How two high school friends turned $25,000 into an $80 million business
Inc.'s 11th annual 30 Under 30 list features the young founders taking on some of the world's biggest challenges. Last week, we opened up the vote via Facebook Likes for this year's Readers' Choice, the coolest young company of 2016. TaskUs won by a wide margin--with 27 percent of the votes!
It's probably fair to say that few kids dream of running an outsourcing business when they grow up.
It certainly wasn't on the agenda for high school friends Bryce Maddock and Jaspar Weir. The two, both 29, now run TaskUs, a Santa Monica, California-based startup that handles outsourced back-office operations using a team located mostly in the Philippines. The company is expected to pull in at least $80 million in revenue in 2016 and has its sights on an IPO in the next five years.
First up on the entrepreneurial agenda, actually, was creating an all-ages nightclub in Los Angeles when they were home from college over the summers. After college, Maddock ditched his Wall Street finance job so that he and Weir could pursue another big idea: a frozen-yogurt company in Buenos Aires, Argentina. That one collapsed before it ever really started when a friend who had started a burrito company in Buenos Aires gave them some critical advice.
"In two hours, [he] crushed our dreams. He said, 'You don't want to move to Argentina to open a food-service business,'" Maddock says. Instead, the friend advised them to build an international business that earned U.S. dollars, but paid employees in a local currency.
Dejected, Maddock and Weir headed home and moved back in with their parents to think about their next move. Maddock kept thinking about all the menial tasks he had to perform at his Wall Street job--data entry in an Excel spreadsheet didn't exactly require special financial knowledge.
In 2008, using the last $25,000 saved from their nightclub days, the two decided to start a virtual personal assistant service. But after more than two years working on the business model and hiring people all over the world to perform the work, they came to two important conclusions: Focusing on individuals as customers would never become a high-growth business, and consistently the highest-quality work came from people they had hired in the Philippines.
RELATED: 10 business people to follow on Twitter
So TaskUs pivoted in a way that now would be easy to call a stroke of genius. But CEO Maddock says it was mostly luck. Their friends and acquaintances who were also startup founders complained that it was tough to keep entry-level employees in jobs such as content moderation and customer service. Eventually, these workers would gain more experience and want to move on. Being able to outsource these jobs would help their startups scale more efficiently. After some thought, Maddock and Weir realized they had their new business model: They would service other startups, essentially hitching TaskUs to companies on very fast growth trajectories.
And with that, the pair entered the more traditional business of outsourcing, which at the time had (and today still has) a negative connotation. Weir, president of TaskUs, says they briefly considered omitting the term and trying to describe the business as "remote work."
"That's silly. If it walks like a duck and talks like a duck, let's call it a duck," he says. "But let's do this in a way that's true to our brand."
Remaining true to the brand meant avoiding some of the most notoriously unlikable elements of traditional outsourcing: massive and depressing call centers, slavish working conditions, and resulting work that is less than stellar.
TaskUs, which boasts the tagline "ridiculously good outsourcing," now employs 5,600 people in the Philippines who perform tasks such as flagging inappropriate content on anonymous social apps like Whisper, photo retouching, online research, and customer service calls. Attrition rates at customer contact centers in the Philippines have hovered between 26 and 33 percent in recent years, according to Towers Watson. Maddock says TaskUs has a voluntary attrition rate of just 14 percent on an annual basis.
The company is retaining more employees not because it pays higher salaries. Instead, TaskUs has tried to bring Silicon Valley-type benefits and culture to an industry that has a reputation for treating employees as commodities. Its themed offices (one boasts a steampunk aesthetic) feature fitness centers, massages, open floor-plans, and company cafeterias. It also helps that TaskUs puts its offices in the provinces, near where its employees live, instead of in major cities that would require longer commutes. Plus, the company has a fund that helps pay for educating employees' children.
Even the Silicon Valley perks and culture, says Weir, weren't part of a calculated business move. "Using common sense, we wanted [our clients] to treat our teams in the Philippines as an extension of their [own] teams. It made sense," he says. "Once we saw it gave us a competitive advantage, we focused more on it."
So far, what the company is doing is working. TaskUs boasts more than 200 customers--many of them the hottest startups in tech--but up until fairly recently few of them wanted to say much about the company, or even admit that they use its services. "The vast majority of clients do not allow us to say that we work with them," Maddock says, citing their concern over the stigma that comes with outsourcing jobs overseas, as well as a reluctance to reveal a potential competitive advantage. Fortunately, that tide is starting to turn. TaskUs is now able to prominently display the logos of Groupon, Tinder, AutoDesk, Whisper, and others on its website.
"We really do feel that the [TaskUs] team is part of our extended family," says Kirsty Traill, vice president of customer support at Hootsuite, which has used the company to handle customers' email queries for about a year. "TaskUs has given us the ability to make more strategic investments and serve our customers globally."
Now it's TaskUs's turn to scale. Maddock and Weir bootstrapped the company until last year, when it raised $15 million from Philippines-based private equity firm Navegar. More recently, in March the company secured a $14 million loan from Bridge Bank. The funds will help grow the El Salvador office from its current three employees to hundreds of employees, as well as expand into Medellin, Colombia.
While the co-founders never envisioned growing up to run an outsourcing company, they say they're deeply passionate about it now for two reasons.
"One is the people. We see how we've changed the lives, careers, and families of the more than 5,000 people who work for us; and two is we're able to work with and create solutions for the world's most innovative companies," Weir says.
In hindsight, nightclubs and frozen yogurt look a lot less exciting by comparison.
Now, check out these notable young entrepreneurs: