Category: youth unemployment
Youth unemployment is increasing world wide, causing numerous problems for individuals as well as nations. Many are seeking employment abroad, which is harmful of the local economies as they are missing a generation. Individuals loose their skills after a long time of unemployment and it is difficult for them to gain new skills and a job. BagoSphere has addressed this issue and provided a training program for rural youth in the Philippines to get employed. The organization provides a unique arrangement of training in communicating, critical thinking and life skills. The program only lasts 2 months, which enables students to find employment almost immediately. Students will be able to find employment in the call centre industry in the Philippines. This enables them to pay for a higher education, upping their chances for the future. 70% of BagoSphere’s alumni are high school students and 80% of their graduates have been able to find employment within the second month from graduating. In 2013 103 students graduated from the organization and in 2014 over double, 200, students are expected to graduate. The goal of BagoSphere is to see a world where the youth can do what they are passionate for, have a respectable income and enable an improved future for the next generation.
Zhihan Lee, who graduated from the National University of Singapore in 2011 with a master in Engineering Science. He spent a year in Stockholm focusing on medical-tech start-up, then travelled to India and became involved in rural IT sourcing. Previously, Zhihan has co-led ad-hoc community service projects to rural villages and schools in Laos and Thailand. In 2010, Zhihan founded BagoSphere in the Philippines. Zhihan is a member of the Sandbox-Network because of his work with BagoSphere.
BagoSphere received the Singapore International Foundation’s Young Social Entrepreneurs Grant Program and won the 3rd prize at Start-up@Singapore’s Business Plan Competition (Social Enterprise) in 2012. BagoSphere’s clients are Transcom, Teleperformance, Teletech and Panasiatic Solutions.
There are two reasons why I decided to become an entrepreneur.
Firstly, I have this deep-seated feeling to do something meaningful in my life. For the longest time, it clashed with the conventional expectations of how I was supposed to live a life. Growing up in Singapore was wonderfully comfortable and my parents provided me with enough for most people to be contented. But I wasn’t. There was a feeling of unfulfillment that constantly haunted me even as a child. It was only in my early twenties when I started to be more aware of this feeling. And I started to search for answers by travelling, by volunteering, and by making friends from people all over the world.
Secondly, I love the thrill of solving problems. The problem is which problems to solve! Just before I decided to go into BagoSphere, I had secured a place to pursue my masters in engineering to do research in the field of nanotechnology. I loved research, and delving into interesting theories and performing experiments was my kind of thing. But I realized that problems “outside of the lab” were more fascinating to me.
As a result, I believe that being an entrepreneur gave me the perfect platform to “hack into life.”
How did you come up with the idea of BagoSphere?
In 2008, my co-founders Ellwyn Tan and Ivan Lau led volunteer projects in the Philippines, while I led projects in Laos. Travelling extensively gave me an opportunity to explore rural poverty first hand.
I was once leading a volunteering project in Laos. We raised tens of thousands of dollars to construct a community library for hundreds of children to use. We got thousands of books flown from Singapore to equip the library. It was launched and the whole community was so excited. As volunteers we felt ecstatic and went home feeling mission accomplished and we all gave ourselves a pat on the back. A few months later, I was backpacking and was passing by so I took the chance to visit the library. To my shock, I found out from the locals that the library was unused. This community library was placed in a public school. Apparently, there a change in the school management and the new one had a different opinion on how the library should be used. Nevertheless, I was extremely disappointed, and I realize that I had a lot to learn.
While interning for a medical devices technology startup in Stockholm, a friend and I organized a small event inviting social entrepreneurs to share their stories. I was inspired but it wasn’t enough for me. When I returned to Singapore, I grabbed a chance to go to India to experience working in a social enterprise. And that was what I did. So a few months later, I returned from a study trip in rural India with a social enterprise that trained uneducated Indian youths and employed them to do basic Business Process Outsourcing (BPO) work. At that point, I had enough of being inspired. I wanted to get my hands dirty.
It was at this point in 2010, I met Ivan and Ellwyn who had strong ties with the city government of Bago City, a small city in central Philippines. Bago city is a second class city in the Philippines, with a population of about 165,000. When the price of sugar crashed in the 1970s, unemployment numbers shot up and has remained a problem till today. Most high school graduates who have no means to pursue college education find it hard to enter the service industry because of poor communication and job related skills. Manufacturing jobs are few and far between.
In late 2010, we did a market study, talked to a few call centers, discussed our plans with the local government and started working together to solve rural poverty. I joined the team in 2011 shortly after my graduation at the National University of Singapore.
What was your general motivation not to pursue a classical corporate career?
It was a matter of timing. I could have pursued a corporate job after graduation, but I saw a huge market opportunity in the Business Process Outsourcing (BPO) of the Philippines. I believe that this market opportunity would enable BagoSphere to thrive as a business, but not only to be profitable but to be able to create a solution to youth unemployment. These circumstances would have passed me by if I wouldn’t have grabbed it.
Besides, I felt that I have more control over what I wanted to learn and grow in an entrepreneurial path. Living in South-East Asia is so exciting! Increasing development of Vietnam, Philippines, the rise of China, use of technology are all culminating into a perfect storm. I chose to go outside and embrace all these changes happening in Singapore’s backyard, and I am thankful that I can.
Who is your ideal ‘role model’ in the entrepreneurial world?
I do not subscribe to any role models because I am aware of a certain survivorship bias and how stories are usually made much sexier than it seems. I try to learn from many sources as possible. Typically, the people that I learned the most are usually people that are close to me. For example, they will be my board of advisors and my entrepreneurial and even non-entrepreneurial friends. The more authentic my interaction with them, the better insights I get. For example, I have a board member in my company who has continuously mentored me in the art of communication. As a newbie CEO, I had to learn how to talk to investors, to manage a board meeting, to communicate ideas in a more effective manner. And throughout the years, he has been my role model in communication. What also struck me was the amount of effort he used to mentor me. So the ideal ‘role model’ for me would be people that I know personally, and I have a close relationship with and are willing to mentor me through the path of a young CEO.
Tell us more about your organization. How did you come up with the initial idea and what were the first weeks / months / years like?
Firstly, we have created a unique training program that has proven to help youths start rewarding careers in the Philippine BPO industry. The program contains a combination of communications, critical thinking and life skills training in 2 months to rural youths. 70% of our students are high school graduates. Most of them do not have the opportunity to go to college. When they get a job through our program, they typically earn an income 4x higher than unskilled work. The job enables them to save for pursuing your professional and personal development goals.
Secondly, BagoSphere wants to make our form of education affordable to all. The hall-mark of our student financing program is the “Study Now Pay Later” deferred payment scheme. Under this scheme, students start paying their tuition fees in affordable monthly instalments after employment. We believe strongly in inculcating positive values in our students and this is a way that they can “pay it forward.” We also work with Micro-finance organizations (MFIs) and more recently with Kiva, to finance the student’s tuition fees.
The first few weeks wasn’t easy. I remember in June 2011, a week before I flew to the Philippines, my mum asked me, “When are you going to get a real job?” It was not easy even to leave Singapore. I was leaving a lot of my friends and loved ones back in Singapore. I felt that I was jumping off a cliff.
When we first started in 2011, we validated the needs of call centers on the ground. We interviewed recruitment managers from call centers such as Teleperformance, Transcom and Convergys. We learned that out of 100 applicants, they would only able to hire 10 which is abysmally low due to the poor quality of talent. Besides finding it difficult to recruit new hires, attrition rates were also a cause of problem for call centers. We also talked to the local city government who gave our support and we decided to plan for a pilot. In July 2011, we commenced a pilot project with a small grant funding from Social Venture Lab (formerly known as Grameen Creative Labs@NUS) at the National University of Singapore and a charity foundation. NUS also kindly donated 15 used computers to us.
So in later 2011, we created the first version of our training product and conducted a 4-month program residential program, where students would only go home on weekends. We made a ton of mistakes particularly in hiring and managing people but learned a lot. Most of all, we were happy with the result that 90% of our students got placed in call centers. One of the learnings from the pilot was that the 4 month residential program was not a good model as the training period was too long.
In 2012, we felt that we had some validation of our model and we planned to raise serious money. After much thinking, we decided to incorporate a for-profit company, but we did carefully design our incorporation papers to specify that the company exists to solve a social problem.
During our first capital raise, I learned that people invest in people. The main difficulty that I found was to communicate the vision and the passion to potential investors. Thankfully we had an experience board of advisors and mentors to guide us though. We also had a ton of help from various organizations such as NUS and Impact Investment Exchange (Asia) who bought in legal and financial advice, and that was what I believed accelerated the entire fund raising process.
It was a major milestone for BagoSphere. We have just transitioned from just a self-funded adventure into a seed funded for-profit business with a social mission. Being a CEO for the first time, I felt exhilarated. But I also felt the fear of the unknown. We went back to the Philippines in October 2012 and hired our first employee.
In early 2013, we pushed ahead with our classes starting from our 2nd Pilot, and ending with Batch 4 on the 18th of December in 2013.
Here are some of our milestones:
- Recruiting youths from over 700 applicants and graduating 103 students in 5 batches in 2013
- An average of 60% of every class are employed 1 week after graduation & 80% 2 months after graduation
- Establishing a team of 11 (including co-founders) in Bago City
- Establishing formal partnerships with call centers, local government, NWTF (MFI-partner) & KIVA
What were the greatest challenges you had to face in the beginning of your entrepreneurial career?
I recently shared some of my biggest challenges over the last one year to our board and some close friends.
1) Hiring was much more difficult than expected: Since we are located in a more rural location, we didn’t have access to many talents which normally aggregate in hubs like Manila or Cebu. Generally, in the rural context, people are less exposed to professional work environments and lack experience in their domain fields. So hiring good trainers and marketing staff took us a long time. However, it drilled into me some of the nuances of hiring, and I saw through the genesis of BagoSphere’s culture, which is very important to retain talent.
2) Pivoting the Business Model: From the start, we had intended to partner with MFIs to finance the student’’ tuition. We didn’t want to get into the operations of financing. We later realized that the problem is that MFIs only finance their clients. Hence, the model shuts out a huge part of our market.
Hence, in the later part of 2013, we decided that we need to formalize the loans that we provide to our students to attend our training program. We do not have any intention of becoming a micro-finance company but in formalizing the student financing scheme we have now (termed as the "study now pay later"), we are putting in more resources (e.g. Kiva 0% credit line, setting up loan tracking system, implement micro-credit policies, etc) to reduce the risk profile of the financing scheme. We also separate the credit line used for student loans away from our working capital. When we master this, the combination of our training program and the loan product will allow anyone who is deserving of training to get it.
3) Complexity of operations: As we open more classes, our operations became more complex. Data management became more complex. Collecting data from hundreds of youths became more complex. Google documents became unwieldy and we had to constantly search for new ways to stay productive and aligned. With operations, it was hard to keep focus on the most important thing. My learning is that delegation is the key here, and there must be A+ people with the right skills to delegate to.
4) Productivity was hampered by poor infrastructure: In rural Bago City, it took us a long time before we had stable power. We suffered from frequent brown-outs and internet disruption during the first half of 2013. After some red-tape and infinite patience, we have now a much better power supply. Thankfully, Typhoon Haiyan did not cause much damage to our facility and operations.
Tell us about the most amazing experience you have had since you started your business? What has the biggest disappointment been?
On the last day of class on the 18th of Dec 2013, our students participated in an activity through which they shared their personal journey at BagoSphere. As I sat there and listened, I was completely touched by their stories and how much
BagoSphere has positively left a deep imprint on their lives. I sat there and thought, “Wow, this is transformational.” And to think that I had some hand to play in creating this transformation, I felt really happy. I felt that my whole body was smiling. And all my stress, lack of sleep and problems melted away.
My biggest disappointment was to learn that some our graduates do not know how to manage their new-found opportunities well. In the beginning, the link seemed logical - that once rural youths get a job, they will earn money and improve their lives. We were wrong. In the early years, we realized that many of our graduates who are now call center agents do not have the habit of saving money despite having a lucrative pay check. So our hypothesis was wrong and we needed to have an immediate course correction. It means that we cannot just train youths in English and IT skills, place them in a call center, and expect them to know how to pull themselves out of poverty. So we made an adjustment to our training program. That’s why we now have a strong emphasis on financial literacy in our training program. It would have been a disaster if we were not self-aware of our effectiveness in pursuing our social objective – solving rural poverty.
In your opinion, what sets apart an entrepreneur and a non-entrepreneur?
Recently, as we were talking about personal goals, one of my staff shared to me this quote from Hermann Hesse in his book, Siddhartha, “Most people...are like a falling leaf that drifts and turns in the air, flutters, and falls to the ground. But a few others are like stars which travel one defined path: no wind reaches them, they have within themselves their guide and path.” I think that is what sets apart an entrepreneur and a non-entrepreneur.
Where do you see social entrepreneurship going in the future?
I think more young people will take it up, and mid-career people will find it an interesting proposition. There needs to be more successful stories, whereby success is defined as both having a profitable business and social impact. We also realized that not all kinds of social problems can be solved in such a blended way. So I think there is much learning in that area too. I am in particular a fan of grounded stories of struggle and real impact. One of my favourite social enterprises is Digital Divide Data. Its CEO & co-founder Jeremy Hockenstein talked about putting down 10 years of hard work before their work was recognized. At the end of the day, we are all going to realize that social entrepreneurship is no different than entrepreneurship. I believe that as we realize that our current model of resource consumption is not sustainable, businesses will need to consider social impact as part of their strategy to be relevant for the next 50 years. We are just going one full circle.
What advice would you give to any aspiring entrepreneurs? What should they be careful about? What financial advice would you give them?
Someone once said to me that any start-up is an extension of the entrepreneur’s dreams and personality. I find that if we are clear with ourselves, we will be able to handle challenges much better. If we are clear with our own objectives, then we will be able to make better decisions. We would lead with purpose and with clarity. If I was to be married with a child, I would need to understand that my personal vision has to co-exist with my family, and how things are going to change once I started a company. I might not be spending a lot of time with your family. Is this something that I can endure? Hence, I would advise any aspiring entrepreneur to try to understand their own personal vision and motivation before starting a company. Rushing to starting a company because it is cool is not advisable.
Having some financial security before starting a business is always important. When I start a company, I wouldn’t myself to be worrying about my college debt when I am getting my first customer. Hence, I would encourage aspiring entrepreneurs to try to put themselves in a financially neutral position before diving in. If you are not in one, my suggestion is to find work, get some experience and work on the idea whenever possible. Again, going back to your own personal motivation and goals are important.
Which areas do you believe provide the greatest opportunities for aspiring social entrepreneurs – i.e., what are the emerging trends?
One trend that I am particularly interested about is the silver-health care industry. The problem is getting bigger with the aging population of the world, in particular in Asia. Education is also a sector that I think is a good place to be in. There are always two things that never change: the demand for good health care and the demand for quality education. Nevertheless, South-East Asia is rapidly developing and I see bountiful opportunities. The catch is that you have to spend time on the ground to understand see those trends.
Is there anything you would like to add?
Thanks a lot for your time and the interview!