Justin Cooke

CMO/Founder at Empire Flippers and host of Empire Flippers podcast, Justin is the brand ambassador of the company. He’s also a digital nomad (i.e. homeless), but spends most of his time in Manila, Bangkok, and Saigon. When not geeking out on sales funnels and marketing automation, he loves fruity drinks by the beach and watches Game of Thrones as a guilty pleasure.

He started Empire Flippers way back 2010 and now runs a 22 person team that are scattered across SE Asia and South America. The company’s management team is technically “location independent”, but they all get together every 3-4 months to spend a month working together.

Justin Cooke on Running Remote Conference 2018

Hey what’s going on wow what a good-looking group you are. I can’t believe someone conned you guys are coming all the way to rainy Bali to listen to a guy talking in socks man this is ridiculous welcome to Bali alright. So we’re talking about three failures that led to fifty million dollars in sales. That’s super clickbait ting. I’m totally aware we’re gonna get into actual failures.

I promise you let me do the intros really quick and by the way I know I’m the last guy. So I’m the one keeping you from food and drinks. I promise thirty minutes of talking ten minutes of Q&A and we’ll get right into it. Alright who am i Justin Cooke.

Justin Cooke founder at Empire Flippers and host of Empire

Flippers podcast

I’m a partner to company called Empire Flippers. My wife’s in the back we are actually nomads of the digital nomads. So we travel around. We have a couple of suitcases and we are two weeks here three weeks. There we’re in Bali for a couple of weeks. Then we were heading off to Prague and then doing a Europe thing for a couple of months companies Empire Flippers.

I help people buy and sell online businesses

We’re a business broker. So we help people buy and sell online businesses we have a marketplace for that and a team and that’s remote as well. We’ve done a lot of business. So you know it went from my business partner. I sitting in a townhouse and a remote part of the Philippines hustling. It up to 50 million dollars in sales total.

We have a customer base potential customer base of 80 thousand people that aren’t shouldn’t buying and selling online businesses. So surprisingly enough this is a real market for this and then we’ve been at Inc 5000 company two years in a row I think we’re gonna get this third year so it’s three years in a row we’re really close to it so that’s it that’s all I’m pimping with Empire FlippersI’m gonna talk about some of the negative stuff that we went through.

So you know that we’re not just showing the company our partners we’ve worked a bunch of partners. That’s our team in Boracay. We do the team retreats as well. We found them amazingly valuable and you know. We’ve got we get our team together twice a year and you know in getting everyone together.

We work two weeks out of villas and that kind of thing and we partnered with a bunch of companies all right. So I don’t have to tell you guys but you know the digital Nomad thing everyone thinks. You’re chilling on the beach fruity drink in hand partying and you know knocking out some SEO or whatever. That’s not at all the case it’s my business partner pulling out the hair.

He has left and you know we’re in a little town house and he’s freaking out about some spreadsheet or something right. So that’s actually our business I don’t have to tell you guys. That because you guys know the real deal.

We’ve got three failures

I really like to do talks about like the real side of business and struggles and failures. We’re gonna be talking about the left side. I wanna talk about the right side a little bit. So we’re gonna go through that today. So we’ve got three failures. We’re discussing the first one is how. We lost 1.5 million dollars sucked.

I’m gonna get into it second one is how we were fired by our own employees. We could not keep them the third one is Jo and I fighting and battling and our management team hating us and we’re gonna talk about well to be fair that’s not done. So that’s actually a problem in progress and maybe. I can talk to you guys you can help me out with that problem. So first failure losing 1.5 million dollars. I should explain a little bit of background and I’ll be brief but you know my business partner and I worked for an SEO company in the u.s.

We were mid-level managers trying to hustle our way up in this company. We were hiring people right in left they came and a pulse. We would hire them because we needed them they’re growing. So quickly and you know we ultimately started hiring people in the Philippines. Because we found some people that were amazing and cheap. And you know they had pulses and they were willing to work for us.

So we worked with this girl in the Philippines. She started hiring more and more people to the point. We decided to go out there and train these people that we had hired she and her like five or six people at this point. So we go to the Philippines were like great you know. She set up a nice little office and everything she’s like no coming to my home like alright.

So we walk into her home we’re like well you got him like a couple of bedrooms or something. She’s like no going to my closet we’re like. What so we go into the closet and she’s got four or five people on like a plastic desk with plastic chairs not organ ah mcclee be fashion and just we’re running a sweatshop effectively in the Philippines.

So we’ve got this sweatshop in the Philippines we’re running we’re like. Oh my god this isn’t gonna work that’s not who. I want to be we go back and we tell our our CEO CFO were like no. We got to fix this. So we had an idea. We said look we can probably why don’t we do something.

Creating a company in the Philippines

We’ll set up a deal where we set up a company in the Philippines and will outsource ourselves to the Philippines and have an outsourcing company. So we pitched them on this idea and they take us up on it. We negotiate the deal.

It’s basically two million dollars over the course of three years. We said okay fine we take that contract in hand. And we you know had basically set up our try BPO company out of the Philippines. So we’re really excited Joe goes over to set up the office get everything running spend all the money. That we’d been working towards on this contract.

I stay in the US and work with our client there. We’re trying to hustle up new clients and while we’re there. My mentors say: look, you can’t go to the Philippines. You have to stay here and work with your client your previous employer and work with them. I said I really want to go my business partner over there, you know making dollar spending pesos and in my head he’s just having a blast right.

I mean he’s doing a lot of work but he’s having a amazing time and I’m like this sucks. I want to go to and and I finally do I leave and I say look I want to go over there. I want to be a part of this company we’re building. I you know it sucks not being there.

So I end up going over to the Philippines as well and that was a bad idea because that contract we signed it was a no-cut contract guaranteed money yeah not so guaranteed. They dropped that contact like contract two or three months after.

I went over in half boom your money’s half you know your salary your team we’re gonna cut them in half they didn’t see me again two months later cut in half again two months later done. So there’s no cut contract for two million dollars. We had over three years lost gone we’re stuck in the Philippines with very little money this cut a customer was 70 percent of our revenue.

So it’s our company is not a company anymore so we’re in the Philippines stuck in Mindanao which is kind of the dangerous place in the Philippines. We’re stuck in the Philippines with no money no contract and worried what the hell.

We’re stuck in the Philippines with no money no contract

We’re gonna do you know we’re probably not to go back home and get jobs and we’re screwed in our digital journey is over before it even started so yeah that’s pretty terrible that’s one of the worst experiences in our business. So far I think we learned is that your business needs to fit you.

So I don’t feel bad at all that that I went to the Philippines even though my mentor was like hey maybe that wouldn’t be a good idea because the business. We were building needs to serve us ultimately as entrepreneurs and founders like the business needs to serve our lifestyle serve our interest.

So it’s not that we need to change our business model and and that wasn’t working for us you know on the other thing is contracts are not worth a lot because and I know this now you know if a business gets in trouble or has a problem they’re gonna cut contracts if they’re gonna cut contracts they’re gonna cut it with our contractors first they’re gonna keep their core team and they’re gonna cut third-party contractors first when the business gets in trouble and that’s exactly what we were to them.

So by being a third party contractor and not having our own business that was super problematic and you know ultimately trying to fit a square peg in a round hole wasn’t helpful like that. We were trying to build a business that just just wasn’t us ultimately so we had a bit of a wake-up call the first thing is we weren’t going back to the u.s. Even if this didn’t work out and that was super difficult there were month.

We didn’t get paid or paid our sales very little money it ended with us closing an office which is probably one of the worst like professional days of my life that sounds. So silly now but we ended up we had an office and we had like a real business right with this office. We had to shut the doors because we couldn’t afford it.

So we sent everyone home and and I felt like a loser right because we’re sending everyone home get out of here we’re closing our doors ultimately is a fantastic decision. Because as you all know having a remote business is way better but it wasn’t so great at the time second thing is we needed a business that would support our new lifestyle the things.

The second failure. We were fired by our own employees

That we wanted to do and then we also need to build something that was less fragile meaning any customer that’s more than 50% of your revenue is a huge problem and we figured that out pretty quickly all right the second failure. We got fired by our own employees. So we uh has anyone heard of our company called tropical mba anybody yeah so they run a really cool podcast totally worth listening to and they this is years ago.

I think 2012 or so they were talking about apprentices this apprenticeship model and what they were doing is they were bringing people out from the US Australia UK take this um hole-in-the-wall place in the Philippines and setting them up to do some side work for them do some side work for their company and they were paying him like a thousand bucks a month or something.

So I were interested in this idea and we said the problem with that is who the hell is gonna come to the Philippines for a thousand bucks a month. That is ridiculous they’re getting losers only losers there we go the Philippines for that amount of money no way.

So we go out to me one of these new guys that they hired and he was awesome bright sharp amazing. We said oh my god dude we got to get on this we got to hire some cheap people bring him out the Philippines.

Cheap people and our new idea

We’ll figure out what we do with it later. So we said yeah great we’re gonna get some cheap people we’re gonna make some money. They’re gonna work for us and then they’re gonna go be entrepreneurs. So we’re gonna give them you know some help we’re gonna make get them on their entrepreneurial path 12 months.

They’re gonna go be entrepreneurs on their own and we’ll just recycle the problem with this is we found out it takes about nine months for us to be profitable. But a new hire so to keep them nine twelve months we’re just churning and burning and it is not a good idea it takes a lot of time and effort on my business partner knows for a thing.

Then the cost of just bringing them on board they’re cheap their salary was cheap but there’s cost associated with that that’s outside of their salary and that was a problem for us. So what we learned is this churn and burn strategy with hiring cheap people and bringing them out wasn’t good we need to think longer term.

So our plan to have them go be entrepreneurs after 12 months was dumb quite honestly. So we spent a couple of years they came this problem out two or three years of just hiring. Someone churning through them hiring someone else and churning through them. So we were not keeping our team we figured out we need to do that.

Developing a long term plan

So what we need to do was we need a plan for them longer term the first thing we did was you know. We would have these strategy sessions quarterly strategy sessions. This is as I know there’s been hugely valuable for us but what we’ll do is we’ll take a three to five year game plan on what we want to do with our company where we want to be and then we’ll break it down backwards.

We’ll go back a year and say here’s where. I think we need to be in twelve months right and then we’ll break it down even further. Than that what do we need to do each quarter to hit our annual goal. So we can inherit three to five-year goal what we did was we end up bringing in these apprentices in those meetings and not just.

I mean just open kimono like here’s the deal here’s one to be in three or five years here’s what you do next year here’s what you do quarterly let’s do it and so they were then engaged and involved in these kind of planning sessions.

Implement strategic sessions for the effective development of our business

These strategy sessions to help us get to where we need to go. So you know by inviting them into these strategy sessions they were now a part of the plan and felt more engaged. We also realized paying them. I think it was like 50 hundred bucks a month or two thousand bucks a month of the time. There’s not a real long-term strategy and just keeping it.

The same like that’s probably not going to work. So we need a new way to pay them and we worked out a compensation plan that grows with the business. So it’s basically tied to and I can talk about this or answer questions about it later. But it’s basically tied to the growth of the business and it expands or contracts based on how successful the business is doing.

It gives us the benefit of scaling our team to our growth. So if we have a bad quarter. Then we can shrink it down until. We want to tighten their bets a belts. If we have a great quarter we can pay them a fair amount of money. But we also figured out you know instead of pushing them out the door fly birdie fly.

We could allow for internal entrepreneur ship give them projects. That they can own and run inside the company let them spread their wings as someone on the team at Empire flippers. So you know it’s a lot harder as a brand new entrepreneur. It’s a lot harder to go from you know zero to five thousand dollars a month that is to go from you know sixty to eighty thousand dollars a month.

That’s a lot easier miles easier than the first five thousand. So we said look why don’t you do that at Empire Flippers. Why don’t you help us grow you’ll make a bigger impact all right. So our third failure and this is one we’re still struggling with is my business partner.

I went when it was just the two of us working out of apartment or a townhouse in the Philippines like it’s pretty easy it’s just me and him I can say look man. I’m doing this bit of sales he goes yeah. I’ll do this other bit of sales you know. We’ll both work on marketing together really easy to communicate. It’s worse and obviously as you had more and more people to your team and part of our problem was is that as we added managers and more to our team.

They were getting super frustrated because I would tell you know someone that was brand new on the team to do. My business partner Joe would tell him to do B and those were in conflict. So and then they would get mad their managers.

Attempts to implement an open structure failed

It was just an absolute cluster. So we realized we needed to you know and and we were trying to go for the kind of flat structure the open structure and we failed it horribly. So I just thought it was cool you know. It’s like oh those like tech startups and they’re this flat structure you don’t have bosses everyone’s a boss right yeah.

I didn’t work for us at all. So way too many chefs at the boardroom. So we decided to cut that out. So look we’re gonna go military-style. We’re gonna have here’s the boss .You know here’s the managers in place. Here the people to work for them. It was much more clear communication divide and conquer.

So you know my business partner takes sales take some administrative stuff. I do marketing and operations and. Then we also realized that we need managers who can actually pass down some of our strategic vision where we want to take the company.

So we got too big to where. We weren’t able to do the you know. The strategy meetings with everyone to come. So we said look well. We’ll keep it managers only we need to make sure. They’re able to pass that information down to their team and then give us the feedback up as well. So we’ve been working with them on that.

This is something that we’re still struggling with we do a much better job. Than we did we started but it’s still difficult. We’re learning how to pass the torch to our managers to our senior leadership team. We struggle with it a bit, but we’re getting better one thing.

We’ve done that’s been really effective is we’ve taken kind of an org chart that we have. Then expanded that to what we see the org chart in three to five years. So say for example the marketing team will have an org chart and then. We’ll say look in three to five years this is where we see our marketing team.

So it gives our employees it gives our managers. Some sense of where we’re going and if there are areas where they excel at or want to advance they can start the head in that direction. So maybe we don’t have a you know an audio a video person now but if they want to learn those skills they can head in that direction.

Three key points

We don’t have a biz dev person but they’re interested in biz dev. They can start heading in that direction. So three main take aways the first one. I build the business that fits you I don’t have any regrets about going to the Philippines and running. the company that ultimately became Empire Flippers.

I’m very happy about it even though. We lost a lot of money on that deal. Second one is to grow a team that sticks. So pay your people put them in positions where they can succeed and work with internal entrepreneur ship. The third is mentor your managers work with your managers to make sure. There’s good pass flow from you to the team and from the team to you that’s it.