funny, when Vincent first got here we were driving through an area that looks pretty poor. He thought it might be dangerous. He’s like, “Is this a bad part of town?” I was like, “No, man. Poverty or poor does not mean dangerous at all.” I mean it does in the US, so if you go through a poor area you go, “Oh well, this might be a more dangerous area,” but it’s definitely not the case here. It’s just all around you. For people that, that really bothers them they can be a bit depressing.

                                                The other thing is that just, especially in the Philippines, but this true in Thailand, this is true in Vietnam as well, some things just aren’t that nice. They’re not really high quality, great. They’re not nice, right.

Joe Magnotti:                    Yeah, I don’t know what it is. The workmanship just seems to be at a lower level.

Justin Cooke:                     Shoddy, or it’s just not as well maintained. I think it’s particularly true in the Philippines, especially when it comes to architecture and stuff. You’ll see these big just cement buildings, right, where it’s different in Indonesia, and Bali specifically, or places like Thailand, but there’s a lot of that. It’s just not that nice.

Joe Magnotti:                    Yeah, I mean the weather doesn’t help, right. I mean it’s hot, and it’s rainy, so things don’t hold up that well under heat and rain. I think we have that little bit of advantage back home. You have your classic automobile in Southern California. Things can last forever, right. But, you don’t see that thing here because the roads are gravel, and you got potholes, and heavy rain, and then heat. Your car would just be worn out.

Justin Cooke:                     Our fifth point is actually that traveling can be fairly expensive. We’re not talking expensive in terms of dollar amounts necessarily, but it’s the time. If you’re moving around even if you’re doing the slow travel thing and you go couple of months here, a month there, three months there, you’re gonna lose a little bit in between each move because you have to figure out with everything is, get acclimated and accustomed to the city. I think we’re in a much better position to do that now than we were when we first came to Davao.

                                                This is one of the things. Right now I’m planning on leaving in September, so I’m gonna do a month here, two months there. I’m going to Thailand for a bit. I want to do Bali by next January. We were talking about this and Joe was looking at me going, “Oh my God. I don’t think I could do it again.” I was like, “What do you mean?’ When he first got here we didn’t know anybody. He didn’t anything. He didn’t know where to get furniture. You had your landlord help you get toilet paper, and cleaning supplies because you didn’t know anything. It was such a pain in the ass that you’re thinking right now it’s gonna be difficult.

                                                I think with a better network that helps because they can help you get plugged in a bit easier, and lead you around and show you where everything goes. I don’t think it would be nearly as hard as it was when you first got here, but I know that you went through it. I wasn’t even here, so you went through that for a few months, and you said, “It was hell.”

Joe Magnotti:                    Yeah. I think it’s a huge distraction from work really because you go to just get a haircut, and you don’t know where to get a haircut.

Justin Cooke:                     Yeah.

Joe Magnotti:                    You wind up going to the place down the road, and you get a bad haircut. Then the next time you’re like, “I want to get a better haircut than that.” Those things are worrisome to me when you’re gonna be traveling. I hope it doesn’t distract you from work.

Justin Cooke:                     I go out to do a podcast, or I go to a café, their wifi sucks, and the next place is too busy. We can’t talk, or whatever. They we’re like, “Oh man, if we don’t do the podcast,” and you’re like, “Oh my God, what a mess.” Yeah, it can be a bit trying to make sure you’re plugged in. I think having networks and knowing other people and some of the cities you’re going to and being able to plug in right away makes it a lot easier. For people that come to Davao, that’s been a real major point for us over the last couple of years is helping them plug in, show them where to go. Meeting up with them for dinner, or drinks, or lunch, or coffee, or whatever to get them … Give them some advice as far as getting up and running.

Joe Magnotti:                    Yeah. I think having some money helps too, right. If you’re really bootstrapping, if you’re at that $1,000 level and you’re trying to get set up in Chiang Mai, or something and you don’t know anyone, it can be expensive for you to do that. Whereas, if you come in with $5,000 you can just pay someone to do it.

Justin Cooke:                     Yeah, man. That’s about all we have to say on the pros and cons of bootstrapping your business, or baselining your business in Southeast Asia. I definitely think the pros outweigh the cons, but there are some things that you need to be aware of. You need to understand yourself and whether it’s a good fit. I would recommend trying it out though. If you’re really interested and just making the jump it’s relatively inexpensive, especially if you know someone on the ground that can get you plugged into the community, plugged in to other entrepreneurs in the area, and they can get you set up in terms of getting a place, and finding where all the good wifi spots are, and getting you set up, I think you’ve got a really good shot at digging it. If you don’t start off in the place that you want to be in, you’ve got the opportunity to travel around until you find what you would consider home, at least for a while.

                                                All right, man. Let’s get into our tips, tricks, and our plans for the future.

Announcer:                        You’re listening to the Empire Flippers podcast with Justin and Joe.

Justin Cooke:                     All right, man. My first tip for the listeners is a website called Human Proof Designs.com. I spoke to this guy the other day. His name is Dominic Wells. Basically, he has a business, or a service that offers starter sites. He does a bit of niche, or keyword research, and will offer you a personalized theme that looks … Well, it’s human proof, right. It’s not just built for search engines. It’s not built to optimize around keywords necessarily. But, if you’re looking to get started at building sites, he can help you get set up. He has a great training program to get you started in building your own blog, your own site, and get you up and rolling.

                                                I really like what he’s doing as opposed to a bunch of the scammy, or spammy get started sites, whatever you see the word [inaudible 00:34:29], or whatever, promising riches and that kind of thing. He doesn’t do any of that, but he has a much more straightforward approach. I really like what he’s doing. I think it’s pretty interesting for people looking to get started.

Joe Magnotti:                    Yeah. My tip for the week here is Found App.com. It’s only for Macs, unfortunately.

Justin Cooke:                     I’m so irritated about this. It’s ridiculous. I saw they’re adding it for Windows. I don’t know, Androids eventually, whatever.

Joe Magnotti:                    What it allows you to do it, it allows you to search everything everywhere with just one click of the keyboard. You can search your Gmail. You can search your Google apps, your drive, your Evernote, your computer. Everything can be searched just in one little app. I mean between this and Alfred it really makes a Mac very, very easy to use, very quick. Check it out. Found App.com.

Justin Cooke:                     I’m jealous man, but there’s no way, I’m not going to the dark side. You guys are not convincing me. I was at a what, a coffee shop, or something we were at the other day. I literally look around, that was our business meeting, everyone there has Macs, everyone there. But, I don’t care, man. I’m a holdout.

                                                All right, buddy. That’s it for Episode 94 of the Empire Flippers podcast. Thanks for being with us. Make sure to check us out on Twitter @EmpireFlippers. We’ll see you next week.

Joe Magnotti:                    Bye-bye, everybody.

Announcer:                        You’ve been listening to the Empire Flippers podcast with Justin and Joe. Be sure to hit up EmpireFlippers.com for more. That’s EmpireFlippers.com. Thanks for listening.

 

Photo Credit: Vagabundo Magazine


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  1. JakubHanke says:

    I think considering $1500 a month to be frugal living in Thai is kind of overkill… I live for less than $2000 in Sydney and pretty much don’t feel like missing on something.

    Sure eating out every day, having a maid etc would be great, it’s just not necessary :)

    I took it the other way. Moved from a relatively cheap place (Prague) to one of the most expensive you can find. That allowed me to easily bank few dozens thousands $ (while doing literally nothing at my job) and move on.

    Also getting away from friends who, exactly as you said in the podcast, are forcing you to go to a party or whatever every single day helps to actually get ahead. It isn’t as much fun without them for sure, but I wouldn’t get anywhere otherwise :)

    • Justin Cooke says:

      Hey Jakub,

      Unfortunately, “cost of living” is just one of those things that’s heavily relative. $1,500/month is “baller” for some currently living in Chiang Mai on $600 – $800 per month, and it’s not living well for someone that’s accustomed to $3K-$4K per month in that same place.

      For me today, living in place like San Diego on $2K/month wouldn’t be acceptable. I’ve never been to Sydney, but I’d imagine I’d feel similarly, especially after discussing the cost of real estate over a few beers with a few Australian buddies.

      Take into account the different prices of good/services across countries and you’ve got yourself a hot mess when you try to explain how all the $$ works out.

      Again, trying to determine what’s “necessary” is along the same lines, I think. :-)

      • JakubHanke says:

        Hi Justin,

        I know it’s extremely dependable on one’s lifestyle. Still, I think that someone who doesn’t have big stash just can’t spend that much in Thai while trying to get a business off the ground. Suck it up or I’ll punch you in the face as MMM would say :))

        From a quick look on numbeo – Sydney is about 50% more expensive than San Diego.

        And yea, real estate prices here are crazy… ie http://news.domain.com.au/domain/real-estate-news/unliveable-redfern-cottage-sells-for-1-million-20140201-31tq8.html

        • Comparing apples to volkswagens..

          I am a Sydney-sider and let me tell you the kind of lifestyle Justin lives would cost $10k+ in Sydney per month.

          The house alone is 4-5x cost than in the Philippines.

          Housestaff? almost unheard of in Sydney and would require at least $4-5k per month

          Food, clothing, transportation? 3-4x

          • JakubHanke says:

            I agree with you Damian. My main point is that someone without nice chunk of savings, who wants to change his/her life by starting a business can easily live for under $700 in Thailand. That’s what I meant by overkill when hearing “$1500 is doable for short term”

            Disclosure: maybe my view is little skewed after I wasted a lot of money on luxury stuff while thinking the income will last… and it did not last. So after getting out of debt and again having some cash-flow and assets I’m much more careful :)

          • Justin Cooke says:

            Hehe – that’s what makes discussions around cost of living so difficult – one person’s baseline is vastly different from someone else’s!

            A funny note – whenever we bring this subject up I almost always get called out from one side or another. Some say, “No way it costs that much to live here/there!” while others think I’m downplaying the costs/expenses, hehe.

  2. Dom Wells says:

    Great episode guys. I’m based in Taiwan and there are definitely some similarities, most notably how far the dollar goes here, and how hard it was to find a good hair cut initially! I do wish there was more of an entrepreneur hub out here, there’s a great expat community but most people are teachers or working for western companies over here on assignment.

    Also, appreciate the shout out!

    • Justin Cooke says:

      Happy to give you a shout, man!

      Yeah – I’m looking forward to visiting Chiang Mai later in the year – tons of other entrepreneurs up there.

    • Scott says:

      I used to live in Taiwan too. Loved the place, great people, wonderful, great place to learn the language (i think better than China). I hate to say it, but the problem is the laowai (the foreigners.) Taiwan is a great place to teach English, not really much of a start up community or even a place to find a non English language teaching job. The foreigners tend to be much more more chilled out, not much hustling going on. At least in Taipei, I can’t speak for any other areas of the country. I suppose that’s good if your goal is to travel for a few years.

      Also, get a guy to cut your hair. As someone who lived in China and taiwan for a while, Asian men are some of the best hair cutters I’ve ever had in my life. You may wish to note I have very curly hair, hard to cut.

      • Dom Wells says:

        Totally agree with you Scott, I’ve been here since 2008 so well aware of the situation. It’s like you said, people are content with being Teachers for the most part, and for those who aren’t, options are limited. That’s why I turned online to get out of the teaching “rat-race”. It would be great if there were more of a “start up community” here though. Interesting tip about the male hair cutters!

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