Stig Brodersen – Founder of We Study Billionaires
Last updated November 21, 2019
Today I am super excited to be joined by Stig Brodersen of the ‘We Study Billionaires’ podcast. Their podcast has over 13 million downloads. It ranks number one for investment podcast, and their tip community has a huge following across the globe. Stig lives in Denmark and his co host Preston lives in the US. However, their entire production team is based here in the Philippines, which makes me really proud that such a high calibre podcast is not only being produced but pretty much run from here in the Philippines. So Stig is here in Manila, visiting his team and holding a few meetups with their tip community. I took this opportunity to explore his thoughts on Philippines outsourcing and for Stig to share some of his own experiences with outsourcing for his burgeoning media empire.
Principles of value investing
Derek Gallimore: It’s an absolute pleasure. And you know, I’m an immigrant here to the Philippines, and I just get super excited to see more and more of the world’s attention being brought to the Philippines. So, I’m very happy to welcome you here and have you on the podcast.
Initially, it’d be good to get a little bit of background from you about what you do and the business aspect of the podcast. And for your podcast, you’ve spoken to many of the world’s preeminent investors, fund managers and billionaires. So I want to bring this down a notch.
As an introduction for the non-investors amongst us, what is value investing in relation to standard investing principles?
Stig Brodersen: The principle of value investing is actually pretty simple. It has the leading principle that you need to figure out before you invest in something – what is the true value of that – truly referred to as the intrinsic value. So, if you have a stock and it’s trading at $60, but you know that, at least based on your assumptions, that the intrinsic value is $100, then it might be a good time to buy into that stock.
So it’s not so much about one studies being good and the studies being bad. It’s all about comparing the price. So basically, what’s trending right now; and then the value, what is it really worth.
Derek Gallimore: Fantastic. And I heard on a recent podcast of We Study Billionaires, that you were saying that you seek out the best value. Yet the markets that you’re most familiar with – the US, Denmark and also the Irish markets, they’re currently very overvalued.
Do you have any sense of the value proposition of the Philippine stock market? and how that might compare and others with an obvious aspect there being an emerging market?
Stig Brodersen: So if you look at the valuation for something like the Philippines, it’s sort of like the middle of the pack. So we have a lot of different stock marks. We have some they’re more expensive than others. And when we talk about valuation of a stock market, we’re basically asking how much money can we expect to get back and how and what should we pay for that?
And in the Philippines, it’s too good priced. Right now, it’s priced around 6 or 7% return. That’s what we can expect for the long run, given the price level that we add. But obviously, that’s an analyzed return and it’s fluctuates wildly.
So there are no stock markets that just go up 6 or 7% every single year, may go up 30% this year, crash 50% next year. So it’s more like whenever you look at the stock market, that’s probably what you can expect giving, given the conditions right now,
Derek Gallimore: And just from a layman’s perspective, the higher risk obviously equals high return because of that risk proposition, how does value investing price in the risk components and components of emerging market risk?
Stig Brodersen: So, I would like to challenge that notion that higher risk is also higher reward. Like, if I would say that the highest risk that you can encourage paying too much for an asset.
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So let me give you an example of a house. Say, the value of that house is worth a million dollars, and you have to pay $10 to acquire that, there’s not a lot of risk attached to that. And so whenever you’re talking about risk, it’s all about the risk of losing your principal.
And if the asset is worth calling hundred dollars and is trading around $30, the risk profile of that is probably very low. So that’s kind of like how we look at at risk.
Staffing in the Philippines
Derek Gallimore: Fantastic. Thank you. And so I’m slightly out of the woods in terms of the deep investment questions, which I’m happy about. But Stig, you are here in the Philippines. We are sitting in Manila, the capital. And as a bit of a spoiler you have staffing here.
So what is it about the Philippines – though there’s another hundred and 90 countries in the world – what has brought you here for your staffing needs?
Stig Brodersen: It’s, I would like to say, a headache. A great-grand plan, or everything was just planned out from the very beginning. I used a fancy business model to figure out that the Philippines was the best country, but that was not how it started at all.
It was really just a coincidence. I was born and raised in Denmark. My wife got a job temporarily for a year and then two teaching finance in Seoul, South Korea, and I went there with her. Because I, being a podcaster, I can go anywhere.
I was looking for someone to help me with everyday life. I do not speak Korean, so I was very challenged in terms of getting around and I was looking for someone who’ll be helpful with that. And there was Bianca, one of the people that’s now part of the team. And it was just pure coincidence that she was from the Philippines because you could have been from any other country.
To begin with, her task was to help with groceries and pick up the dry cleaning whatever it really was. And then we talked about what it did. And it turned out she had a degree in computer science. So it was like, oh, okay, since we have a podcast and you have a website, perhaps you can help with that. Then we needed a designer and she said, Well, my sister, she’s a designer. Perhaps we should consider hiring her.
And that’s kind of like how it started. So it was really just a very fortunate coincidence. I’m really happy to have staffing in the Philippines and we got to talk a lot more about that. But it was just pure coincidence that it all started here.
Derek Gallimore: Wow. Fantastic. And kind of infilling or backfilling your knowledge of the Philippines then, you obviously wasn’t aware of the sort of outsourcing Mecca that the Philippines is.
What is your awareness now? And I’m interested in getting the perspectives of people that are very successful and formed in the West, but not necessarily aware of this opportunity in terms of staffing from the Philippines.
Stig Brodersen: I’m really happy you asked that question. I knew very little of the Philippines. It’s kind of embarrassing to say, but if you ask me like any details you know how many people, languages, I didn’t know too much at a time. And obviously I’ll be brushing up a lot ever since.
But now, looking at why should one outsource in the Philippines, why should one do India or other countries? I mean, there’s so many good reasons that I’m sure you, Derek, are much more familiar with than I am when it comes to the Philippines.
Just for ones that everyone or a lot of people speak English. That’s a huge help. I also want to say culture, in general, just makes it so much easier people are – I know it might be wrong to say that they’re nicer than the West; but for a lot of differences that you would need, in e-commerce, or if you’re doing things online, it’s just more suited for the Filipino culture. And I think a lot of people probably go to the Philippines to save cost.
And as a business owner, that’s that’s what we aim to do. But I know on the head-to-head basis, I think that the quality that you’re getting here from the Philippines is sometimes much better than than what I would use to in Denmark.
Derek Gallimore: It’s nice, isn’t it? Because without too much forethought or planning, you stumbled across an opportunity of someone from the Philippines. And then I think the fact that it is a low-friction transaction, it’s easy to do business with Filipinos, that you’ve now developed a team here, that it is amazing.
I think that the people faced with the uncertainty and lack of knowledge of the Philippines and business people that explore it are a little bit intimidated by by outsourcing. But then once you start It’s very reassuring and the people who you get are excellent.
And how is your team evolved since your initial outsourcing?
Stig Brodersen: It’s been fantastic. The first person we hired back in 2016 as a part-time, she went full-time. We hired her sister, as I mentioned before, started part-time then went on full-time. We actually also hired her sister-in-law.
And now, we hired another three people here within the past six months. So now there were six people here on the team. And the heart the soul of TIP, of our company, is really here in the Philippines.
We have a very scalable product. We cater to quite a few people. So we do emphasise a lot on targetting or employing few but very productive people, and all about making that scale. So yeah, the development if you live here in Manila, the hosts are in the States. I’m the one in Denmark. It has no relevance whatsoever. But that’s how we go. That’s how we run the team.
Derek Gallimore: And again, it’s a nod to the increasingly globalised society that you’re based in Denmark, the other hosts are in the US, the editing and production crew here in the Philippines. And it’s one sort of glorious, globalised economy now, isn’t it?
Stig Brodersen: It’s amazing. Yeah.
Derek Gallimore: And do you feel that you’re onto a good thing here? And what is your perspective back in Denmark of the awareness of – because fundamentally, outsourcing is kind of pigeon-holed. But I suppose the global implication of having more affordable salaries, accessible by all of the world.
Is Denmark aware of this opportunity, or the world, generally?
Outsourcing in the Philippines
Stig Brodersen: It’s such a big question, and I think that more or less everyone in the business world are aware of the power of outsourcing.
When they think of outsourcing, they do not think of the Philippines. I can’t speak for everyone when I say this, but that would be my best guess. They might be thinking about China, even though China is getting really expensive for a lot of outsourcing. So I think that would have that connotation. That’s probably why you go to Asia to have something done.
And traditionally, it’s been Eastern Europe, which is a lot cheaper to live in than Western Europe. Then it went on to Asia, primarily China. And now it seems like more and more people are looking at Southeast Asia.
I do want to say that my impression is it’s different types of people who do that. Like, production companies might not look two months in Southeast Asia just yet. It’s more online companies who understand the power of, for instance, having a call centre, being able to employ 50 or 100 people whatnot.
What I do expect more to happen is that you would have more specialised staff. Really high paying, especially by Filipino standards. High-paying, highly-skilled staff here in the Philippines. I think that’s probably what you will see more of that what you see in the past
Derek Gallimore: And you’re very involved in the financial sector, in the investing sector. Do you see an opportunity in the future – because outsourcing is predominantly been the sort of lower venue task.
Do you see that the financial sectors might see this as an opportunity and, of course, with professionals going up the value ladder, of getting more and more of the backend financial activities done from the Philippines, to support things like funds and investors?
Stig Brodersen: I wouldn’t be surprised.
I do think that whenever it comes to finance, it’s regulated differently, and I think it’s trigger than it is for many other different tasks to outsource. So I do think that a lot of the backbone would still be in the West for something like that. Or at least them would have their HQ there and then just do some of the subtasks in the Philippines.
Financial sector relate to that, and probably not the best example of who would go first. That’s my impression. You might have a different intake. You work with a lot more companies doing that exactly. So, I guess that’s my take.
Derek Gallimore: Absolutely. And so TIP, which is The Investors Podcast network, is growing. Do you see what facilitated that? And is the Philippines potentially a catalyst to the successful growth of this business? Do you think it could necessarily have scaled so fast?
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Stig Brodersen: Yes. Definitely. The thing is that the reason why we are now hiring more people in the Philippines than we hire in the States, that really relates to scale, but scale in a different way.
Because if we got 10 times as many people listening to our podcast tomorrow, we would need more staff. That’s just not how the industry works. So I think that whenever you look at a company like ours, for instance, that starting to develop software, the Philippines is amazing because you can call – I think what they call in the industry – the Rockstar programmers. You can hire really good programmers here in the Philippines. And if you know what you’re doing, you can hire really good, so you don’t need too many people doing that.
So I do think that you will see this shift from not being as intensive in terms of the quantity – even something as special as a programmer – that would be moved to the Philippines and much more from the West.
Global podcast growth
Derek Gallimore: Fantastic. And the TIP network then, where do you see the growth? You have two or three more podcast shows coming live just just right now I think, isn’t it?
Stig Brodersen: Yeah, so we are recording this here in early September 1.
Our first show came out in August. We start already to back in 2014, but Millennial Investing, our new show came out in August. We have a show called Silicon Valley that’s coming on later here in September. We’re sending up another one here in October called The Good Life. So, it’s very helpful to have staff in the Philippines who can help set that up.
And as we go along, we would like to end up hiring more people. But for us. It’s all about scalability. So I guess, in that sense, we have a different approach when it comes to hiring people in the Philippines.
Derek Gallimore: Fantastic. And I’m obviously based in the Philippines, but I’m a bit of a podcast addict. It is amazing how the world is so connected with almost similar vein of knowledge and thought processes, and it seems now that the media is really modernising the world, isn’t it, which is very powerful for people here. The podcast world is just getting started in the Philippines and I think there’s kind of two or three prominent podcast shows now.
So it will be really exciting to see that it grows as everything does. How are you seeing the podcast economy of the world? And where do you see that that going in the next 10 years?
Stig Brodersen: Are you referring specifically in terms of the Philippines or just the past?
Derek Gallimore: Yes, the podcaster adoption around the world?
Stig Brodersen: Well, I read this here recently that only 10% of people using iPhones are listening to podcasts. It is even less with Android. And I think there would be a lot more in the future.
I know I’m kind of biased to say that, why would people do that. But whenever we look at the production, it’s going to be more and more like TV without pictures. It’s going to be produced better and better, is going to be more and more specialised.
And something like podcasting, as it grows in popularity. It’s just perfectly suited for the Philippines. So I do expect and hope for the Philippines, that in the next 5 or 10 years, you will see a lot of people being employed by larger, typically American podcast companies.
Movement towards globalisation
Derek Gallimore: Absolutely. Okay. And in terms of more macroeconomic trends – and I’m not sure if you necessarily observe these from value investments – do you see a movement towards globalisation and how that affects the companies that you study? Is it a major thing on the agenda of companies to look out for?
Stig Brodersen: Definitely. And I think where we saw a lot more blue collar jobs being outsourced the foreign thing today, you see more and more white collar jobs being outsourced, and the thing that the Philippines would be absolutely amazing. Also going back to the programmers, that’s one of the reasons for that and just one example of how that would be.
So for instance, back in the day – whenever I say back in the day, we might talk about 5 or 10 years ago – especially in my industry, the Philippines were notorious for having really good transcribers, and also it wouldn’t be steep. I think that’s about to change a lot. Please allow me to elaborate.
So just a few years ago, we started to use AI transcripts. And there was probably like a 60% solution. The AI, the way it’s set up now, it’s almost free to use, right? Because it’s all just processing power. And it’s probably like 60% solution you have so you can get the rest done in the Philippines with much lower rate because now they only need to do the last 40%.
Today, probably closer like 80%. So the cost has been caught on that and before too long, we’re going to do 100%. So everything would just be absolutely perfect, which would unfortunately cut out in the Philippines of employment. But if you look at the market forces, that’s kind of like how you see that.
But also for a lot of the more, something again like programmers, you don’t get a good programmer for $100,000 a year in Silicon Valley. He or she would probably be pretty bad if it only charged you $100,000. You can get rockstar programmers, multiples of them, for the same cost. And I do think there will be some sort of convergence, which might unfortunately lead to higher inequality in the Philippines.
When you see a good portion making considerably more money as you can see, the globalisation continues to unfold. As you can see a lot of those people who would do different sorts of blue collar work, highly want to, even online, they would not be out of job because of the way that AI machine learning has evolved.
Derek Gallimore: It is incredible as an AI is kind of creeping up the value ladder already. You got to keep ahead of the pace just to be able to add value that a computer can’t have. But I think that’s challenging all of us all around the world, isn’t it? It’s a constant match. Interesting.
And so you come over here, you visit the Philippines, you feel that it’s better to visit your team and be connected to your team?
Stig Brodersen: 100%. And I was hitting on this before in terms of, I think I look at outsourcing slightly different than most business owners. For us it’s not so much a strategic choice even though it is. But we think that this staff we have here in the Philippines, there are actually better than what we can get in the West. So even if we look away from the cost component, we’re probably looking at more skilled people suited for those roles.
And because we are such a scalable product, it makes so much sense for us, not just because we’re nice people, but also to really invest emotionally, personally, in growing the team here in the Philippines. Because going back to the scalability, if we get 10 times 100 times as many downloads tomorrow, we don’t need to hire more staff, we don’t get extra costs.
So it makes a lot more sense to invest in the individual employee in the Philippines, sort of like what you’ve been used to do in the West. You outline different types of educational opportunities, or whatever it might be, to train that person to become even better. I do think we might be some of the front runners on that. But I didn’t expect that to happen in the future here in the Philippines.
Derek Gallimore: Absolutely. And do you see any strategic advantage being located here in the Philippines as well? It seems like a lot of growth is really happening in the Asian region, the Southeast Asia region, and maybe Europe’s in North America. They’re the sort of old boys of the economy now. Do you do sort of see a lot of growth ahead for Asia?
Stig Brodersen: I do see a lot of growth ahead. And I don’t necessarily think that, for me as a business owner, it makes the biggest difference. There are of course, different perks that will come with more growth in Southeast Asia. While it might mean a higher cost, everything else equal. They’re also something like the internet.
As much as we talked about the Philippines being the best country to outsource to, and I think it is, in many ways, the internet connection is just not good. Now we have issues with the weather. Sometimes whenever it rains, the internet cuts out, the power cuts out.
So we have all types of problems that you don’t necessarily think about when you think of outsourcing. You’re looking at your Excel sheet and you’re looking at costs or deliverables. But as the region becomes wealthy and wealthy, I do think that we might not be able to do anything about the weather, but we can do a lot of things with that extra money in the Philippines in terms of making it easier to conduct business in the time to come.
Future of AI and podcasting…
Derek Gallimore: Yeah, absolutely it is a double edged sword, isn’t it? Because people do get better than you here because it is an emerging economy. But then sometimes, it is easy to forget that it is an emerging economy and then it has those those restrictions and issues in terms of internet, traffic, weather, and things like that, that we face every day.
But, fantastic. And so, Stig, as you are expanding your Investor Podcast Network, do you see any future for Southeast Asian podcast focusing on…
Stig Brodersen: It’s such a good question. In the Philippines, and basically all of Asia, it is like a small manager for us. The Philippines specifically, it’s .3% of our listeners. And the way that podcasting works right now is that it’s very difficult to make money in podcasting unless you are in the US.
We slowly see some things happening, especially in Canada and Australia. I would imagine that the UK would be next. But a listener is not just a listener, it’s sort of, like, whenever you hear Facebook expanding with 200 million users last year. Sure, but it’s not the most affluent 200 million listeners, or 200 visitors or whatever it might be. And that’s what we talked about here.
So if we look at we would say, 10 x on the amount of people we thought would be listening to our podcast, we would go from .3% to 3%. But the rates in the US might still be call it 10, 20, or 30 times as high. So the way it is now, unfortunately, it doesn’t make sense for podcaster to target the market in Southeast Asia at the moment.
Derek Gallimore: Interesting there. You know, America does remain a very valuable market. It is amazing how long it takes other markets to catch up, but still very much seems a leader in many spaces, doesn’t it?
Stig Brodersen: Yeah, it does. I do think that there are a few reasons why it might change. I know I’ll keep going back to the AI and machine learning and all and the thing that will be challenged a lot by China, but even something like China, that’s many ways that probably better positioned to become a world leader in AI compared to the US, which might surprise a few people.
I would say that the technology is just as good, and even if not, the most important component in something like that. That’s the amount of data and the Chinese no surprise, just better at collecting data than Americans that do have more data available.
But you also have some disadvantages in terms of looking at something a country like China, ensures will have that catch on. If you look at something like drones, it makes a lot less sense to come up with, to work with drones in China, because you have millions, if not 10s of millions, people delivering in China. It’s a few dollars an hour, that much.
So that’s one of the reasons why there’s so much done with drones in the US, because it actually makes sense for them to look forward to that. Because they’re still have this rule influx of employment in Asia. It makes less sense in many ways to lead that wave of technology.
AI might be the thing to change that, but I think that’s the exception to the rule.
Derek Gallimore: Yeah, it’s a good observation. Actually, there’s not the same need for early adoption of technology here, especially labour saving technology, especially in the sort of physical traits and things because there’s really excess supply.
Whereas I think that AI is marching forward here and is having a really special significant impact in terms of the outsourcing industry, where they can reduce the highly repetitive mess tasks, you know, maybe by 20% optimization. So it’s having an impact here but certainly, they’re not the early adopters in terms of the physical labour saving things.
So, thank you so much, Stig. I’m so happy to have met you here in the Philippines and be wonderful to see you back here. If anyone wants to catch up with the podcast that you run how should they do that?
Stig Brodersen: They can just go to theinvestorspodcast.com and if they want to shoot me an email directly, it’s [email protected] Thank you so much for having me Derek.
Derek Gallimore: That was Stig Brodersen of the We Study Billionaires podcast. If you want any of the show notes, go to outsourceaccelerator.com/263. And as always, if you want to ask us anything, just drop some email to [email protected] See you next time.