BiggerPockets Business Podcast

BiggerPockets Business Podcast 41: Outsourcing Your Way to Millions with Nathan Hirsch of Outsource School

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Intrigued by the concept of virtual assistants? Understandably so—the time commitment and expense of office space and in-house employees can be intimidating. Luckily, there are alternatives…

Nathan Hirsch—serial entrepreneur and outsourcing expert—knows firsthand how difficult it can be to manage an office with lots of employees. And not only did he figure out a way to avoid it, he’s built several companies to help others do it, as well.

As founder of his previous company FreeeUp.com, Nathan created a marketplace of remote workers and virtual assistants to help entrepreneurs grow their businesses without the need for local employees. And as a follow-up, Nathan has created OutsourceSchool.com, an educational platform where business owners can learn how to manage their businesses efficiently and effectively by using remote employees.

In this episode, Nathan brings his expertise in outsourcing to our listeners, providing tons of actionable tips and ideas for how we can build our businesses without the overhead of office space and local employees. Nathan tells us how he built his Amazon store to over $25M in gross revenue and how he built and sold FreeeUp without a staff of local employees—only hiring remote help. He shares how we can do the same.

Make sure you listen for Nathan’s four-step process for harnessing the power of remote employees.

Check him out, and subscribe to the BiggerPockets Business Podcast so you won’t miss our next show!

Click here to listen on iTunes.

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Read the Transcript Here

J: And let’s welcome Nathan Hirsch to the show. How are you doing today, Nathan?

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Nathan: I’m doing great guys. How are you?

J: We are doing awesome, Carol, how are you doing?

Carol: I’m doing great. And Nathan, we’re so looking forward to speaking with you because here on our show we kind of talk to people in two different categories, right? We speak with experts, we speak with entrepreneurs, and you truly are the embodiment of both of those things. So you have so many great tips to offer and we can’t wait to dig in.

Nathan: I appreciate it. I love talking business. I love talking to hiring and outsourcing. It’s two things I’m really passionate about.

J: Awesome. Well, let’s start with first on the entrepreneur side. You are a serial entrepreneur, you’ve started several companies, you’ve sold your last company and are moving on to the next. Can you give us just a brief summary of what’s your history? How did you become an entrepreneur? What is your entrepreneurial journey look like up till now?

Nathan: Yeah, so growing up, my parents were both teachers, so I grew up with the mentality that I was going to go to school and get a real job work for 30 years, retire, and that’s what they did. They’re traveling the world right now. There’s nothing wrong with that, but I learned at a very young age that that’s not what I wanted to do. My parents always made me get a 40 hour week summer job, winter vacation job. I was working at Errands, which is kind of like a rent a center. I was working at Firestone and I learned a ton about marketing and sales and managing people, but I also learned how much I just hated working for someone else, having a boss, watching the clock every day and all my friends are outside playing. So when I got to college, I kind of looked at it as a ticking clock. I had a glimpse of what life was like after college and I wanted no part of it.

Nathan: So I started hustling. I took the few thousand dollars I’d saved up from the summer job and I started buying people’s textbooks competing against my school bookstore. I created a little referral program and before I knew it, I had lines out the door of people trying to sell me their books to the point where I got a cease and desist letter from my college telling me to knock it off because I was stealing too much of their business. So that was my first glimpse in being an entrepreneur.

J: That’s awesome. I love that. It’s always good when your first venture, you start getting cease and desist letters. I guess you kind of jumped into the fray early.

Carol: Right? Legal action in college can’t beat that.

J: Okay. So you’re selling college textbooks, you get a cease and desist letter. I’m going to assume you probably slowed down from there. What was the next venture from there?

Nathan: Yeah, my parents were both teachers, like I said, so getting kicked out of college was not a very good option. So I pivoted pretty hard. I had sold some of these books on Amazon and this was 2008, 2009. No one really knew what Amazon was. There were no courses, gurus, none of that stuff existed. And I thought it was so cool. I could have this 24/7 storefront, money would get automatically deposit in my bank account. These are all new concepts and I just have to figure out what to sell besides these books. So I started experimenting with stuff I was familiar with, sporting equipment, video games, computers, typical college guy stuff. And I just fail over and over and over again. The only thing I get to sell where these books. And finally I branch out of my comfort zone a little bit and I find a deal on baby products and I list them on Amazon and these products take off.

Nathan: So I learn and I get into drop shipping years before I even know what drop shipping is. And if you can imagine me as a single college guy selling $1 million worth of baby products on Amazon, that was me. So that’s really how I hit the ground running with my first successful business.

J: That’s awesome. And I love the fact, and you kind of hit on this early, again, we talk about this a lot on the show, is that, a lot of us, we want to go out and we want to do those businesses that we love. We want to do what we find to be passionate. So you like computers, you like sports, you want to sell those things, but just because you’re passionate about something, just because you love something doesn’t mean it’s going to make a great business model. And so you weren’t scared to say, hey, baby products, I don’t have kids, I’m not a baby, but this is something that’s going to sell and you are willing to break out of your passion zone or your comfort zone to sell something that was going to make money, even if it wasn’t something that you were truly passionate about or truly loved.

Nathan: Yeah. You kind of have to get over what people think about you too, right?

J: Yeah.

Nathan: Because I was in class listing baby products, people were looking over my shoulder thinking I’m some kind of creep or running a Ponzi scheme or who knows what was going through their head. No one really understood what being an Amazon seller was, but I saw a ton of potential there and I really went all out to grow that business.

J: Awesome.

Carol: Very cool. And were you doing that on your own or did you have a partner or what did that business look like?

Nathan: So funny story, I’m making this money and my parents say, you should probably pay taxes, right? So I meet with an accountant and the first question he asked me is, when are you going to hire your first person? And I shrug him off. I’m like, “Why would I do that? That’s out of my pocket. They’re going to steal my ideas, they’re going to hurt my business.” Pretty standard entrepreneurial excuses. And he just laughs in my face and he says, “You’re going to learn this lesson on your own.” So sure enough, my first busy season comes around, the fourth quarter, everyone’s buying toys, everyone’s buying baby products. I’m running the whole business by myself and I just get destroyed. I’m working 20 hours a day. My social life plummets, my grades go down. I’m filling every order, answering every email and I work my butt off for six weeks just to keep this business alive. I get to the other side and I realized, oh my God, my accountant was right. I can never let that happen again. I need to start hiring people.

Nathan: So I’m 20, I know nothing about hiring, I post a job on my Facebook, this guy in my business law class reaches out. He says, “I don’t know what you do. I need a job.” I don’t even interview him. I just hire him on the spot. Ends up being this unbelievable hire. He’s hardworking, he’s smart. We had the same core values, the same beliefs, but completely different skillsets. His name is Connor Gilligan, we’ve been business partners for 10 years. So I just hit the jackpot at the beginning, but there I am as this punk 20 year old thinking, “Man, this hiring thing is easy. You post a job, someone shows up, you make more money, your life becomes easier.” And then I just proceed to make bad hire after bad hire after bad hire.

J: That’s great. So tip number one, hire the first person you meet and he’ll be your business partner for life, but then everyone after that is going to be bad.

Nathan: Right. Exactly. I mean you could not get luckier.

J: That’s awesome. Okay, so people that are listening to this are probably thinking, okay, well this is the business we’re going to talk about, this textbook business. And you grew this business pretty big. What did you get your revenue up to in the textbook business?

Nathan: So I kind of lumped together the textbooks and the baby products. It was all really one business. The textbooks, I probably sold 50, $100000 somewhere in there. But the baby product business is where I sold the most. That was about $25 million over a six, seven year period.

Carol: Whoa.

J: Yeah. Okay.

Carol: I’m sorry, pause for a quick second. So you starting at age 20 in college with a random dude in one of your classes that you met off of Facebook sold $25 million worth of baby products on Amazon?

Nathan: Yeah, it was a pretty crazy time.

J: That’s awesome.

Carol: That’s amazing. So how’d you get up to that volume? You must’ve figured out something in the hiring process along the way to do that type of volume. I mean, you can’t create more than 24 hours a day in which to work. So how did that work? [inaudible 00:08:20]?

Nathan: Yeah, so there are three parts to the success. Part of it was just the timing, right? We got in at Amazon had a great time before a lot of people knew that you could be a third party seller on Amazon, before a lot of Amazon’s algorithms and changes. It was kind of a Wild Wild West. You could list anything on Amazon within reason and get it to sell. The second part of it was that hiring. So I mentioned that I made a bunch of bad hires. I quickly realized that college kids were not very reliable. They cared a lot more about drinking and smoking weed than they did about working on my business. And no 30 year old wanted to work for a 20 year old entrepreneur running an Amazon business. So I turned to the remote hiring world, the Upworks and the Fiverrs and that’s where I hire some really awesome people like [Chick Yan 00:09:01] who’s been my assistant for eight plus years and I’m the godfather of one of her kids.

Nathan: And that’s really when I got into, hey, I can hire people from all over the world. I can hire them part-time, project-based, full-time, to do all these different tasks to run a business that really runs 24 seven you need people on at all times in different time zones and building a really, really great team. And then the other side of it was just learning business in general, starting with retailers and so we would drop ship from retailers and then going around them eventually and building relationships with the manufacturers. And there I am as a 20 year old pitching these large manufacturers, but they had no idea what Amazon was. They didn’t really understand e-commerce, so I went to them saying, “Hey, I’ve got a new sale channels for you. I’ll do everything. I’ll handle the returns, I’ll sell your product. All you have to do is keep my credit card on file. When I send you an order, you ship it, you charge me, and we built the relationship with over 500 manufacturers.

Carol: That is really cool. So you had 500 manufacturers. How many people were you outsourcing with at this point? How many people did you hire from around the world to help make this happen?

Nathan: Yeah, so at that point it was a probably about 15 to 20 people.

Carol: Wow.

Nathan: But then I actually graduated and moved to Orlando and got an office here, which was probably one of my worst business decisions and we can talk about that too. And we had about 30, 40 maybe 45 people at it’s max before we decided to get rid of the office.

Carol: Oh, let’s talk more about that. I think that’s going to be a really big value add for our listeners. Right? Because that’s I think one of those, in some circumstances, daunting, in some circumstances, exciting things that happens with new and young entrepreneurs. Right? So talk to us more about why you decided to get that office in the first place and how that ultimately worked out.

Nathan: Yeah, so we have this business that really requires no overhead. We don’t need a warehouse to store products. We were working with the manufacturers who are shipping it. We have a team that’s entirely remote. They’re happy. It’s working well. I kind of have flexibility and freedom in my own life. I can be anywhere. I was going on Euro trips and running my business from my laptop, but we said, hey, if we want to take this business to the next level, at that point we were like, oh, we’re going to be the next Amazon. We’re going to be the next big e-commerce player, we need to get everyone in one place. We need to create an office. We need to have one place where we can have meetings and grow this business. So, we added a third business partner at the time. He was going to Rollins, which I know you guys are familiar with in Orlando to get his MBA.

Nathan: And I wasn’t really loving living in Stanford, Connecticut at the time. I lived there for a year. I was young, I was single. It just wasn’t a great place for me. So I said, “You know what? Let’s move down to Florida, real estate’s a lot cheaper. If I hate it, I can always move back, but let’s try to build this office.” So we moved to Orlando, we ended up getting a lease on an office. We take these remote people and we pay for them to relocate, the ones that are willing to and move to this office. So there we are. We have this office space, we’re young entrepreneurs, we have all these remote people that are now working in person, and honestly, it led to drama. People working in person for whatever reason. I remember dealing with just personal issues and stuff that I never dealt with remote. I remember a few weeks in, I was driving to work and I was like, wow, I just created a nine to five job for myself. Now I have to drive into work every single day.

Nathan: And then you start getting the payments for the rent and you’re like, wow, I just added overhead to my business that wasn’t there before. That was unnecessary. So I think a combination of the drama of me now feeling trapped inside this business, which now as a more experienced entrepreneur, I probably realized, hey, I didn’t have to go to the office every single day. It probably could have run without me. The combination of all of that made us think, hey, a year in, this office is not the way we want to go. And I’ve been working remote ever since with no plans of changing that.

Carol: Cool. So I would like to follow up a couple of things now. How would you recommend that? And just in hindsight, when business owners are presented with the opportunity or the question of do I get an office, how do we go about making those decisions?

Nathan: Yeah, I think we live in a very exciting time, right? There’s so many remote businesses. You guys can run this podcast I’m assuming from home. I work from home. I can be anywhere and there are some businesses where you do need an office, some businesses where you do need a retail location. But for a lot of online entrepreneurs it’s not necessary. And there’s pros and cons. I mean, I think there is some benefit to having people in one place, but it’s also a different managerial style. Being able to run in-person meetings, keep people focused and organized when they’re there. I personally, am kind of against it. I don’t really believe that people are productive working nine to five. I’d rather give them a more flexible schedule, work mornings, work nights, whatever you like doing. As long as you get the job done and you show up for the meeting times and all of that.

Nathan: So that’s more of a personal preference. But I think people need to really weigh the pros and cons. If you’re just getting an office to have an office and show it off and all that, not really a good decision and it is expensive. It does add overhead, it does add an extra level of responsibility and liability that you have to think about.

Carol: Excellent. And one more thing on that, J, sorry, I apologize for the cutoff there, but I think there’s one more important thing to that. You’re talking about after the office didn’t it work out, didn’t make sense, you moved to a more remote culture. So do you have just a couple tips on what you can really do as an entrepreneur to make sure that that remote working situation is effective for your business?

Nathan: Yes. So you almost have to treat it like you have people in an office, you have to treat it like a team, like a family and make it a fun work working environment. One of the things that we did every Monday morning was people would show pictures of what they did that weekend and that’s how we’d start off every week. So people would build a relationship, you’d get to know what everyone else is up to, but at the same time it wasn’t a free for all, we had very high expectations. If you weren’t meeting those expectations, you weren’t going to work there very long. So it’s a combination of keeping that fun culture, high environment or high energy environment while also maintaining the expectations that just because you’re working from home doesn’t mean you’re watching TV all day.

J: Okay.

Carol: Excellent.

J: So for our listeners, we kind of know the next piece of the story and we’re talking a lot about outsourcing and remote employees here. For our listeners, just to kind of jump ahead a little bit, this became the focus of your next couple businesses. So you did your Amazon selling, sold tens of millions of dollars on Amazon. I think you’re still doing that now, but that’s not the end of the story. You went on and you started another company and then another company, and both of those companies were focused on outsourcing independent contractors, remote employees, correct?

Nathan: Yeah. So with the Amazon business, I mentioned we got in at a really good time, so we’re doubling every year, we do over five, $6 million a year, and then the Amazon space becomes a lot more competitive. Right? The courses, the gurus come out instead of doubling every year, we’re kind of maintaining and then one year we’re doing two million, then one year we’re going three, then we’re back to two and Amazon is chasing the algorithm and meanwhile we’re not really growing a brand, our brand is 100% relying on Amazon, they can shut us down at any time. We’re not selling our own products, we don’t have our own patents, our own trademarks. And I wasn’t very passionate about selling baby products back then. I’m not very passionate about baby products now. It wasn’t something that I all of a sudden saw myself doing for 20 years.

Nathan: On the flip side of that, I had used the Upworks, I used the Fiverrs and although I found some pretty good people, I hated the process. I hated posting a job, getting 100 applicants, interviewing them one by one. If I get through that process and I like them and they quit on me, I have to start all over again. And I kept looking for something faster. And finally when I couldn’t, I said, you know what? I’ll build it myself. So I took the four things that I really care about in a hiring platform, the pre-vetting where FreeeUp would get thousands of applicants every week and only let in the top 1%, the speed where a client could put in a request and get someone within a few hours or even less, and get started right away without spending weeks interviewing, 24/7 support in case you have even the smallest issue, and that no turnover protection where if someone quit, we would cover replacement costs and get them a new person right away.

Nathan: So that was the foundation of platform the basic idea. And I started talking to other Amazon sellers who were struggling to hire and I had created this Rolodex of reliable freelancers, graphic designers, content writers, and they loved that they could just email me and be like, “Hey, I need a graphic designer.” “Boom, here you go.” And they could get started right away. So we invest $5000 in the most minimum viable, terrible software that you could imagine where clients could log in, they could see the freelancer on their account, the freelancers could clock in and clock out, and that was it. That was all the software did, we would have to manually charge their credit cards week. They would have to email me or call me or Skype me when they had a freelancer request and we took that to market and people love that concept. We created a referral program where you get 50 cents for every hour that people bill forever that come from you.

Nathan: So people start talking about us at conferences and all around the world and all of a sudden FreeeUp, which is our own brand, our own baby, our own website blows up and knocks our Amazon business out of the water and eventually became an easy decision to stop selling baby products and focus on FreeeUp.

J: So basically what you’re saying is you didn’t raise millions of dollars and spend five years building the software and the automation and building a big company and then launching, you basically went out with $5000 in launch with the minimum viable product. I’m saying this facetiously because we talk about this a lot on the show that, a lot of the best businesses, they start this way. They start by just going out and doing something. And too many people seem to think that you have to raise money and you have to have a perfect product and you have to have everything buttoned up and automated and ready to go before you launch. And people are terrified of launching before everything’s perfect, but you’re just yet another example of you throw a few bucks into it, you build something minimal, you get it out there, you start getting feedback and you grow and build as you go along. And that worked for you.

Nathan: Yeah, so I go to a lot of Orlando meetups and I always cringe a little bit when I’m talking to entrepreneurs and I always see them in a spot where they just think I can’t do anything until I raise $300000. They’re just completely stuck. They’re not moving forward. And in my mind it’s like, go out there, sell, get something out to market, see if that’s even what your customers want before you invest hundreds of thousands of dollars. And yeah, I mean we got it out there, we listened to people. There were some things that we thought would be a really good part of FreeeUp. Like we thought we would teach people how to use VA’s and then get them a VA and people were much more interested in then just putting in the request. They wanted more of that market place. So we kind of tweaked and adjusted.

Nathan: And they told us what kind of features they wanted when they were using our software. So that gave us a better blueprint, hey, these are the things we need to add next. Like add billing, add the affiliate links and all of that. So just get it to market and then get out there and talk to your actual clients. That’s the biggest advice I can give.

Carol: Excellent. Is getting out there and talking. So it sounds like you are relying a lot on client feedback to grow your business. Right? And what were the other things about that business that really stood out? Because like you said, there are already a lot of them out there and you’re taking a different spin. But what was it about FreeeUp that made it different and better?

Nathan: Yeah, so I remember pitching my first influencer on FreeeUp and the email I got back was, the world does not need another freelance marketplace. And so I took that and I talked to him on the phone and pitched him on the idea and he ended up sharing it with his audience. Well, his audience fell in love with it and he ended up being one of our top affiliate partners for years to come. So we realized early on that yes, the client feedback is very important. But the freelancer feedback is really important too because these freelancers, they can go anywhere. They can go Fiverr, Upwork. We need to create a place where they’re not just there because the jobs and the clients are there, they’re there because they actually want to be there. We wanted to build a community of freelancers where they could interact with each other, they could help each other. We were giving them resources to help them grow their freelance business.

Nathan: And it wasn’t just us and the clients versus them, it was a win, win, win across the board where everyone is on the same side building this platform. And it worked out in so many different ways because freelancers started telling their clients and started telling other freelancers and really listening to that feedback from both sides initially was key.

Carol: That’s really cool and it sounds like, almost if I’m understanding this correctly, that by doing that you are really getting all these passionate freelancers who are coming to your site, dedicating all of their time to your site, so you are really able to gain a ton of expertise in how the whole freelancing situation worked and you’re really building this company of all these freelancers that you then freelance out to other people. Right? Is that kind of the whole overall concept?

Nathan: Yeah.

Carol: Awesome.

Nathan: And I mean what I would tell everyone was, “Hey, we can’t compete with Upwork on software budget. We can’t compete with them on advertising budget. We can always compete with them on customer service. Let’s have the best customer service out there where if someone messages us, we respond instantly, we help them, we go above and beyond whether they’re a client, they’re a freelancer and make them feel like we actually care about them because we do.” And because of that our referral program really blew up where we paid out over $250000 last year in affiliate money, which is a lot of 50 cents per hour.

Carol: That is really, really cool.

J: Yeah, I love that. And again, another thing we often talk about is, it’s possible to compete with the big companies if you figure out what your competitive advantage is, if you can figure out how to differentiate yourself. And I personally always like to think that customer service is often low hanging fruit if you want to have a competitive advantage. A lot of these big companies, they’ve done a really great job of building great platforms, of getting millions of people through their network buyers and sellers of just advertising and marketing. But a lot of times they don’t focus on the most basic piece, which is the customer service.

J: And as you grow that can be difficult. You look at some of the biggest companies in the world, Comcast is known for their horrendous customer service. And you think, how is a company this big not focusing on something this important? And oftentimes that’s a great opportunity for us little guys and you became a big guy in the space but at the time you were a small company. That was an opportunity for you to really compete with the big companies because that’s just something that a lot of them can’t do.

Nathan: Right, exactly. And even the speed, I mean, let’s take a client comes in, they hire a graphic designer and they use the graphic designer for a few hours. It’s personal preference but they really don’t like the person’s work. Well, they reach out to customers for it. We’d say, “Hey, no problem. We refunded the two hours, we added a $25 credit to your account and here’s two more graphic designers that we think you’ll really like.” If you submit an email like that and you’re pissed off and you’re angry and you just wasted your time and money, and that’s a fast kind of response you get back. You’re committed for life, you’re going to keep using that service. And that’s the kind of customer service we wanted to give.

Carol: That is really cool. How many people did you ultimately end up having at FreeeUp? [crosstalk 00:24:14].

Nathan: In terms of freelancers offering services, there’s probably about 4000 at the end of last year.

Carol: Wow.

Nathan: Clients in the thousands. We did about 12 million in revenue last year.

J: That’s awesome. And how many people did you have on your team, the FreeeUp team specifically?

Nathan: So I really like to practice what I preach. We add no U.S. employees. We had 35 VAs in the Philippines and we hired all 35 of them on the FreeeUp marketplace. We only hired people from FreeeUp. So that was another part of it is like, listen, we’re growing this entire business using the service that we’re telling you guys to use. We’re not going out there to other places to hire. So that was something that I was really proud of and I mean, that was definitely probably the worst part about selling FreeeUp is, I’m going to miss those 35 people, although I’m really good friends with them and I’ll stay in touch, but they are absolute rockstars and I owe them a lot for helping us grow FreeeUp.

J: That’s awesome. Okay, so I think we’ve kind of gotten to the crux of what I think is really most interesting here is that you grew multiple businesses basically using remote employees. I know a lot of our listeners are probably thinking, this is great. I don’t want to necessarily have an office. I don’t want to necessarily have to be dealing with employees, interacting with employees day in and day out. Remote employees might be a great opportunity for me and my business. So let’s talk a little bit about for the entrepreneurs out there, the aspiring entrepreneurs out there who are thinking this might be an opportunity for me. One, what questions should people be asking themselves before they make that decision on local employees, people in an office or remote employees? Are remote employees always a viable option? Are there times when we shouldn’t be considering it?

Nathan: Yeah, so I’m obviously biased. I’ve gotten to the point now where if I never hire someone in person again, I am totally okay with that. There’s nothing that someone can come to me and say, “Hey, you can’t outsource bookkeeping. You can’t outsource marketing.” In my mind, I’ve done all that, or if I haven’t, I know a client that has, it can all be done. It more comes down to your management style and your preference. There are people out there that for whatever reason, they struggle to communicate with people that are remote. They struggle to work with them. They struggle to set deadlines and get tasks done. In my opinion, those are all skills that can be learned and that’s one of the reasons why I’m launching my new company, Outsource School, but they might not want to commit to those skills. Sometimes when you’re an entrepreneur and you’re having success your way, it does make sense to keep doing it to some level.

Nathan: So I’m a big proponent of outsourcing everything. I mean, I just started a new company. The first thing I did was hire a few VAs and hit the ground running. And we just live in an amazing time. I mean, you go back 20 years, you had to hire people full-time. You had to hire people in your town or the towns around you to go into your office. You fast forward to today, you can hire people part-time, full-time project-based, they can be all over the world at different price points, different skillsets. You’re not limited. So it just gives you a lot of flexibility as an entrepreneur and in my opinion, if you’re not hiring remote, your competitors are and they get an extreme competitive advantage over you.

Carol: Excellent. That’s kind of a great overview of how to begin going down that road. So when would you say, I want to take a step back, not even step back. I want to step forward and then dig in more. So let’s talk about, you mentioned your latest business Outsource School, so talk more specifically about what that business is and then we’re going to dig into what your expertise is in what you teach in Outsource School.

Nathan: Yeah. So for the past four years of FreeeUp, people have been asking me to launch a course on using VAs and I honestly just haven’t had time for it. We put out a lot of different content, but now that we’ve sold FreeeUp, I wanted to take the time to say, hey, how did we do this? Because I didn’t just wake up one day and hire 35 full-time people and cross my fingers and hope it worked out and have this all star team and grow a company. There was a lot of time and effort and there was a stepping stone in hiring a part-time and two part-times and then a full-time. So really breaking it down and I want to give a more generic overview.

Nathan: The first thing you do before anything else is figure out your budget. Figure out how much money you actually made last month and how aggressive do you want to be. If you want to be super aggressive, maybe you’re investing 40, 60% of your profit into hiring. If you want to be more conservative, maybe it’s 10 to 30%. I tend to be in that 25, 30% range, but figure out what that percentage is and then from there you can figure out what you want to start taking off your plate.

J: That’s excellent. Awesome. Okay, so let’s say I want to start hiring remote employees, now I have to manage them. Now, how do I do that? I know how to manage local employees. I can go, I can walk up to their desk, I can talk to them, I can see what they’re working on. I can talk to them 10 times a day. That’s a lot more difficult when I’m trying to manage remote employees or at least it seems to me that is. So how do I manage remote employees? How do I keep track of what they’re working on? Make sure that they’re actually doing the right things, they’re making progress, they’re focused on my business. What are some best practices for entrepreneurs when they’re managing these employees?

Nathan: Yeah, so there’s four parts into hiring remote. You’ve got the interviewing them, you’ve got onboarding them, you’ve got training them and you’ve got managing them. Now managing the onboarding goes hand in hand because onboarding is all about setting expectations and this is where most people go wrong, especially when they’re hiring remote. They don’t actually take the time to sit down and get on the same page with, this is what’s expected of you, this is when you’re going to work, this is what’s a good project, this is what’s a bad project, these are past hires that didn’t work out, these are ones that have stuck with us for years and really getting on the same page right from the beginning. When you go more towards the managing, once you’ve set those expectations, when it comes to how well you hold people to those expectations while also creating a culture that people want to be in and getting them to buy into the company.

Nathan: That’s one of the best things that we did at FreeeUp, is we got them to buy into the long-term vision. We wouldn’t just hand them a project, get the project back, and then give them more work. We would tell them, “Hey, these are our goals. This is what we’re trying to accomplish. We were billing 500 hours a week. We want to hit 20000 hours a week. We want to impact the lives of freelancers. We want to pay out $7 million a year to freelancers around the world. This is how we feel you’re going to fit into that.” And when you start treating people as part of the team instead of just one remote person and another remote person over here and another remote person over there, it makes it a lot easier to build that culture just like you would in an office. And it really is the same thing in an office. If you don’t get them to buy into the company and the long-term vision and what you’re doing, they’re only going to be there until they get a higher job offer.

J: Love that. That’s awesome. Okay. So can you give us some best practices in general for bringing on remote employees?

Nathan: Yeah, so I like to start with getting on the same page with the expectation. So it starts off with internet and power. So, a lot of times you’re hiring people from the Philippines and if they’re rural country and yes, you’re probably going to get them at a cheaper rate. But part of it that goes with it is there’s going to be power outages, there’s going to be internet interruption. So you need to get that full information. What type of internet do they have? What’s their speed? How often do they lose internet? How often do they lose power and what kind of computer are they going to use because they can’t control how often they lose internet, but they can control how fast their computer is. And if you get someone that moves in here all the time and they have a sole computer that’s only going to lead to issue. So getting on the same page with what their actual work environment is. Are they working in a quiet place, a loud place? Do they have kids running around? Really understanding that full picture is incredibly important.

Nathan: From there it’s setting up the schedule, making sure that, hey, if you’re hiring someone in the U.S. time zone that they can actually commit to that, that it’s not going to be a graveyard shift that’s going to affect their personal health down the line. Also understanding what other clients they have. That’s a big key that I don’t see people do. Asking them, hey, am I your only client? Do you have other part-time, full-time? What other commitments do you have outside of my job? And really getting that full picture and coming to an understanding because you’ll get VA’s that want to work 80, 100 hours a week, but I personally don’t want someone that’s working 100 hours a week, 40 hours for me working on my business. So understanding that, getting on the same page and then establishing what kind of culture and what kind of rules that you have at your company, how you want to communicate. How do you use email? How do you Slack? Who are they going to be working under or working with and getting them 100% on the same page right from the beginning.

J: That some awesome tips there. You mentioned remote employees in other countries. We talked a little about remote employees in other countries. Are there certain countries that you like to focus on and are there reasons for that? Should we be focusing on certain countries? What are your thoughts there?

Nathan: Yeah, so I personally love hiring people from the Philippines. There’s a few reasons, I think the most obvious is cost. The minimum wage in the Philippines is $12 a day, not $12 an hour, $12 a day. So when you’re hiring people, and I was paying some five some $20 an hour, that’s a big difference from the jobs that they can get there in the Philippines. They speak and learn English. They learn English at a very young age. They speak English at a very high level, which is incredibly important, especially for someone like me that struggles with foreign language. They are very tech and media savvy. And what I mean by that is they consume a lot of content. They watch a lot of U.S. videos, they listen to U.S. music, which you don’t think makes a difference, but it really does when you’re trying to deal, let’s say you’re selling products or services in the U.S. to U.S. customers, they’re going to understand U.S. culture a lot better than someone who has never experienced that before.

Nathan: And then just work ethic. Whatever it is, and this obviously doesn’t go for everyone in the Philippines, but from my experience, you have people that want to work a lot of hours. They want to provide for their families, they want to progress and have stability and be part of something great and really work with a family that they can depend on and rely on going forward. And if you think about it, those are all really the traits that you want in any virtual assistant regardless of where they’re from.

Carol: That is great. Are there any negatives? To have people in the Philippines that we should be looking out for?

Nathan: Yeah, so I don’t call them negatives. I call it things to just be aware of it and to be proactive about.

Carol: Fair enough.

Nathan: So I mentioned the work ethic and a lot of people get surprised when they find out their VA is working 100 hours a week, but that’s something that you can proactively figure out upfront and set the tone for it. I’ve had VAs that had an outside client, I loved them, I wanted them for 50 hours a week. And I went to them and I said, “What would it take for you to drop that other client and just focus on me?” They want an extra $2 an hour, that’s worth it to me, I get their full attention, boom, problem solved. So something to just be aware of. Sensitivity is a big one. And again, this doesn’t go for every person in the country, but from my experience in the Philippines, you have to be careful. It’s very easy to offend people. I’ve been guilty of it. I tend to be a very direct entrepreneur. I like to just tell it how it is. Fire off that email.

Nathan: And if you do that over time, people will kind of get pulled back. They won’t want to come to you, they’ll feel like you’re a little bit harsh, a little bit more aggressive. And that’s something you really need to change your tone and just change how you approach different situations if someone’s not doing exactly what you want. Another thing, and this kind of goes for everyone, but more importantly in the Philippines, appreciation, you cannot only talk to your VA when they do something wrong. You have to appreciate when they do something right. And when you show appreciation to people in the Philippines, again, these are people that grew in a third world country. They have a lot of things outside of their control that are not very great on a day to day basis. When you’re providing them income and you appreciate them, that goes a very long way and that’s where people I think missed the boat on.

Nathan: And lastly, I mentioned that the computer and the internet and being able to address that and get on the same page early on. I mean, even my best VA’s, they lose power here and there, but they have a backup plan. When they lose power, we’ve already established how they communicate it, what they do, where they go. And and coming up with that and being proactive instead of just having a VA disappear for 48 hours is incredibly important.

Carol: I love this and I really like how this is shedding so much light on virtual assistants and outsourcing in general, Nathan. So I really appreciate this because a lot of the things you’re talking about really show the correlations of having somebody virtual versus having somebody right in an office and you’re just painting this picture that to me, makes it incredibly clear that you really can have the same type of relationship, the same type of results with somebody that is in another country that costs exponentially less, that you don’t have to be handholding on a daily basis, if you will, that you don’t have to be, 100% committed from 8:00 AM to 5:00 PM where it becomes a job. So I really liked those correlations that you’re drawing and it just shows the power in this whole concept. So thank you for that.

Nathan: Yeah, no problem.

Carol: So what are some of the common mistakes that we can avoid? Pitfalls we can avoid as entrepreneurs? What are mistakes that you see when people begin outsourcing?

Nathan: So I always say that there’s three different levels of people you can hire. You’ve got the followers, you got the doers and you got the experts. So the followers are your virtual assistants, they might have years of experience, but they’re there to follow your systems, your processes, where the doers are more of the graphic designers, the bookkeepers, the writers. You’re not teaching a graphic designer how to be a graphic designer, but they’re not consulting with you either. They’re doers. And then you got the experts, the high level consultants, agencies, they’re bringing their own systems, their own processes to the table. So when you talk about hiring virtual assistants, you’re really talking about the followers, which means you need systems, you need processes, you need SOPs. You can’t just hire someone and say, “Hey, I don’t know how to run Facebook ads, go run my Facebook ads.” That’s probably not going to work out too well for you. And that’s probably the biggest mistake that I see is not creating those standard operating procedures.

Nathan: I like to have a 90 day rule where the first month that I start a new task, I’m throwing stuff against the wall, right? I’m seeing what works, what doesn’t work. By the second month, I have a pretty good understanding of what doesn’t work and I’m creating some processes on what’s working and then I maybe hire someone at the end of the month then I spend the next 30 days onboarding that person and ironing out the kinks and making it their responsibility. So by the end of 90 days, that task is off my plate. And if people follow that, they have a lot more success than if you just say, hey, go do this and you’re assuming that they know what to do. But they’ve worked with lots of other clients who all want things done a different way.

Carol: I love that. Again, that’s a great tip for outsourcing versus even right, if you had somebody working right with you in your office right next to you, right, just making sure those procedures are how they need to be teaching them to do it and then you’re able to take that off your plate in 90 days and what a better way to do it than through a virtual assistant. That’s an awesome tip. Thank you.

Nathan: Yeah, no problem. A few of the others real quick. I mean we talked about not setting expectations. We can talk about not diversifying. I know I’ve been guilty of that where I have hired one person to do everything and then that person gets sick or that person quits and all of a sudden your entire business just comes to a stop and it might take you months and months to replace them, making sure that you spread work out across different people. So you’re not 100% responsible or relying on them. Also just not listening to feedback because at some point they’re in the small parts of your business. You might not be answering customer service emails, you might not know what’s going on with shipping your product and if they know what’s going on and they’re relaying what’s working and what’s not working to you, that becomes even more important as you get bigger and as you grow.

J: That’s great. So I probably should have asked this question earlier, but, we’re using kind of, I don’t know if they’re interchangeable, but we use terms like virtual assistant, we use terms like remote employee, we use terms like outsourcing to contractors. In your mind, are these kind of all the same thing? Are they different things? When should we be thinking about a part-time person that’s kind of brought in to do a single task versus a full-time person that’s brought in to like work in our business for years at a time? How do you get your head around the different types of people that aren’t in your office locally?

Nathan: Yeah, so I mentioned the followers, the doers and the experts. The followers are who I would call the virtual assistants. The doers and the experts are the freelancers and then the experts can also be consultants and agencies. That’s really how I break it down to make it clear. I mean, I used to call them remote workers and stuff like that. But in my mind, virtual assistants are the followers, the freelancer are the doers and the experts and the consultants are that higher level.

J: Awesome. Okay. I want to take one more step back because I know people… You mentioned something briefly before and people are going to ask me about this so I want to make sure that we address it. You mentioned that you sold FreeeUp. Can you tell us a little bit about how that all went down and what the business was looking like when you sold it? You don’t have to tell us exactly who, but who did you sell it to and what did that whole process look like?

Nathan: Yeah. So I’m 60 days out. We actually had a 60 day transition that just ended a few days ago.

J: Congrats.

Carol: Wow.

Nathan: Thank you. Going into 2019 our goal was not to sell FreeeUp. We love FreeeUp, we continue to love FreeeUp. I’m now a client of FreeeUp. I negotiated a lifetime discount there. So I’m a big proponent of FreeeUp, but one of our clients reached out to us, the client’s name is The HOTH, they’re actually located in Tampa. They run an SEO business and they had use FreeeUp for years. They said, “Hey, we love FreeeUp. We want to get into the freelance space. We don’t want to build a marketplace from scratch. We prefer to purchase one that exists. And would you guys be open to that?” And the back of every entrepreneur’s mind, there’s only so many ways you exit a business, right? You either work in it forever, you get funding, which is not something I want to do because I feel like you’re working for someone else. You go out of business or you sell it. There’s not many options past those four.

Nathan: So it’s always something you considered. And we said we would hear them out. So they came back to us with an offer that was fair. I even thought it was aggressive and then the due diligence began because if we’re going to sell our baby, something we put our heart and soul into for the past four years, we want to make sure these people aren’t going to blow it up and ruin it for everyone. And we’ve got a lot of people depending on us, we have all these clients, all these partners, these freelancers, our internal team that we care so much about. And they were firing over due diligence questions at us as fast as we were firing it at them. They wanted to know all the financials, we wanted to know how they treat people, what their customer service was like, what other businesses they’ve acquired, what successes and failures they’ve had.

Nathan: And we were really impressed. I mean, Mark Hargrove and David Martin are fantastic entrepreneurs. They bought and scaled numerous businesses. They have an office down here in Tampa and we got to visit the office and meet their team and learn about their culture and how they treat people. And it was very similar. The values were very similar as ours. And it was a really tough decision and once we’ve gone through the due diligence, the mind numbing part began, which is the lawyers and obviously our lawyer wants to protect us, their lawyer wants to protect them, so going back and forth with them for two months was not their fault or our fault. It’s just kind of the process and going over that. And then putting steps in place to make sure that people are taken care of. I was mentioning with you guys before, we took hundreds of thousands of dollars from the sale and gave it to our internal team and the Philippines also made sure their jobs were secure, they weren’t going to lose their job, made sure all that was part of our agreement with them.

Nathan: And then kind of just making that decision of, hey, we’re going to transition this to someone who has more experience than us because at the end of the day, Connor and I have no experience growing a business from 10 million a year to $50 million a year and growing from zero to one and one to five and five to 10 is way, way different than growing from 10 to 50 and we have all these people depending on us and maybe we could’ve figured it out, but like every entrepreneurial endeavor, there’s going to be a lot of trial and error. There’s going to be a lot of learning and we wanted to put everyone in position to succeed moving forward. And really, we really felt like that was the right decision to make and a win-win for everyone.

J: I love that. And I love what you just said about growing a business from zero to a million and a million to five and five to 10 and 10 to 50. It’s so true. We’re all good at different things. And a lot of people, when they go into entrepreneurship, they think, I want to grow a business. I want to start a business, I want to grow to a billion dollar business. But what they realize is at some point they’re going to realize that not only do they not have the skill set necessarily to do all of those things, zero to one, one to five, five to 10, 10 to 50, but they also probably don’t have the passion to do it. I personally, I couldn’t ever imagine like you growing a business from 10 to 50 or 50 to $100 million. That’s not what I enjoy. I like starting from scratch. And then there are other people I know that like to buy a business at 10 or $20 million and then grow it to 100 million.

J: So everybody’s going to kind of have what they enjoy doing and what they’re good at. And so it’s something that we should be thinking about as entrepreneurs. Where do we want to spend our time? And you obviously decided that you kind of got to where you wanted to be. You sold and then you started Outsource School.

Nathan: Yeah. So here’s what’s cool. I mentioned I was part of the 60 day transition. Well, during that we got to see what entrepreneurs do that take a business from 10 million to 50 million. So they’re coming in with these systems, these processes, stuff that it might’ve taken Connor and I years to figure out years to implement them. They’re implementing them within 24 or 48 hours. And when we told our internal team about the sale, it was emotional. They were crying. I was crying like it was sad. Even though we set them up and we tried our best to make sure they were taken care of. Like, we’re going to miss them and they’re going to miss us. But now I check in with them 60 days later and they’re like, “Nate, this is awesome. This stuff that they’re doing is incredible. We’re so excited for FreeeUp in the future.” And I mean, in my mind, you obviously hope it goes that well, but you never really know until you had to do the transition.

Nathan: So I think I just learned a lot. So that next time I get to that level I’m like, oh, that’s the next step if you really want to scale your business.

J: Yeah, that’s the cool thing. It’s truly a win, win, win for you and your partner, for your employees and for the company that bought you.

Nathan: Right. Exactly.

J: Awesome.

Carol: Very fine. So it sounds like you and Connor are still together with Outsource School?

Nathan: Yes. So we started Outsource School. We’re excited. We’ll probably have our first course launching it in the next 60 days. People can join the news letter there and our first courses on our IOTM method, which IOTM stands for, Interviewing Onboarding Training Managing. And we’re going to teach people, hey, this is how we interview people. This is how we interviewed people for FreeeUp, Outsource School that we’re doing right now. This is how we onboarded them. This is our training process to make sure they actually understand it and a task is actually off our plate and we’re not looking over people’s shoulders. And then once you’ve invested all this time and energy into interviewing, onboarding, training, how do you get people to actually stick around for years to come? How do you get them to buy into your business and enjoy working and build a family in a culture that actually grows so you’re not dealing with turnover that send you in circles?

Nathan: So I’m really excited about that. I think we’re going to be able to help a lot of people and even help the virtual assistants because again, creating a win-win where people get better at hiring the VA’s benefit too. And everyone kind of moves forward together.

J: I love it.

Carol: I love it. this is great. And what a great way to launch 2020, right? For you and Connor to share your knowledge even more with more entrepreneurs and small business owners and even large business owners around the world. That’s very cool.

Nathan: Thank you. It’s been a crazy six months, but I mean for the past four years, every second of every day has been FreeeUp. So just trying to get out of that and getting into more creative mode has been exciting at least for me.

Carol: That is great. What do you think J, is about time to jump to the four more?

J: Let’s do it. Okay, so the four more is the part of the show where we’re going to ask you the four questions that we ask all of our guests and that’s the four part. The more part is you telling us more about where our listeners can get in touch with you and connect with you. You ready?

Nathan: Let’s do it.

J: Okay. Let’s start with question number one. I’ll take this one. What was your very first job and what did you learn from it? What didn’t you learn from it?

Nathan: One of my first jobs, I was a vegetarian in high school and the only person that would hire me was a meat store right by my house. So I was a cashier at a meat store. And again, really just in my mind was like, I never want to do this. This is terrible. Just hating every day, but I feel like the people that really hate their first job just become even more motivated to do well just so that never becomes a fallback option down the line.

Carol: So true. I love it. Okay. My question for you, the second question is, what is the defining moment when you Nate, realize that you had the entrepreneurial edge?

Nathan: Let me guess. When you were a vegetarian and had to work in a meat store.

Carol: Had to work in a meat job.

Nathan: So I mentioned the cease and desist letter, but one of my crazy stories is I put all my eggs in one basket. I was running this Amazon business and I hired this one manager the day to run the entire business and I spent six months training him and got it to a really good spot. I was sleeping better at night. The business ran without me. Well, I did the same thing with one supplier. I had one supplier doing about 80% of our sales. I said, “You know what? We don’t need the other suppliers. Let’s just work with him.” So my business as an autopilot. I’m a 20 year old and I’m making more money than I ever should. I think I’m like the king of the world and I go on vacation to Myrtle Beach and I’ll never go back. On the first day of my vacation, I get a phone call that my manager quits on me and my supplier was dropping me and no longer wanted to work with me.

Nathan: So I go as like, hey, I’m this 20 year old who no one can touch to. Let’s start this whole thing all over again and build it back up. And I mean, it was tough. I remember drinking a lot on that vacation and coming back and saying, “You know what? We got X amount of money in the bank account. We’re going to go all out. Let’s contact every supplier and build up.” And that’s how we got to 500 and let’s not make that same mistake again. Let’s hire two people for customer service. Two people for filling orders, two people for listing and diversify so that if someone quit, it wasn’t the end of the world. So I think that’s the part where I was almost like, “Oh no, now I need to get a real job.” And then building it back up being like, “Okay, this entrepreneurial thing is for me.”

J: Awesome. Love it.

Carol: That’s cool.

J: Okay. Next question that I recently added to the rotation because honestly, I’m looking for more good books to read. What is your favorite business book? Maybe one that isn’t as popular, something that other people may not be as familiar with?

Nathan: Man, you got me at the end. Built to Last is honestly my favorite book. I’m sure you guys have read it and I mean, for me it kind of goes against what you’re always been taught. You always think, hey, you need this charismatic leader to grow a business and it’s really not that it comes down to core principles and adjusting and figuring out what the market actually needs. So definitely not a book that’s not well known, but I know it’s my favorite and if you haven’t read it, don’t start a business without reading that book, it’s going to completely change your mindset of what’s important.

J: Yeah, I think you’d be surprised. I think there are a lot of people out there that probably haven’t heard of it or haven’t read it. So I love that recommendation. And I agree with you. Fantastic book.

Carol: Excellent. Now this is my favorite question, the four. What is something in your personal or professional life that you’ve splurged on along the way that was totally worth it?

Nathan: It’s funny, I am the most frugal person. I drive a 2011 Subaru. When I sold a FreeeUp, I’m not going out there and buying a new car, that’s just not my lifestyle. So for me, I spend money on two things, travel and food. I’m a big foodie, so I want to travel to awesome places and try just amazing things. Like yesterday, I had a Sushi Burger, which was probably one of the craziest things I’ve ever had in my life. And the buns were made out of rice. It was nuts. That’s really the only thing I spend money on. I mean, I bought my place back in the day and I’ve lived here now, so I’m not a big like splashy spender person. That’s just not my personality.

Carol: I love that. And we find that is so typical of so many people in the same boat as us. Right? All of us, all of we entrepreneurs, we so value the time and the experiences more than the flashy stuff. So I love that.

J: Carol is all about the travel, I’m all about the food.

Carol: That’s right.

Nathan: Perfect.

J: Awesome. Okay, now let’s get to the more question of the four more. Where can our listeners find out more about you? Find out more about Outsource School that you’re in the process of building and potentially connect with you.

Nathan: Yeah. So if you go to outsourceschool.com you can get a free case study on how we built FreeeUp, how we actually built the teams, what those teams look like in year one, year two, year three, year four and how we built it. And you’ll also join our waiting list. So when our first course and other courses come out, you guys will be first to get it, early bird discount and all of that. You can also follow me on social media, Nathan Hirsch on Facebook and LinkedIn. Connect with me on Twitter and Instagram, realnatehirsch. I’m probably one of the easiest entrepreneurs to contact, so feel free to reach out to me. I love connecting with other entrepreneurs and helping people however I can.

J: That’s awesome. Absolutely love that. Nathan, this was fantastic. We so appreciate hearing about the businesses you built and more importantly, just all the amazing actionable tips that you gave our listeners today.

Nathan: Yeah, thanks so much for having me guys. That hour flew by pretty fast.

J: Awesome. Cool. Well we will talk to you soon.

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In This Episode We Cover:

  • Why he treats his remote team like they’re in a real office
  • How he built another freelancer marketplace to cater to his needs
  • How he makes customer service his competitive advantage
  • Why he may never hire someone in person again
  • The 4-step process to dealing with remote employees
  • How to get on the same page with expectations
  • The traits of virtual assistants that you want to look for
  • Why Nathan prefers to outsource in the Philippines
  • 3 different levels of people you hire: followers, doers, and experts
  • The 90-day rule
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “Treat remote workers like you have people in the office.” (Tweet This!)
  • “See if it is even what your customers wants before you invest hundreds of thousands of dollars.” (Tweet This!)
  • “If you’re not hiring remote, your competitors are and they have an extreme competitive advantage over you.” (Tweet This!)

Connect with Nathan

What does it take to start, scale, and sell your own business? Every Tuesday, J and Carol Scott ask this question to entrepreneurs of all stripes and delve into stories that go beyond the launch. F...
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    Katie Rogers from Santa Barbara, California
    Replied 11 days ago
    Dropshipping is horrible. Somebody dropshipped a book I listed on Amazon, but at the time I did not even know what a dropshipper was. I was a little curious that the person who paid for the book was different tan the person I sent the book to. I did not realize what a dropshipper was until the dropshipper claimed his customer reported the book never arrived and asked me for a refund. However, I had shipped the book "Delivery Confirmation." I sent his customer the required USPS affidavit for undelivered mail, and asked him to fill it out and return it to me. He refused, so I told the dropshipper there would be no refund. He complained to me about losing money. That is when I really lost my temper. I told him I felt like the Little Red Hen. I listed the book, I packaged the book, I shlepped the package to the post office, but he wants to eat the bread though he did no work. His customer was not willing to fill out the form because he had the book. Then I told him to get lost.