Blog > MyFBAPrep Interviews > Outsourcing and Process Optimization: A Chat With Yoni Kozminski of Escala

Outsourcing and Process Optimization: A Chat With Yoni Kozminski of Escala

In this video, Rachel Go chats with Yoni Kozminski, CEO & co-founder of Escala and MultiplyMii. Yoni shares his advice for hiring internationally, outsourcing various roles, and optimizing your eCommerce business processes to set yourself up for future and continuing success.

Yoni’s background

Rachel Andrea Go: Thank you, Yoni, for joining me. Yoni is the CEO and co-founder of Escala and also MultiplyMii. So, Yoni, to start off, can you share a little bit about your background and how it led to where you are today?

Yoni Kozminski: Absolutely, Rachel. Thanks for having me and [I’m] excited to be sat here with you. My journey into MultiplyMii and Escala started many years ago. I came from a creative advertising and digital marketing background working with some of the largest brands in the world from Mercedes-Benz to MasterCard, Snapchat, and Sony and many others, before finding my way into eventually an eCommerce—or, more specifically, an Amazon-focused business that was doing about two million in revenue.

That was where I met my co-founder, Lippy, and we were able to build an agency and systems for this Amazon business that enabled it to grow from two to five million dollars in revenue that subsequently was acquired by Thrasio. Now, the secret sauce of what was actually achieved there was two things: [It] was one, we looked at how typical Amazon business founders look at it and it’s, “Work harder, not smarter. How do I just keep putting in more hours?” And Lippy was the architect behind sort of the systems and design thinking around it. And what I brought to the table and what we achieved together was effectively building an agency for this business that was entirely built of Filipino talent that was at a comparable and, I would argue, even better level than the services that we delivering it with locally sourced talent in the U.S. and Australia, which is where I had worked with these large companies. So, that was the journey to MultiplyMii and Escala.

And, just to share, MultiplyMii is the byproduct of that business in that we now help find the top 5% of talent the Philippines has to offer in the form of recruitment for eCommerce businesses and beyond these days, and Escala is a process improvement management consultancy, which is really just a management consulting way of stating that what we do is we go into eCommerce businesses, we systemize them, we understand the processes, we improve on them, and then we build out the future state, the SOPs, the training videos, the documentation, the accountability charts, and we simply make these businesses run like they—like every founder dreams that they should.

Rachel Andrea Go: I know that MyFBAPrep has used Escala in the past, and I was just chatting with our ops manager. He mentioned that we’ve been really impressed with the professionalism of Escala and kind of what we got back.

Yoni Kozminski: Yeah, I mean, you know, I would gladly have any of our management consultants jump in here and express just the level of work that went into working with not just MyFBAPrep but any of the clients that we’re fortunate to work with. You know, it’s funny, I get into these conversations and I almost feel like a fraud because, well, you know, if you look at how businesses break down, you need someone to have a degree of the vision, but it’s the talent that’s actually able to execute, and I could never deliver on the value that the management consulting team that we’ve built in the Philippines can deliver. I don’t think [I have] that level of specificity or have that level of granularity and focus and insight that each of our management consultants do. So, I’ll definitely pass that on to the consulting team who worked on it. I can’t take the credit for that one.

The recipe for a successful startup

Rachel Andrea Go: I know that you founded multiple businesses. What are some common factors you’ve noticed are crucial for a successful start-up?

Yoni Kozminski: Crucial factors for a successful start-up, I believe, are a few critical things. The first is clarity on what problem are you looking to solve and really sticking to that problem-solution architecture. So, obviously, for a lot of start-ups, they’ll shift, but you have to really come with a clear thesis on where you see the gap with validated information, state the objective, and really drive forward and build toward that thesis. I would say what’s more is having that level of understanding and therefore focus on what you’re trying to achieve becomes critical. I’ve been guilty of it more times than I would care to admit in trying to tackle absolutely everything at once and, you know, not succeeding to the level that you would like on anyone of those.

So, I guess the second thing is focus, and the third thing, I would say, is really having the right founding team, having the right mix of people that have complementary skill sets that can not only, as an example, deliver on high-value services or technology or product or solutions. There’s a lot of much better products and services and companies that have been created that weren’t able to actually sell and market that vision, and the converse is true too. You can’t just have someone who’s incredible at selling and marketing that has a sub-par product or service.

So, finding that right mix and building that really core team, I think, are—is paramount to seeing success. Once you’re aligned on vision and you have the right team members to actually achieve it, I think that’s where most start-ups will see, you know, the highest degree and probability of success.

Rachel Andrea Go: So, the idea of your team kind of being the power and force behind your company has come up a few times now. How do you test for who you want on your team remote worker-wise or skill wise or any of that?

Yoni Kozminski: Yeah. Well, it’s fortunate that we have a recruitment team and this is literally in our DNA. But I would say working backwards, I think a lot of people actually sort of fall forwards into how, I would say, sort of the maturity of hiring goes. So, typically—I’ll take myself as an example. I used to look, have a conversation with someone, turn up to the interview, look at their resume after we’d posted a job description, [which we] hadn’t put probably too much thought [into], [we] had pulled something off the internet and said, “That looks about right.” Let’s take marketing directly for [an] example: I’ll search, I’ll find on Indeed or Monster wherever I can.

I’d have an interview, you know, I’d interview someone like you, Rachel. We get along just great, and I’d say, “Well, you know what, there’s a really good chemistry here, and I can see how we would work together.” And what I quickly learned is that you’re not trying to bring more people that are just wired like you because they fit your vibe and your culture. And so I think that, once you sort of grow beyond that — and that’s not to say that you’re not an incredible marketing director and we wouldn’t work well together — what I’m indicating here is that, what I’ve learned in time is to reverse engineer it. So, let’s look at what is our business goals and objectives? And from that, what are the actual most critical gaps that exist? And from those critical gaps, how do we actually build a job description with accountabilities and KPIs and performance metrics that are aligned with that goal?

And then from that, we build the job description. So, we’re working backwards to achieve these desired outcomes. And only then would we go into that interview where I’m building a checklist, whether it’s against the four R’s — role, responsibility, requirements, and I always forget the fourth “R” — but, you know, the four R’s, or there’s also a methodology called the scorecard methodology where you effectively build what you’re looking for and what success looks like in that interview process and you’re marking every single candidate against that.

So, when you come to making that decision, even if you’ve got, for example, multiple people interviewing for them if these are quite senior roles, then you actually have a score marked against them, and it’s not a “touch and feel,” it’s a quantitative decision that is made based on the hiring requirements and how likely they are to succeed in that role.

Knowing when to outsource — or “offshore”

Rachel Andrea Go: I know what you mentioned applies to both in-house and outsourced roles, but knowing that MultiplyMii specializes in helping companies outsource, what would you say are some signs that your company is ready to start outsourcing internationally?

Yoni Kozminski: Yeah, that’s a great question, Rachel. So, I would say the first thing that people need to realize and identify and get with the times is a couple of things, is one: There’s this notion that was popularized probably 15 years ago. It was a guy by the name of Tim Ferriss that wrote a book called The 4-Hour Workweek that I think a lot of eCommerce entrepreneurs and a lot of entrepreneurs globally have read. It’s a great book and it gives you some really great principles, but there was a term that was used in that book that’s become common[ly] use[d] now, and it’s “VA” — virtual assistants.

And I think that one of the things that we strive to achieve in MultiplyMii, whether people work with us or not, actually — I mean, obviously, we’d love to work with people — but the objective is to take that term and kill it, because if you’re delegating task-based decisions, you’re always going to be the end of that task list. So, what we’re looking for is high-skilled, value-based team members that you’re bringing in.

So, whether you’re outsourcing, or “offshoring” would be the term that I would more likely use here — actually, how I would define it today is “globally dispersed teams.” I don’t really care what geography or working in, and where you’re from, it’s more about what is the business objective, how good are you at achieving that objective, and if that’s a fit, great. Obviously, it does help when we talk about the Philippines and other emerging world countries that the cost of living is significantly less than that of the U.S. or here in Tel Aviv, or, you know, in a lot of these first-world countries that it’s just very expensive to live.

But ultimately, coming back to your question, I would say you need to have a high degree of being professional and how you onboard; being professional and how you define performance metrics and KPIs. And there’s sort of a—the second and third tier of, you know, where to start looking, how do you approach working with talent in other geographies, understanding cultural differences, time zones, and just efficient ways. I think that, since Covid, we’ve learned how to work in remote environments and we’ve all been forced to do that. So, I think for a lot of people, that gap has shrunk quite considerably, but ultimately, it’s just like any other team member, really. It’s just about wading through where do you find the best talent and being really buttoned down on how you bring them in and making them just like a locally—a local team member, part of the team.

I think that’s probably the most important piece of advice I would give anyone who’s trying to grow their business with talent that doesn’t sit in the same country as them is that, you know, just because someone lives in a different geography, they’re, I’ll argue, more valuable than most of the talent that I would find locally here, especially just given the fact that, you know, the English proficiency that exists in the Philippines is far higher, at least the accent’s a lot better than here Israel. I’ll say Israel, they’re pretty good when it comes to spoken English, but they definitely are not nearly as clear as the Philippines.

Balancing in-house and outsourced roles

Rachel Andrea Go: And what would you say is a good balance between in-house versus outsourced roles in a company?

Yoni Kozminski: So, great question. I just want to dive a little deeper into the definition. So, there’s sort of a few different ways in which you build these types of models. So, there’s outsourcing, where you sort of hand off a function. So, that might be your customer support function or your BRD function or, you know, some ask your—QA function; you sort of delegate that entire thing and companies will work on a service-level agreement. What I’m—what MultiplyMii and what we talk about more so is offshoring, where it’s really just an extension of your team and it is your team. And so, your question, Rachel, was…. Just remind me the question?

Rachel Andrea Go: What would you say …

Yoni Kozminski: Which roles?

Rachel Andrea Go: … is a good balance between in-house and outsourced roles?

Yoni Kozminski: So, yeah, sorry. Sorry about that. I lost myself. I’m so passionate about really the definitions and making sure that people understand, like, what they’re entering into and to make good decisions for their business that it’s, like, it strikes a cord every time. So, I would say a good balance. I mean, if I look at how we’re structured as an example, we’re a team of 90 total, and five people live outside of the Philippines for context. Now, I would say we’re pretty heavily skewed toward having talent that lives in the Philippines, and for good reason: We have a recruitment function; we have nearly 40 management consultants that are all ex-Ernst & Young, Accenture, Deloittes. So, I think that we’re probably a bit of a different case, but I’d say in general, the roles that I have struggled to find in the Philippines are ones that really require, like, a high degree of local know-how.

So, you know I know, Rachel, I mean—we’ve had some conversations about your sort of broader experience globally and, you know, some of—where you’re going to move to and things like that. But I’d say, as a general rule, if you don’t have that level of exposure, as an example, in a marketing role for the U.S. market, then I think those become, like, somewhat challenging to find, like, you would—candidly, you’d be quite a rare talent to in the Philippines, because I think that you need to have quite a high degree of understanding, for example, of the U.S. market and the language use and the terminology and things like that. So, you’re typically not finding your C-suite.

I would say we have struggled to have great success there — so, CMO, CTO, CFO things like that. But anything from a middle management perspective—like, our entire management function sits in the Philippines, so, ahead of recruitment, sourcing, client success, you know, my heads of marketing outside of the function that I play that oversees it at that C-suite level, you’re pretty well placed.

And I would say, like, in terms of, like, a structure or a design, I think that when you look at talent from a remote geography or — I’m just to speak to my experience and that’s with the Philippines specifically — I think that what’s worked really, really well for us has been that we have, like, a senior that works with teams of sort of 10 and 15-plus in the Philippines, where there’s the middle management layer and then there’s the execution layer, and that’s how we’ve been able to, you know, run a profitable business and, you know, an efficient one at that as a result of just the ability to find not VAs but, you know, professionals that have, you know, web design and development, content production, content writers, project managers, operations managers — I mean, the list goes on. But I think that’s probably the best high-level way to look at it.

Rachel Andrea Go: So, I can tell kind of from my own experience with Escala and from our discussions that you’ve seen multiple different companies’ structure at different growth stages. What are some roles you would recommend eCommerce businesses outsource at different stages of growth? For example, when they get founded, as they hit 10 million, and so on.

Yoni Kozminski: You’re teeing me up too much here, Rachel. And the reason I say that is, we literally just produced a couple of ebooks that actually highlight—and it’s funny, I know we chatted a while ago; I don’t know if these were actually out when we last spoke, but we have on our MultiplyMii website now, we have an eCommerce-focused one, an Amazon-focused one, and even an agency-focused ebook that you can download, and in it, it shows the initial roles that you should look at versus the scale-up roles, the different types in which you can structure, and then all the salaries of what is fair market rate for a junior, mid, and Senior in the Philippines.

So, you know, to throw out some examples here, I think that the best way to look at it for a business owner as they’re going from each of these iterative stages would be to actually understand what are the business gaps that exist and what professionals can I bring in to plug those gaps? As opposed to the typical, “Let’s build a task list of the baseline, you know, repetitive tasks that I want to be—not want to be doing,” and rather sort of focus on what is the business need and function and core skill set. So, you know, PPC management becomes a pretty obvious one for an Amazon FBA seller or, as you’re continuing to grow, someone like a brand or account manager that’s gonna oversee sort of the brand health and existence, inventory and supply chain specialist.

Again, as your volumes increase, so, too, does that need to have a high degree of focus around it. So, I think those are some examples at an early stage, and then as you continue to grow, as the complexities increase, then starting to add in project managers, operations managers, and roles that are going to help sort of be that glue around the business that can help connect the dots as you get to that five- and 10-million-plus mark.

Map operations to optimize and avoid mistakes

Rachel Andrea Go: And then, speaking of operations managers, I would love to shift gears a little bit and ask what is some common, low-hanging fruit when it comes to process optimization?

Yoni Kozminski: Low-hanging fruit for process optimization. So, I would say that the reality when it comes to process optimization is that the first and most important step is understanding, “What does my current state look like?” Too many people — and I think it’s kind of in the nature of eCommerce entrepreneurs, right — is that you hit a winner, you come up or find a product that all of a sudden is just selling like hotcakes, and, you know, it’s a really fast-paced and exciting space, but what’s actually needed when we talk about operations is a really slow and steady cadence. And the first thing is to build out the process maps. So, what are each of the different elements and the stages that are actually happening? What’s being produced?

So, you know, let’s talk about new product development as an example: You know, when you’re looking to source the product, moving from the sourcing stage to identifying the bill of materials, actually producing the spec sheet, and then, from that spec sheet, who gets—you know, who is the next hand to review in order that. So, building the process maps I think is the most important step that anyone will be able to take in order to get that clarity on what is happening in their business before they can start to actually move into making improvements. And I think that that is sort of the critical step. Now it’s, you know—we can call it a low-hanging fruit, but the reality is it’s quite a bit of work, but that’s what’s needed when we talk about solving operations.

Rachel Andrea Go: And in your experience, what are some of the most expensive mistakes that you’ve seen eCommerce brands make when it comes to their operations?

Yoni Kozminski: I think the most expensive mistakes that I’ve seen eCommerce sellers make is not setting a number of these just really critical baselines. So, first is, what does it look like from a product-market fit to dictate that this is a product that actually makes sense for me to bring to market? So, what does the profitability need to look like? How many suppliers do I need to be able to have access to if there’s issues with one of them? What sort of protection do I need to have? Freight and logistics—like, defining every single variable and factor and holding yourself accountable to making sure, from a keyword research and analysis perspective, what actually needs to make sense.

I think that that’s—probably the biggest mistake is that people are so emotionally invested in the products and the idea around what they’re trying to bring that they don’t stop to look at what is—what actually makes sense: How do I get to a 20-plus percent profit margin ongoing? How do I continue to improve on that? And I would say the other thing is a lack of having an official sign-off stage. So, what—when is it done? When is the actual product ready to go to market? Or, when is it not performing? And when is it time to say, “You know what? We’re spending way too much money on PPC, you know, external traffic, doing all this work to try and revive the product that was just an emotive decision and the market has shifted.” So, having those checks and balances to ensure that you know when to push go and you know when to push stop.

Be professional and thorough

Rachel Andrea Go: What is the most interesting development in eCommerce lately that you’re keeping an eye on?

Yoni Kozminski: The most interesting development in eCommerce that I’m keeping an eye on — I would say just, in general, there’s been such a seismic shift over the course of the last three years in terms of where the market was. It was such a bull market, you know, brands were selling for multiples that just did not make sense, everything was exploding, you know? We now sit in a reality where there’s a lot of market compression, Amazon’s charging a lot more for everything that they’re doing, supply chain logistics — there’s just margin compression on all sides.

And so, I would say that, at a sort of a higher level, the thing that’s most interesting, or I think that the state and the direction of the entire space is that we’re moving into an era of professionalization where it’s no longer—you no longer have an ability to simply, you know, find a product on AliExpress, slap a bumper sticker on it that’s your brand, and move forward. You really need to be professional. You need to be thinking through, critically, what does the profitability—and what is my roadmap to building, you know, a perpetual, profitable lifestyle brand, which is quite hard in the eCommerce space; or, ultimately, hitting a meaningful EBITDA and, therefore, margin and revenue number that becomes, you know, an interesting acquisition target for prospective PE, strategics, and aggregators that are left.

So, I think that that’s really the thing that I find really interesting now is seeing how much—how quickly the market has had to grow and, from an individual level, sellers that were once sort of—they could do no wrong and, you know, you were getting 25% conversion rates on PPC with your eyes closed. And now, you have to run a real business and you have to build a real brand and you need to expand beyond just one marketplace. And, you know, it’s about global expansion, channel expansion, you know, investing in DTC brick-and-mortar retail and doing it all, you know, in the strategic, you know, in the strategic—so I’d say that’s what I’m excited about to see where this whole space evolves to.

Rachel Andrea Go: My last question is, what’s your advice to brands who are trying to grow and scale?

Yoni Kozminski: What is my advice to brands that are looking to grow and scale? I would say firstly, slow and steady wins the race. So, taking the time to invest in really thinking through what your three-, six-, 12-, 18-, 24-month roadmap looks like, committing to it, continuing to evolve and meet market decisions, and not just, you know, not just taking it willy-nilly and saying, “Okay, like, let’s just hire this extra person,” or, “Let’s, you know, invest in this added software on a whim.” Take the time and really think it through and, you know, when we talk about systems and process[es]—how we operate inside of Escala and therefore what we do for our businesses, you know, we build the roadmap for the next 24 months.

We look at the head count, we attach the budgeting process to their head count, to the required output, and, you know, for us that means how many projects do we sell or—and, therefore, how many consultants do we need to support? Or, how many roles do we believe we’ll close each month? And what’s the average, you know, what’s the average salary of those roles?

And we’re really thinking through it, and I think that for anyone in any business in any vertical, the key to scale is having the foresight, building that road map, and then actually executing on it, as opposed to just sort of, you know, guessing your way through it and just hoping for the best. Because I think pretty quickly, especially with how, you know, the eCommerce market went through some really high highs and some pretty low lows at the end of sort of 2022, you know, you really have to be buttoned down to wade through the chaos and build a buffer so that you can actually pivot if needed.