The challenge of building a 7-figure business with first-mover advantage is educating the market

Marcel Petitpas built the first-ever "profit management firm" to scratch his own itch as an agency owner. Seven years in, he still has no direct competitors. But that blue ocean came with a problem: the need to educate the market.

Today, Parakeeto brings in seven figures per year.

Here's Marcel on how he did it. 👇

The first-ever profit management firm

I'm building Parakeeto, the world's first "Profit Management Firm," which helps agencies and professional services businesses measure and improve their profitability.

Basically, we help bring together data from Finance, Ops/Delivery, and Sales to help agencies understand how they're performing, why, and what to do about it. It's a combination of consulting, tech, and coaching to help firms gather the right data and make the right decisions so they can make more money doing what they're great at.

TL;DR: We worry about the numbers, so you don't have to.

We've built the business to over 7 figures since starting in 2018.

Scratching his own itch

I got started because I experienced this problem when I ran my own small agency, and everyone I talked to had the same challenge.

The questions we were all asking ourselves were simple:

• "Are we making money on clients and projects?"

• "Is our team busy enough?"

• "Do we need to hire or fire people?"

• "Are we charging enough?"

• "Are we as profitable as we could/should be?"

• Etc.

But getting the answers was not easy. Data was spread out all over the place and was messy, and figuring out what formulas to use to answer these questions accurately wasn't something anyone was really talking about.

We saw that margins were getting tighter and tighter, and smaller firms were getting access to more and more data than ever before — but we all lacked the frameworks, tools, and understanding to leverage that data to protect their margins and make better decisions.

It was a problem that I wanted to solve.

From product to service and back to product

We had a few failed attempts at the product in the first 3-4 years of the business. The first version was naive in the sense that it assumed people would have clean and consistent data — so, it was essentially just a data visualization tool.

The second version tried to start solving data structure and hygiene problems by going to where people created those conventions (when they were pricing and estimating work). It got traction, but wasn't solving enough of the problem to really be sticky and scale.

In both of those instances, we over-engineered solutions that weren't sufficiently validated, so we deliberately under-engineered the latest version of the product and leaned on services to fill in the gaps. We had a strict "no real tech" rule for the better part of 2 years, meaning we had to lean mostly on "off the shelf" solutions as a way to keep things nimble and easy to change.

As such, we essentially scaled to $1M in ARR on top of Google Sheets, app scripts, and custom functions before starting to build out legitimate infrastructure and write code. It eventually got really painful and had its own challenges, but the increase in product velocity and our ability to iterate towards product-market fit was significantly higher, and I think it really made the difference between success and failure for us at that juncture.

A minimal tech stack

Today, a lot of things are still running on Google Sheets and Javascript (appscripts) — it's actually pretty good at a lot of things, and clients like it!

But we're moving some things over to Typescript, React, Postgres for all the reasons you would expect: Scalability, performance, speed, and security.

And a lot of our "stack" is human. Essentially, all the things we don't have a product for, we throw people at. This includes things like:

• Pulling CSVs of time-tracking data. It didn't make sense to build and maintain integrations for the billions of time-tracking tools that exist.

• Meeting with clients to design the data schemas and help them clean up and load their data into the system.

• Ongoing support to find and fix errors and hygiene issues in their data.

• Meeting with clients to help them interpret and make decisions based on what their data is telling them (coaching).

• Etc.

All of this stemmed from asking ourselves the question, "What would the best and most complete solution to this problem look like if there were no constraints around time or money?"

Tech-enabled consulting

These days, I would consider us a tech-enabled consulting firm. Essentially, we sell professional services that are highly leveraged by proprietary technology. We do have revenue that you could consider "SaaS" revenue, and could probably stand to do more financial engineering around that.

But in essence, we have two core services that are typically framed as a two-step process:

Step 1: Profitability Assessment - This is a tech-leveraged project focused on collecting and analyzing data about a client to help them understand their numbers, opportunities, and help them develop a clear roadmap to reaching their profitability goals. It includes a lot of consulting and coaching as part of that experience.

Step 2: Profit Management Plan - This is an ongoing relationship wherein our team (leveraging our tech) takes care of collecting, cleaning, and reporting on data for clients on an ongoing basis. We then regularly meet with clients and coach them on how to interpret and act on their metrics to improve their profitability.

Educating the market

We've created a bit of a new category in our space. That's a blessing in the sense that we don't really have any direct competitors — even after seven years. But it's a bit of a curse in that people don't inherently know what we are and what we do.

For a long time, I think we lost more business than we won just because it was challenging to clearly articulate what we do to people. Most people think profitability is an accounting problem, and they go looking for an accounting firm to help them solve it. We've spent years teaching people that accounting isn't the problem (or the solution) and trying to teach them about our POV.

We have to do a ton of education in our go-to-market. We focus on education and try to get in front of people by borrowing the audience of those who already have attention and authority in our market. We back this up with an education-based funnel, which includes lead magnets that help teach our audience how to think about solving their profitability problems and, therefore, help position us as the most viable solution.

Looking back, I would probably have just started meeting people where they were at, and selling them what they wanted (or thought they wanted), so I had the opportunity to give them what they actually need.

I think we'd be a lot further along today if we had embraced that earlier.

Growing via earned media and SEO

So education the market is a big part of it. Otherwise, we've basically built out our entire business from two channels, in this sequential order:

1. We started with Earned Media, which I would define as borrowing attention from other people who already have an audience. We did this mostly by guesting on podcasts, and sharing our POV and teaching people about how to measure and improve their profitability. This led to speaking engagements, coaching in masterminds, etc.

2. We published our thoughts and expertise on our blog and focused on leveraging the backlinks and authority we were building through earned media to do well on SEO.

I think the fact that we found our niche really early helped a lot. It made it much easier to build authority and get traction on thought leadership because we were clear, specific, and demonstrated real expertise and an understanding of the specific nuances of the industry we were targeting.

We've also experimented with paid advertising in the past, and have never been able to make it work. I don't think that's existential or unsolvable. The the challenge we've had, I think, is what I've already mentioned — we're in a bit of a new category, so there's more nuance to running ads compared to a category that people already have in their minds and can comprehend quickly.

By the way, I actually wrote several in-depth chapters on how we think about go-to-market in my book, Software as a Science, which I co-authored with Dan Martell, Matt Verlaque, and Johnny Page.

How to measure agency performance

We believe in a 3-ingredient model:

1. The right framework: Making sure you have a simple set of metrics, the exact formulas for measuring them, and a clear understanding of the relationship between those metrics and your business.

1. The right data: Making sure your finance, delivery, and sales tools produce the data you need, without creating extra headaches and compromises for your team.

2. The right process: A process that ensures data hygiene, adapts seamlessly to change, and supports critical conversations with consistent cadences—even when things are messy and in flux.

These three ingredients lead to consistent clarity. That means confident decision-making, alignment as a team — and most importantly, results.

At a tactical level, we bring all the data together using an ETL (Extract, Transform, Load) process.

Start with services

I touched on this earlier, but the biggest mistake we made in the early days was being too focused on the business model that we wanted to have as entrepreneurs — in our case SaaS.

In the early days, that caused us to do two things that were incredibly costly in terms of how much they slowed us down:

1. We restricted our ability to think more broadly about the problem(s) our customer had that we could/should solve.

2. We restricted our ability to think more broadly about how to solve those problems and/or validate solutions to those problems.

3. We over-engineered solutions based on assumptions.

4. We delayed our ability to solve problems by requiring ourselves to build tech, instead of just solving them with services in the early days and then building tech to fill those gaps later.

In my mind, I think the MVP for most SaaS companies should be a service in the early days. It's truly one of the best ways to validate that the process for solving a problem actually works, and working out all the kinks and edge cases, because of how much you learn and how fast you can iterate.

It significantly de-risks product development and significantly accelerates your ability to generate revenue and bootstrap in the early days.

I think what you'll also find is that it gets you used to monetizing the human capital that is inherently needed to build a SaaS company (especially in B2B) — things like onboarding, support, customer success, customization, etc. These are things most SaaS companies are doing, but they're usually doing them for free.

When you get used to (and get good at) charging for these things, it dramatically changes the unit economics of the business, and in many cases allows you to be WAY better at these things than your competitors because they become profit centers vs cost-centers and you can spend more on them as a result.

Not to mention, your clients tend to be more engaged and do the things that make them successful and sticky because they're paying for the help.

What's next?

I'd like people to look back in 20 years and credit Parakeeto for permanently changing the way service-based businesses measure and improve their profitability.

I think we entered the market at a time when it was transitioning from hourly billing to a much more nuanced and complex operating model, and did the work to develop a new way of thinking about the business that handles that complexity in a way that conventional wisdom didn't.

My goal is that our methodology is seen as the de facto best practice for running this kind of business for the foreseeable future in the same way that Agile eclipsed Waterfall in software development.

Check out Parakeeto, where we have tons of free resources, tools, and content. And my book, Software as a Science. And you can find me on LinkedIn, Instagram, and my personal website.