Here's how and why I decided to walk away from a small, profitable company that I founded. After making £1M in revenue, I made some of my closest friends redundant, let clients go, and wound up operations all together.
This company is called Zoetrope Labs. I started it immediately after finishing university in June 2013. For the first 18 months or so, the company raised about £120K and spent nearly all of that developing a 360° e-commerce photography system — I'll save that story for another time. The “3D-photography-as-a-service” did not stick at all. Morale was very low and cash was even lower. At that point, we had just enough money to cover less than a month of expenses.
I’m not entirely sure why, but I was not ready to give up. We needed to generate some cash — and fast.
By mid-2015, my co-founder Rich and I had landed our first major contract for “IoT consulting” (this was the latest buzzword at the time, and happened to be an excellent match for our skillsets). That was worth something like £80K over nine months.
Things continued along those lines — a couple more contracts worth £20K+ followed by the big one: a major IoT product development project worth £170K over one year. The team slowly built up over this time; by late 2016 there were seven of us.
Here’s where it gets tricky. For the first two years or so of consulting work, I was far more concerned with keeping the money flowing, getting better at sales, and not screwing up the delivery of our projects. Eventually as these things became more regular and my mind less clouded, there was room to remember what I actually set out to do — build a scalable, product-based company.
Don’t get me wrong; there’s a great sense of reward in delivering hardware and software to customers and seeing them run their businesses with your work. It’s just that after a while you start to wish you were building for yourself, where you can see the ROI rather than someone else.
Consulting felt crazy difficult for a long time. Then suddenly it was like being in a hamster wheel. Predictable, tiring. There was always the constant churn of projects, constant curveballs (e.g., employees moving away, canceled projects). Just normal stuff.
Overcoming the Challenges
Like many consulting business owners, I wanted the business to be less dependent on projects, build up recurring revenue, and increase scalability (i.e. revenue per developer). The aim of this was really freedom from the pressure of consulting and also the freedom to create something the way I wanted it to be, at least in comparison to consulting where the clients (understandably) exert quite some control on occasion.
During some downtime between projects we experimented with several ideas to see where we could go. I’ll go into more detail on this another time, but the product experiments were:
- ZConnect - This was a complete IoT platform which we’d developed in part for a large client who wanted a bespoke platform, and then extended for other uses.
- Overlock - This was a product which we desperately needed when we were working in the IoT space.
- Tavern - An “engineering as marketing” project at first. We considered making a functional API monitoring solution. This was Mike Boulton’s pet project and still is today — shout out to Boulton!
We focused with force and intention on Overlock; we made an MVP in two months (based on ZConnect), visited an IoT fair, and had about 30-40 follow-up conversations with potential customers (giant potential customers, like Bosch). We found that everyone wanted a product like Overlock, but that their needs did not overlap enough, which meant we couldn't productize without a significant consulting phase for each customer. That works for SAP and Salesforce, but it’s not really what I was after for my company.
How It Ultimately Didn’t Work
We spent about £100K on the downtime needed for those projects and the associated marketing spend to explore the idea with potential customers. Not a problematic amount to spend, but it did highlight how quickly money can go into these things.
The business was healthy and we were just at the start of three reasonably big consulting projects that were based around ZConnect.
Then Rich and I decided to pull the plug.
By then we had worked really hard for about five years. I was exhausted. Rich was exhausted. And our business was not large enough that we could hire people to help take the load off. I’d learned a great deal and based on the experience we’d had I knew that in our current state we were never going to have the time or the energy to make our product fit the market.
Rich and I went for a walk, sat on the steps in one of my favorite parts of Bristol, and came to the conclusion that we were stuck in a rut. We made our decision on the spot.
Deciding to shut down was not as hard as it might seem. We'd actually discussed it about six months earlier; at the time it triggered one last big push in an attempt to make Overlock scalable.
After making our decision to shut down we went back to the office and finished the day as if it were any other day. Maybe we were in denial about what had just happened.
The next day was far less comfortable — I had to let the team know about this decision. I’d be lying if I said I didn’t shed a tear. The team was massively supportive of the decision. I knew that none of them would have any trouble moving on and sure enough, they were all in new jobs in no time.
It took about six weeks to finish our projects and hand everything over and sell assets. There were some tough conversations with clients, but despite how pissed off or disappointed they were I knew it was far better to experience that than continue to do something that my heart wasn’t in anymore.
Overall I spent three-and-a-half years in the tech consulting business, turned over nearly £1M, and was able to pay back the loans which formed most of the original investment.
One Year On
I dove straight into contracting the Monday after handing over the keys to the Zoetrope Labs office. No break in between. Rich had a holiday and then did the same thing.
I was relieved to be working 40 hours a week rather than 50+ and with comparatively low responsibility. The first holiday where I wasn’t worried about what was going on at Zoetrope was also fantastic.
I took a few months just to take it easy, go to the gym, take care of myself, and spend more time with my wife. I didn’t have much of an urge to make things for a little while. My batteries were simply recharging.
Starting in September 2018, Rich and I began working on Stalemate. I’m just getting started on another side project with some other collaborators which is also really exciting.
My long-term goal is to reach a stage where my income stems from one or two of my own companies which I believe will give me the freedom and sense of achievement I’m looking for.
The plan is:
- Build and ship a side project once every six months or so (some solo, some with co-founders)
- Once a revenue target is hit, reduce the amount of time spent contracting (e.g. taking breaks between contracts)
- After another revenue target is reached, stop contracting entirely to focus on growing revenue
The rough principles of the kind of business I want to create are:
- Automated, self-serve, online products
- Allowing me to focus on the overlap of what I’m best at and what I enjoy
- Fairly minimal capital requirements (no more than £5K needed to bootstrap)
- Ability to be run from anywhere — I may want or need to spend extended periods in India (where my wife was born)
- The businesses will be company-of-one style — not “go big or go home” startups
- I’m picking up on some idea filters that Derrick Reimer talks about here — Thanks, Derrick!
The journey I’m just beginning is going to be a little different than a “normal" indie hacker approach. I’m planning to keep working full-time and keep paying my mortgage while I bootstrap, just as I've done with Stalemate.
I feel more than ever that I did the right thing — I’m healthier, happier, and making a lot more progress towards my goal of having a product.
Before, I was in a comfortable rut. Not anymore.