Article

Sink or Swim

An Offshore Startup Deals with a Tidal Wave of Growth

By John Coon

September 9, 2013


Cultivating success in business is not a new thing for Brigham Tomco. He has been around the block in the entrepreneurial realm more times than he can count.

Tomco was an investor in dozens of companies and was involved in six different startups before launching Zylun, a Lehi-based outsourcing company, in 2010. At one point, Tomco managed an investment fund in New York City worth nearly $1 billion.

He knew what it took to make money, sustain growth and cultivate success. Still, shepherding Zylun through the initial start-up phase as its founder and CEO provided a challenge even Tomco found unique.

Zylun not only experienced success right away, it grew with the force of a monsoon. In fact, the company ballooned to 500 employees during its first year of operation in the Philippines. In February 2011 alone, the company hired 200 people. At the time of the hiring boom, Zylun had only a handful of employees in its Lehi and Cebu, Philippines, offices to handle it all.

Dealing with that growth required a great deal of energy and a sound strategy, says Tomco. “‘Managing’ is probably a good word because we didn’t really have control over it. You got a bull by its tail and you’re getting pulled along.”

Massive growth equaled constant change. Zylun outgrew several offices in Cebu over the first six months. At one point, the company had teams in three different offices to handle the burgeoning base of clients.

“It was one of those all-hands-on deck situations,” Tomco says. “You either sink or swim. We found ways to make it happen. Sometimes, we look back and there’s so many times we could have failed during that growth process.”

Build a Solid Foundation

Zylun didn’t fail because Tomco made sure the company managed growth with a strategic, patient approach. And the first order of business was getting the right people in place.

He brought Tony Morrison on board as the chief operations officer a year after launching Zylun. Morrison brought an information systems background to the table, and he had managed more than 100 employees at Ancestry.com before coming to Zylun. Morrison was tasked with building out key systems and processes related to everything from sales to recruiting. His job was to give Zylun a solid foundation for scaling the business in future years.

 This foundation helped Zylun streamline how it identified and developed the right talent. People are the crucial element for Zylun since it relies on offshore teams to serve the technological needs of clients and their businesses. Tomco credits Morrison’s work with increasing the quality of Zylun’s product. The company could do a better job of bringing in and preparing people with the skills needed to serve its clients.

The changes also meant restructuring and changing roles within the company. Zylun could now better identify the people who fit with the new systems and processes.

“It was hard to evaluate our management staff because everything was so by the seat of your pants,” Tomco says. “You couldn’t tell if they were putting out the fire or if they were the cause of the fire they were putting out. We actually had some major shakeups with management as we put some of the processes in place and realized certain people weren’t doing as well as we thought they were. Certain people were willing to jump on that bus of helping to scale the business.”

Do Your Homework

Running an offshore business added another layer of complexity to Zylun’s early years. Tomco says getting to know the country where Zylun was to be headquartered—the Philippines—was a top priority and key to the company’s success.

And doing business in the Philippines certainly presented a set of unique challenges—particularly from a cash-flow perspective. The Filipino government requires business to prepay the first six months of rent on their facility.  For Tomco, this added up to $120,000 worth of debt in prepaid rent. Every employee also receives 13-month pay each year with a one-month bonus at year’s end. On top of that, the Philippines celebrates 25 federal holidays.

Because running an offshore business presents a unique set of challenges, like the aforementioned, Tomco advises entrepreneurs to do their homework and gain a working knowledge of everything from local laws to available infrastructure so they can hit the ground running.

That’s probably the No. 1 thing,” he says. “It’s not a decision to make lightly. It’s a totally different business being offshore.”

Back to Square One

After the period of extreme growth, Tomco and his management team embarked on a new strategy of deliberate, controlled expansion. The company sold off 95 percent of its assets after initially expanding to 500 employees. After the sale at the end of 2011, Zylun went down to 30 employees. The company has engineered steady growth since that time and now has 150 employees.

While cash flow was an early challenge, Tomco made a point of keeping his company from drowning in the debt. He raised money from investors to cover start-up costs and had clients pay setup fees to guarantee cash flow until Zylun could open a line of credit a year after launch.

“We’ve really tried to bootstrap as much as we could,” Tomco says. “We’ve chosen to grow in a way that we could fund it ourselves. You could go raise a bunch of cash and hire a bunch of salespeople and go faster. But we’ve chosen a pace we’ve been
able to handle.” 

 

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