Background
2 years ago I graduated from university.
Back then I used to run an online letting agency for international students in between my lectures.
After not being able to grow the business and with revenues declining, I decided to exit the business and took a year off to travel and explore Africa. I did an internship there and travelled a bit around nearby countries and eventually flew to Asia.
Not having a job at that time I decided to launch a small productized service offering unlimited design work for a fixed fee per month.
I bootstrapped it to $40,000 in MRR and decided to write to write a long post to explain how everything came along so sit back, relax and take a ☕ of coffee, this is big brain dump of everything that happened from the start until today!
Step 1) Finding your value proposition
The top priority of a founder of any business is to create value.
Entrepreneurship is really just about that: Understanding market inefficiencies and correcting them. You get paid to make markets more efficient.
Being a Indie Hacker / Solo founder is great because markets change all the time, and one industry can have many new problems. Incumbents are usually too slow at realising that and that's where you have an advantage at being small and fast.
Finding the right problem to work on > Having the perfect solution
Back when I was running my real estate company I would often hire design services.
I would look online for designers, gave them 50% in advance, and would struggle to write what I needed to get done. A bad experience both for the designer and I.
I usually fix problems that really bother me and that I would be passionate to work on. It makes me motivated to work and I can see the value in fixing them.
That's one of the key things I learned when I was in law school:
Finding the right problem to work on is more important than finding the solution. Once you get to know the core pain points, you'll understand how you can add value to fix these and find a solution for that.
Here was my problem-solving framework for setting up my project:
Lack of trust: Put a lot of testimonials on the website and a 10 days, 100% money back guarantee.
Poor communication: Empower clients and designers to communicate better via standardised offers and standardised briefs.
Expensive: Source designers in Asia to offer more affordable prices.
After laying out the key problems finding a solution was rather simple:
Let's just create an unlimited design service, with a 100% money back guarantee, and a platform where it is a great experience to submit a brief.
Getting the supply
After having my rough value proposition done, I needed to find designers, not being one myself.
I contacted two designers I had on my Skype list for a while and asked them the following:
Can I put your portfolio items on my website? In exchange I will find clients for you and pay you a fixed fee per month. You will have to work on at least 5-6 requests per week.
They accepted and we started working.
I also did a napkin calculation of the business model which was like this:
Step 2) Validating the demand
The problem when starting a business is that you can have many biases. Use mental models and recognises which biases you may have as as entrepreneur so you do not fall into mental traps...
... But at the same time, it is great to keep a little bit of hope as it helps you pushes forward. The realist person is the room though, is the market. So you have to put your product in front of that person.
A. Starting a MVP
I purchased a $10 CSS/HTML template and launched a quick MVP which basically comprised the following items:
The portfolio pieces of designers.
The price and a payment button
A FAQ page
A chat.
B. Putting that MVP in front of potential customers
Once the site was up I naturally tried to get people to visit it.
My thought process was the following: "Who would be the most likely to be interested by those services?" ... "And how do I advertise it without spamming?"
I remembered I was a member of various entrepreneur groups on Facebook and decided that it would not hurt to ask for feedback. Here is what I posted:
It worked.
A few people purchased and I repeated it on about 10 other groups. That's how we got our first customers.
Being hunted on ProductHunt
Then things got a little bit more ugly.
We got hunted on PH.
At that time our MRR was only a few thousand dollars per month and I was managing the projects all by myself, working remotely with the designers.
That's what happened after:
But... We slowly recovered.
We tried new project management solutions, we set up a better system for email requests and learned from our mistakes.
Step 3) Attracting customers and growing revenues
After the initial surge of customers that ProductHunt gave us the next question was:
How do we keep on acquiring customers to grow our business?" and a second question was : Who are the right customers for us?
A) Understanding our target market
A lot of our initial customers were solo founders or entrepreneurs, which is great as we help them as we are relatively low priced but they churn after they get their initial design work done. Selling to established businesses on the other hand require more time but is more valuable over the long term.
Sometimes the customers who are the easiest to sell to are not your best customers.
B) Using different tactics
When launching a tactic I usually analyse what is high impact and low effort.
I agree, this is not a perfect science but over time once you get more and more customers and segment them, you can plan better strategies.
But at the beginning: Just throw spaghettis at the wall and hustle your way in.
Here are a few tactics we used to find customers:
1. Creating valuable and entertaining content
Pro: Helps with SEO and to connect with your audience
Con: Takes a long time
What we did: We crafted behind the scenes blog posts that entrepreneurs loved. They used our learnings for their business and some purchased our services after.
2. Launch offers
Pro: Relatively easy to set up
Con: Short lived
What we did: Every time we would launch a new subscription (or limited subscription) we would discount it and add a quantity and time limit on it. It created a fear of missing out! You can also use this strategy to kickstart your startup or even pre-sell your products / services.
Here is an example:
3. Warning people we would raise prices for new customers
Pro: Helps you test your pricing
Con: None?
What we did: One day going to bed I told my co-founder: "We need to raise our prices".
He told me:
Yes, but let's not raise immediately. Let's tell everyone we'll raise them next week and see if more people buy at the current price points.
5 hours after the announcement we had made 1000 euros in sales!
4. Build an email list
Pro: Very effective if people see value in your emails
Con: Takes time to build and you have to maintain the quality
What we did: Having an email list is the real estate of the Internet. It is like having your own mini monopoly. It is something you can own and that can be extremely valuable. We use our email list to communicate with our customers (and future customers) about updates, behind the scenes, etc.
We are quite simple in our communication. We provide real value. That's all.
Step 4) Building a team, opening an office
During the first month I worked solely remotely with the whole team via Skype. After one month I booked a one way flight to Indonesia.
My goal of going to Indonesia was mostly to understand the motivation of our designers better: They found the idea of having recurring income great and they also loved the fact that they were being paid twice a week (some of them had to chase their clients for their payment).
Understanding motivations is key in setting up a team, because if the right incentives are in place, you can go much faster.
1) Opening an office.
Then we decided to open an office.
The problem with working remotely with designers is that it was incredibly hard to set up new processes or control quality so we decided to centralise everything to train people faster and to share our vision more efficiently.
And we grew from there. Adding one designer per one designer.
After two months we hired 3 project managers to help deal with clients. We grew steadily the number of staff, making sure we had enough money in the bank and enough subscription revenue to pay them in the future.
I understand, this is against startup mantra of growing fast but in the case of service growing fast can absolutely kill you:
You need to have clearly defined service offerings and clear blueprints before being able to scale. Hiring immediately a huge team creates organisational challenges where your focus should be on talking to customers and creating very good SOPs.
2) Training the team, building standard operating procedures (SOPs), and empowering them
One of the first hires I made was a local production manager to help me understand the culture better. She told me once:
Robin, you are like an Englishman in Paris.
She was right, I could not lead effectively in Asia because I could not connect (I did not understand the culture yet). I learned a little bit of the local language and focused more on leading than directly managing projects on a day to day basis.
I solved this issue mostly by being as transparent as I could and becoming friends with everyone in the office. Once my employees knew my personality, it became easier for them to work with me as they understood me and my reasoning.
Now that we had a good team, knowing each other and working well together the next challenge was the following : Set up standard operating procedures, or build the machine.
I remember a book I read my Michael E. Gerber (that I used to start my first business):
Work on the business and not in the business
The principle is simple: You have to start building a machine so that the business can operate without you. We are at this stage for Manypixels and we're building a ton of standard operating procedures so that we can deliver very efficiently. We document everything on Google Suite and have folders for each team. I will write more on this later!
Step 5) The future: Becoming more like a "Shop" for services
The future for us will be focused on productizing more our services. We want to make ordering design services as easy as it is to order a product on Amazon.
We also want to continue training designers and offering them higher economic opportunities (we pay them more than twice the average local graphic designer salary). We are also planning to open a Pixel Campus where we're going to train designers and offer free UI/UX workshops and business English courses.
Conclusion
1. Providing value is the foundation of business.
2. Finding a good problem to work on is more important than finding a solution.
3. As a service business we focused a lot on empowering our team (via connecting them) and then only setting up SOPs.
I have a couple of uneasy questions, feel free to reply to those that you feel comfortable answering:
Hey @orliesaurus !
That's an interesting and important point; there's so much noise about ideas not having value, but try working on the wrong thing for a year, and you'll really see something without value.
How on earth do you get your content to be read? :)
Not an expert on this but basically I always try to provide valuable content + entertaining and... if possible content that hasn't been already written about a thousand times.
We also focus on one specific type of post: Behind the scenes posts / transparency posts.
And when you have written the content, do you just wait for google to index it?
How do you get people to read it?
I mostly post it on HN/Reddit/IH and on Facebook groups.
Thanks for sharing your tips :)
I enjoyed the read!
Hey Robin, great post.
I had a question about your operations. To validate the product you threw together an MVP with a "Purchase" button and started getting your first few orders.
Once these users have paid, what was your process of delivering the service?
It seems to me that the first version was basically just a way of paying for the service differently (flat fee per month), but the actual operation of the business was the same as if you were freelance: sending specifications, validating needs, delivering, etc.
Did you have a dashboard, or even simpler like a set of Google Forms where customers could place orders that made it feel like a product?
I'm asking because I'm very interested in productizing a service that we currently provide, but besides the pricing and the way we present the service, the actual operation stays the same. I want it to feel like a product from the moment the user finds us to the moment we deliver.
Hey Steven, thanks!
You're spot on: At the beginning it was very, very basic. We were only providing a design "retainer" service and everything went through email. No dashboard, no structured brief: We just asked a couple of questions via email.
So you're right at the beginning we were not a productized service.
The only way to "productize" is to create very clearly defined "service packs" where you exactly say what you'll do / what you won't do, for how much, with which steps, at which speed, etc.
A good way to do so is by breaking your service into "pieces" and thinking of an assembly line where the customer will review separate items of that whole project.
Productized services are more about customisation than creation from the scratch (which is what services are about)
Right, and is this being communicated before the user pays or is it done after payment? Like you send a welcome email saying "here are the packages you can pick from and their timeframes"?
Correct - they get an email afterwards with access to the platform.
Great post! I was wondering whether you were a coder/programmer? If not (or if so) how did you go about developing your MVP site? Did you use wordpress, Wix or some other tool or did you program everything yourself? If so what tech stack did you use and where did you continue development? Thanks!
Hey Zaid! Not a programmer, I bought an HTML template and then added Paywhirl to manage subscriptions.
How can a designer join manypixels.co? I don't see anything on the website.
Hi Robin, interesting article :) , thanks for your details
I would like to ask your opinion about trying the same business model of productizing a service but for development agency
We are running a development agency [http://ventaapps.com/] for 6+ years now, we are focused on mobile and web apps development
I have seen many design-focused startups using the model like yours,
I'm trying to evaluate if that business model could be suitable for development services also, What do you think?
@engmsaleh I definitely think our model can work for other industries!
My biggest advice would be to really come up with service packs. Try to come up with something that a lot of people need developed or fixed (and if it is on a recurring basis that's even better) and try to put together a service pack with immense value. I know it might seem vague but one way you can do it is by looking at your problems or looking at development/fixing bugs types of projects that have a very low customer satisfaction / high level of distrust. Then you come in, put together a service pack, your customers trust you and you guarantee their satisfaction --> That's what productized services are all about IMHO!
Finally I just want to say something: We were also lucky and what worked for us might not work for others. So do your own thing, try a lot and always provide value!
I really appreciate your input Robin
I will try to think of a good value and package and test it out :)
Human service vs Digital Commodity:
In the design space, the most common needs that people have are usually straightforward. But for web/mobile app development complexity makes the whole story different.
What I have seen people do is build platforms/products/tools that helps other people do what they do manually in the logo design, animation and video making space.
This is the direct opposite of hiring more people to deliver the service.
I think you are right in the point of hiring more to deliver the services ... the point is that what we actually currently doing without productizing the service ... we hire more to compensate with our workload
The catch is that the number of projects that we work on isn’t constant and are variable all the time which doesn’t make a sustainable revenue which is the major drawback in our current business model
The point of making an automated process is largely dependent on the projects which are mostly variable and find a commonality is very hard in my opinion
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Very good idea on the niche like "You give us one of your KPI and we offer you a solution to improve it". People when ordering services want the certainty of having results and when you "sell" results you're gold.
Thanks for the heads up for the footer, will fix!
This comment was deleted 4 years ago.