Blog - Yu-kai Chou

Outsourcing to Foreign Countries can sometimes create the Illusion of Saving Money

Outsourcing Web Development to other countries can create the Illusion of Saving Money

A lot of people talk about saving money by outsourcing to foreign countries such as India. However, my personal experience is that it actually costs way more than doing it in the US if you are a resourceful entrepreneur.

I’m sure there are some firms out there that are truly good and cheap. I also know that there are way more US development firms that overcharge, but if you can find the cost efficient in the US, the effects are much better than the good in many foreign nations.

This post is not about how the miscommunication, off hours and what not could make development more expensive. No, I’m talking about pure projected spending at the beginning. Here are my experiences:

Outsourcing to offshore teams I estimates takes 3x more hours than my in-house developer

There was one point where I seriously looked for an outsourced company as backbone developers for Viralogy. After looking around, I found a firm that seems really professional, has been around for close to a decase with dozens of engineers, and built all the websites for National Geographic in each country.

More importantly, their programmers charge $10-15/hour. Compared to a full-blown traditional development firm in the US, that’s a tiny fraction of what it would cost. It all sounded very promising (besides a tiny bit of that language barrier).

However, very safely, I asked them to do an estimate of a project that we were working on. My in-house programmer previously made an estimation, which was about 88 hours(which he didn’t exceed much afterwards). The foreign firm gave me an estimate too, and it was shockingly 350 hours.

WHAT?

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(Redirected) Vertical Networking and The Pit

Chou Notes:

Today I talk about Vertical Networking and why I think it’s more meaningful than Horizontal Networking. Making others more successful in your network can be more meaningful than constantly meeting new people.

If you were all stuck in a pit, helping people out of it would benefit you more than stepping on someone’s shoulders.

How to be known by Influential People using Twitter Lists

Influential people are generally too busy with their emails, meetings, tweets etc

There are always benefits when more influential people know about you and think positively of you. If they like you, they are able to give you shootouts, advice, connections, and all that good stuff. However, it’s often very difficult to get their attention since they’re always bombarded with all sorts of things.

Twitter creates that opportunity for you to contact them instantly. But still, you’ve tweeted out to them before, and either they completely ignored you, or they responded back, made you feel great, and you know they forgot about you right after.

Engage your followers those you follow

Most advice out there tell you to engage your followers. I can’t agree more with that. However, if you want to get non-followers to know who you are (read: not to “follow” you), you’ll need to do more than that.

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The non-superman non-excuse

No one likes excuses…besides their creator

Often times when someone did their tasks incorrectly and it was pointed out to them, the person would blame it on their tools or environment. It could be pretty frustrating when you are working with people like that and their work/attitudes directly impact how you do.

When that happens, instead of just saying “That’s just an excuse!” and create an emotional response (these RARELY solve your problems and they’ve managed to bring you down to their level of negativity), I find it useful to ask, “I understand that. But is it humanly possible for a normal person to do this correctly, even with these obstacles?” If their response is “No! That’s not possible for anyone to do it!”, then either you should probably drop what your team is doing, or find someone else to work with.

But the chances are their responses will be “Yes.”

Making people understand is better than making people feel guilty

I then followup with, “Then is it possible for to you do it correctly, even with these obstacles?” At this point, most people would say yes too and understand that it’s ultimately up to them to overcome these problems and it’s pointless focusing on the obstacles and excuses. It’s humanly possible for non-geniuses to do it. You can do it too.

The non-excuse is on you

While we realize this is a good way to shut people up and stop them from complaining, it’s also a good idea to apply it to ourselves. When we face obstacles and failures in our lives, instead of focusing why we couldn’t do it, we should again think, “is this humanly possible for a normal person?” And if the answer is yes, stop the complaining and just get it done.

Being cautious can be useful for in life. But being negative creates value for no one.

Social Media Competitions: Don’t give out your own service as the prize

Chou Note

When you run a social media competition when people submit pictures or videos and one person wins a free prize, DO NOT use your own service as a free price. You want to use something that people already want. Usually these are things like Apple products or cameras. If your service is so valuable that it will incentivize people to submit for a competition, they like your service anyway and for you this “marketing” campaign is redundant – only people who already think you have the best service ever would participate.

Also, don’t give out the prize quietly. Make it the biggest announcement in the world. It’s special.

ROI Numbers on Social Media

Some readers have asked me to provide some specific numbers on social media instead of just saying that it works. I have mostly been running RewardMe these days so I don’t have time to do more research on that, but last year I found a few interesting numbers so I’ll post it here. They’re a bit old but pretty concrete and can be used in school reports or benchmarks. Hope this helps!

1. Organizations with the deepest social media engagement increased revenue 18% last year, while the least active saw sales drop 6%.

2. Forrester Research estimates social media marketing to grow at an annual rate of 34 percent – faster than any other form of online marketing and double the average growth rate of 17 percent for all online mediums.

Of course, social media is starting from a smaller base. Forrester estimates that $716 million will be spent on the medium this year, growing to $3.1 billion in 2014. At that point, social media will be a bigger marketing channel than both email and mobile, but still just a fraction of the size of search or display advertising ($31.6B and $16.9B, respectively).

3. Average ROI – online campgain, 153%, average sale 32%, offline (18%, 14%). Average allocation to online media: 10%

Lifestyle Gamification: Having a Strong Core is your most Valuable Asset

Your Core determines your Life

It all starts here. Your Core. Without your core, you are easily swayed by others, you become a product of conformity, and you cannot be a leader. Your Core is what stops you from being an NPC (Non-playable character) and allows you to become the Hero. (Here’s my hero btw)

Have you ever talked to someone and you instantly felt that there was something about the person that made him/her respectable or even intimidating? And that person may not be very physically large, particularly good looking, and he hasn’t said enough things for you to truly conclude that he is highly intelligent. Nevertheless, it seems like he is really smart, knows what he is talking about, and you can really rely on him. That is usually because he has a strong Core. He believes and trusts in himself, and that conviction spreads to others.

My own story on Lifestyle Gamification and Discovering the Core

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