Failure is not an option

astr0 · Mar 4, 2019

Because the idea is boring, not very innovative/blockbuster but proven to work for me and others.
Yet another software development company, with new knowledge/experience applied.

!WARNING! TLDR

Have some possible points of failure, but if that happens I'll just have to repeat with different people... And that all comes from slight lacking of CENTS, so
Control
The worst part. Me and 2 more partners. Much better than solo, much better than more, worse than only one of them. And, being INTJ, I definitely need one (let's call him M) for his communication/engaging talents. Haven't met the other one (DH - dark horse) yet, meetup scheduled for tomorrow. But past experience taught me that not having 50% is VERY RISKY.
Entry
Everything's fine here. Not much money upfront, but pretty high monthly expenses for paying salaries to people doing nothing. Not very easy to get good clients. And, right now, competition for good developers (employees) is rather high in my city, but we'll handle it.
Need
The demand seems even higher than 10 years ago. We'll be focusing on a smaller niche with some approaches to get in front of the competition.
Scale
Definitely much harder than digital products, harder than physical products, but pretty doable with some strategies/systems applied. Doesn't require a lot of money to scale, but requires human resource and efforts to hire them. And more clients of course.
Time
Well... Services are harder than the products here, but it can be done. Shouldn't be done till it's big though.

Things to keep in mind from the previous similar venture:

Try not to burn out. Working 16+ hours a day 7 days a week doesn't work at all.
Don't fall into trap of coding a lot to get more done to get more instant profits. I'll take that to the extreme and try not to write a single line of code here. Focus on a big picture, strategies, customer acquisition, planning.
Hire more aggressively. For example, a team of 6 can tolerate 3 idling employees with much less loses than a team of 3. A team of 12 can tolerate 4 idling with profits.
Manage client/work-flow better. Having no work suxx, having too much to deliver suxx even more. Losing an opportunity of returning client suxx the most.
Filter out clients more carefully. Similar to the above - stay in the niche, don't spend time trying to get shitty projects/clients.

Long term

Finalize partner
Setup/half-setup everything
Get client/hire employees (chicken or egg? depends, but will try customer first; have an idea for the opposite too - with close to break-even friend-client)
Build first "scalable unit" (a thing we figured out on the past company, but haven't got there, unfortunately)

Short term

Evaluate current partners
Decide/do legal stuff/corporate. Estonia/Malta corporation or work as a Ukrainian contractor for now (have a lot of issues). Not action faking, required by dumb Ukrainian laws...
Look for an office. Again not action faking: work from home is not the greatest idea for new employees on a new company; apartments as an office is proven to scare good employees away. Something not too expensive for 10-12 people will do for now. Smaller will actually limit the opportunities (been there before).
Decide on leaving 9-5 right away or keep 9-5 and hire from day 1. This one is a little tricky, on my first company we only had option #1. But now I actually much more inclined to option #2 since I can pay for living and pay a few salaries with my current income. Option #2 also looks more right to me from "how it should be done" perspective.

Now
I have a meetup with my potential partners tomorrow. Important stuff:

Get to know DH more, we haven't met before. They had plans with M to start a company in June, so I'm actually joining the boat here by wanting to partner with M too. M had me in mind but thought that I'm too busy with 2 kids and can't afford to lose a job... That turned to be almost the opposite. Oh, and did I mentioned that waiting June is too long for me?
Make sure we're on the same page with why? what? how? when?
They probably don't fully realize what they're up to, and that 80% of their programming skills will be useless, especially in the begininng. Scare them to hell with reality and check if everything's still fine.
Be quite offensive since I can bring a lot to the table from my bunch of failures . Gut tells me that they need me more than I need them, but we'll see.
Would be great to get M, ok to get both, not great to get none, but I have two more options on partners (but not as great as M).
Discuss some stuff if everything else goes well. Finalize some plans. They had some plans too, will be interesting to listen.

Done

Back to the forum
Very quickly looked through my notes from some books
Scanned my network for useful contacts. Will schedule a call with IT lawyer to get some bits of advice on the setup part. Found one strong customer lead (a bit too early, but it will be like winning a jackpot if they sign up).
Thought again on a backup partner just in case.
Quickly looked at the current state of the industry.
Done most of it on my 9-5. F*ck this is great. Still have a lot of important, but not urgent work to do. Spent only 1.5 hours on more urgent stuff today. Planning to work for 3-4 hours tomorrow. Having a flexible schedule is great, exploiting it feels even better! Not concerned too much about being laid off too early. I'm not irreplaceable but replacing me effectively would take a few months and definitely more than one good hire. Don't want to screw up the project though, our clients are great and people I work with are too (and I've hired half of them ). They just owe me a lot for saving the project during the past 3 weeks .

Will be posting some status updates here, probably much shorter and not very often. Combining this together took little more than an hour and I'm expecting not to have a lot of time later on.

P.S. A lot of things changed in those 10 years. Notably back then 20% margin was a bare minimum, now some companies are ok with only 7% (info from a bunch of drunk CEOs at the party). Mostly that's because average salaries in IT here have risen 50-70% since then depending on job position (juniors 300%). Will be tough as we need to aim much higher...

Good luck & have fun everyone!

astr0 · Mar 21, 2019

Small status update:

We've (mostly my partners) finished a tiny project for a friend. Only some minor equity % as he does all the marketing and operations himself. It's already a little profitable.
Signed bigger project. Client honestly told me that had proposals for $28k and $20k, but delivery terms is an issue for him. Both companies estimated more than a month for delivery, he needs it in two weeks. My estimate was 27 days avg, 19 days best, 42 days worst so both companies were right . Since I'm on 9-5 job, I'm getting a vacation for the next two weeks to focus 300% on this project. Looks pretty doable in my opinion, and he's ok to deliver main functionality in 2 weeks and some minor stuff later. Partners were against it cause it's not exactly our focus/expertise and the terms seemed unreal to them. Also, I've insisted on % equity and some fixed payment with some penalties on a fixed part if not delivered in time and big penalties if not delivered in a month. The project might be pretty profitable with almost guaranteed 5-figure earnings and has 6-7 figure potential.
Fixed niche/focus/potential ideal customer/etc.
Researched lead gen strategies/competition/other stuff.
Haven't applied for e-residency... kinda always too busy to do it.

Personal:

No energy drinks for ~3 weeks and I'm feeling great.
Morning zombie-mode has pretty much gone.

astr0 · Mar 5, 2019

Adding some personal TODOs here since that's important too:

Drink much fewer energy drinks. Current ~3 a day is way too much. The give short term productivity boost but deplete max energy levels in a long term. Not good for health either.
More vegetables to replace vitamins from energy drinks.
Get rid of 1-hour zombie mode in the morning. #1 is the main contributor to this. A glass of water and a few minutes of meditation worked will in the past.
Free up some time. Suspend/quit all hobbies. Delegate most of the house-maintenance tasks to contractors and my wife managing them.
Don't skip breakfast. Connected to #3, bad things happen when I eat in zombie-mode.
Figure out what to do with ~$1.3k a month 0% mortgage(there must be a better word for this) for two apartments under construction (one of the investment hustles). If I stop paying I'll lose 20% of what I've paid already and that's quite some money. Doesn't bother me too much now, but that may well be a rent for the office or a salary for one more junior dev. Will keep paying probably unless I find a definitely better use for this money and 80% of what was paid already.

astr0 · Mar 5, 2019

Quick status update

Meetup went well

DH is pretty good technically and had experience engaging big client for his employer.
Why? What? How? Checked. When? can't be fully started before May, but have a lot to set up so it's ok. Also, M is going on vacation to the USA on April-May and has plans to visit conferences and try to get some leads/client.
They do realize that their programming skills are almost useless for now, and do realize that getting clients would be hard
They also have something to bring to the table: a lot of resumes of "failed" hiring candidates that M interviewed for his employer. Some of them were good ones but failed to meet other corporate policies. Also, they have a lot of leads (counted 7 in 2 minutes) from clients they previously worked with. Bonus: they are all from Europe and from our niche.
We're starting, 33% each

Finalized

Two of us will keep 9-5 for as long as needed, depositing most of the salary to the company. One quits, haven't decided who yet, but not me.
Will incorporate in Estonia
Will hire as needed, a client first. Things may change depending on the client ("jackpot" type).
Need an office for 10-12 people, not very fancy, not very scary, in an OK location.
Figured out other contacts that might help with setup advice

Done

Meetup
Quickly looked for an office. Surprisingly, nothing... A lot of ok small ones (30-40 m2) and big ones (180+ m2). We would need something like 50-90 m2. $10/m2/month average rental rate. But we thought this would be the easy part.
Quickly revisited my notes for an Estonian corp. Wanted to open it 2 years ago for a side hustle, but ended up using Payoneer card instead...

Now
Estonian and local setup.

Concerns
M has almost zero savings. Normal for just moving to his first own apartment or a sign of a sidewalker?

Happy grinding everyone!

astr0 · Mar 6, 2019

Little update
Done

Spent some time researching taxes and other aspects of Estonian OU. Found an issue - it's hard to open a bank account in EU for Estonian company with Ukrainian owner: most banks decline. Scheduled a meetup on Sunday with my ex-partner on MMO project to ask for their current setup details. He runs a successful VR/AR company now. Also, found out that it's actually ok to work as 3 separate Ukrainian contractors if yearly turnover doesn't exceed ~80-100k for each.
Estimated setup costs for company, office and an employee workspace (mostly action faking).
Action-faked for a few hours playing with numbers in an estimated operational income-expenses spreadsheet. Our plan with staying on the jobs and hiring from day 1 looks quite well on paper. Also, the spreadsheet seems pretty accurate, lying only a dozen percent in our favor. Tested with Oziris and some other input data.
Renting an office is not an issue - I've just looked in the wrong place. Still fewer proposals than for smaller and bigger ones.

Personal

No energy drinks starting from today. Feel constantly tired, but ok.
Starting to mix more vegetable food and eat more often (recommendation from a CEO that went from 90+ kilos to 65 in 2 years and feels great). My weight and fat ratio is ok, it's just for more energy.
Zombie/sleeping mode was insane and lasted for 2 hours today. That's dangerous: missed pedestrians on a crosswalk on my way to work...

Concerns
I'm putting a lot of time into this, they're doing almost nothing. Even don't answer to my finding in chat. Waiting for 2 more weeks, until we'll make our first deposits for company needs. If not much changes by then, I'll probably restart/continue the journey alone...

astr0 · Mar 6, 2019

Was too concerned with partners, so had to think it over again.

I want a partner to:

Execute hiring from day 1 plan (keeping 9-5 income). Totally can't make it work without a partner.
Help with customer engagement. I'm not very communicative in real life, but have a pretty good skill to see through customers needs and wants (for software products at least) and picking up the domain knowledge quickly. Throwing a lot of technical details on them usually works too.
For brainstorming / having a different opinion. Actually, this may not always end well.
Have more employee-power from the start. Yep, employee.
Share responsibility for the current state of things and decisions that led there. This is huge for me.
Avoid "shining object"/"grass is greener on the other side" syndrome by not having an option to switch so easily.
Bring something with him: connections, expertise, experience, etc.
Just unexplainable/non-logical fear of being completely on my own. Probably caused by a simple fear of failure or just making a bad decision.

I wouldn't want a partner to:

Be accountable. I'm pretty accountable with myself and can setup/join some accountability group if it's needed.
Avoid bad decisions insisted by a partner like not hiring, not scaling, not invoicing for additional work requested by the client, picking a huge unvalidated project for a startup, etc.
Have different vision/goals
Put different effort
Share profit

Do I really need a partner? No.
Would it be easier in a short term? Probably yes, especially by executing hiring from day 1 plan.
Would it be faster to accomplish? Probably, but profit is shared.
Would it be better in a long run? No, we'll fight each other.

So while my "partners" are doing nothing, I'll make it look like I'm doing nothing too.
Will try to start on my own NOW.
The plan obviously needs a lot of corrections:

Ukrainian sole proprietor (contractor) would work fine in short term, no urgent need for a company. Will still apply for an e-residency just to be ready.
No need for an office for now. A smaller office for 6 people would be fine later.
A client first, obviously.
Will still try to hire as soon as possible to delegate low-level work.
Niche has to be changed - it was the partner's expertise. Mine is pretty small and very closed (trading/risk-management software).
Not writing a single line of code won't work. Will do my best no to fall into the instant profit trap.

Not sure if it worth quitting 9-5 right away.
On one hand, I have almost 2x average salary for the same position and quite often some free time. Unfortunately, I can't do anything I want with it and it's very unpredictable so I can't count on it.
On the other hand, I'm pretty sure I can match/beat my salary pretty soon by working on my own.

Can't ping most of my network for projects right now - they all know my boss and I don't want him and my coworkers to know anything for now. Starting an upwork profile and doing some portfolio work there while keeping 9-5 seems the best option. Until I hit a long enough project to justify hiring. Going from freelancing to hiring will be hard...

Short-term
Find a stable client / build a stable work-flow

Now
Find at least some work to build a portfolio

Won't post status updates until first client or something major happens. This thread looks like a brain-dump already. 0 value.

Patrick Jones · Mar 6, 2019

I think freelancers are a lot easier to manage. Instead of employing one developer full time, I have 3 freelancers running on 1/3 load. The other 2/3 they spend on different clients. Or goof off, or whatever.

With that kind of spread there is always someone available, but I never have to worry for a minute about having to have work for them.

They deliver top work because their next gig depends on it. And because they work for different clients, they get insight in to many different techniques and processes, which means they learn a lot on the job. Of course what they learn from working for me, other people profit from. But that's a fair trade in my eyes.

Them having their own offices/desks also means that my office cost is reduced to a desk and a meeting room - both of which I rent on demand.

Working with freelancers is like running multiple servers behind a load-balancer.

astr0 · Apr 7, 2019

So 2 weeks passed.

Done the project (almost o_O

), got the fixed pay in full amount. Overdelivered a lot so the Client was very happy.

Fun thing: we relied on a 3-rd party API which banned our trial account this Friday. The client wanted to buy access, but their subscription prices are 20x greater than he initially expected / is willing to pay. Found another good one already, but I'll have to implement it for free this time. A little lack of C in his CENTS project, but there are a ton of providers for the data he needs, so not a big deal to switch them if something bad happens.

Note for the future: work more with clients during the "estimate" phase, so that we totally understand each other in every detail. On this project, the client totally missed like 30% of work (we haven't discussed it at all, it's really important and we both figured out that we need it after 2/3 of development was done) and around 10% he wanted to do in a much more complex way than I assumed.

The client already did some marketing and we have a few dozens of people waiting for the launch in the project's telegram group which is quite nice considering that his market is like 10-100k people.
He also found some investors who seem interested in the project (at least they have good money, so they value their time and they spend quite a few hours with him discussing terms, ROI, marketing and other stuff). Noone signed cause he still hasn't figured out exactly how much he needs to raise (low 6 figure to mid 6 figure) or if he needs to raise something at all (he's considering more of a partnership than investment now - like delegating the marketing/community management with all expenses). But my equity% already looks more promising than just bigger fixed price.

Personal:

Back to 1-2 energy drink per day for the last week...
Had no time at all to spend with family
Surprisingly haven't burned out at all during these 2 weeks

astr0 · Apr 11, 2019

Somehow attended two local seminars in these two days (I'm not seminar guy and usually find everything I need online).

On was called "Legal Porn": legal stuff for IT businesses. My client is a business partner with two experienced lawyers who were speakers there, so I've got an opportunity to say "Hi" from him and talk with them a bit. Basically, it was very cheap but long legal consultancy from people who know this business.

Main takeaways:

No one cares about you if your small and haven't screwed up big
Estonia is a great residency for a company
There are issues with opening a Bank account in EU for Ukrainians, but after your company gets some history it's no longer an issue. Starting with Payoneer is fine. Also, there soon may be an option to open Bank account for EU company in Ukrainian bank.
Got confirmation that most things are as I thought they are
Got bunch of info on intellectual property rights, including useful ones like on using stock photos

Another was on Business Development from a woman who worked for more than 10 years on BisDev roles in different companies, including BisDev Director in 200+ company who's CEO I know well. She started her business 3 years ago and it's pretty successful now. I've attended it more to meet with the Client and to discuss a few things as he was going there.

Main takeaways:

Most Ukrainian IT companies are doing a lot of things wrong, but still profitable
I probably know more and have more experience with paid traffic than she is, but she's definitely great at building a brand and online presence. So later should be very important too.
Some, mostly outdated, sales and marketing info
Employees, real company culture and values are important
Confirmed that focusing on a small niche and killing it is a nice strategy

Noticed a lot of business people on the first seminar, but very few on the second.

astr0 · May 14, 2019

Pretty soon after informing my circle what I'm about to do things started to get some momentum.

Has some chances of hitting double Gold or at least Gold + Silver.

Gold/Silver
My multimillionaire poker friend is currently starting a software product and outsourced it to a local company. They finally showed him something. Nice looking half-working crap full of bugs. He asked me to estimate that project for him. I've done something similar before, so could quickly adjust everything to our current rates.

The total was 40% of what that company estimated and we have almost 2x of their rates. Math doesn't match, right? Yet, I'm pretty sure of the accuracy for this one.

The fun thing is that he had failed 2 times with software products already, blowing low 6 figures on them. I've actually tried to finish one, more expensive of them before, made some progress in two weeks, but had no time to finish it back then (and I've told him that I don't have a lot of time beforehand)... Since that he thought that I'm unreliable and can change my mind whenever I like.

Fortunately, he knows of our recent process so he changed his mind.
Unfortunately, that company already spent 35% of their budget, so he'll try to get his money back by selling everything to them as their owner seemed to like the idea.
And to start from scratch with us hoping to over-compete them cause he has more money and more domain knowledge in that niche.

He's happy with our budget, but I'm thinking of a better win-win deal. We would do it when we don't have other clients work for 0 margin rates. Normal rate if he needs something done top-priority. All that for a small equity %. Same would go for his future projects.

Cheaper failure for him, better results for us since he's aiming really big and not interested in a few K here and there. And we won't have to worry about ups & downs while we're small.

He needs time to think, but I'm pretty sure we're at least got another client.

Gold in the sky
One, not the smallest fund had invested in the NDA project. They are pretty impressed with the progress on the development side (only me, half-time, while still on 9-5 lol) and asked my client for a referral. Usually, they are making their own very specific web apps for a very specific market in Asia and making good money on them. Currently, they outsource everything to China and not very happy with that... No offenses, but poor Ukrainian developers have almost 40% bigger average salaries for a reason.

My client is in the same niche so can estimate their ROI very accurately. He thinks that they can profitably pay us even bigger rates than we currently ask and his nice commission of top of that. Meaning that would still be a win-win for them.

That would put us pretty close to a well-known local "boutique" UI/UX company on rates and would give us a strong reason to hire & scale fast.

Still, that's only "btw" talks now, but the client is pretty committed to selling us.

Hope is not a business plan, but hoping for the best, worked last time

astr0 · Mar 7, 2019

I think I totally understand your point of view.

You're building a SaaS and it requires a lot of different skill sets: design, backend, frontend, marketing, copywriting, etc.
Your workload is not stable: some programming to prototype and build MVP, more for later iterations of product development, some non-programming work along the way.
Being a web developer yourself you can manage freelances much better than a person without tech skills. You know what has to be done and how and just leverage their time to do it.
So that's definitely much much better for you to hire many freelancers for different tasks instead of an employee with a fixed, smaller, skillset, who requires constant work, not easy to replace and brings a lot of troubles with him (more complex taxation, insurance?, office expenses and so on).

However, I'm focusing on helping other people and businesses to build something useful for them or for their clients by offering full-scale software development services.
Not all people have the skills required to manage an army of freelancers and actually control their work. Two projects might look completely identical to the client, but one of them might be full of crap inside. And you know how much time it might take to make some changes to a crappy code, compared to a good one.
That probably doesn't matter at all for an MVP, but may greatly affect the cost of a project during its lifespan.

So, compared to freelancers, my benefits for the client would be:

No tech skills required from the client at all.
Much less management (up to zero) and communication (one person responsible for the whole project instead of a bunch of freelancers), saving their time.
Projects can be done faster by paralleling tasks between developers. Also, developers will have better communication with each other than remote freelances. That contributes a lot to quality and time savings.
Expert work will be done by experts, low-level work by cheaper employees. Reducing costs for the client compared to hiring only good freelances.
We're even more concerned about quality. Bad quality means losing a client, that is much harder to find that a gig.
We actually want our clients to succeed with their projects. It's a synergy relationship, much more than just b2b. Happy with a one-time small project - our free referral. Scaling business using our project - more work for us. The project failed for a client - we just get paid and have to look for another client. Most freelancers aren't interested much in becoming full-time remote employees for one client. And not all want to build an agency and become more of a manager. So more work from a client is not that important to them.

The only cons that I can think of would be:

It probably still be more expensive for the client than going with freelancers. But all the benefits should justify that. Also, it would still be much cheaper than hiring local developers in some countries.
They have to trust us. Replacing the whole developer team on an established project would be very hard for them.

Small status update:

Browsed upwork for some gigs. Elance 10 years ago was better for an agency... A lot of small tasks and opportunities to sell myself to a 9-5 freelance. I know that small tasks can bring more or even a bigger project, but still, it doesn't look like the best place to find clients. Also, very few companies from Ukraine are present there, mostly tiny ones.
Reconsidered partnership just for a much smoother start and early steps. Still not sure if it justifies that benefits. If everything goes well, except partnership, we can actually figure something out. From having different responsibilities, different niches to just splitting a company into pieces and go our own ways taking employees and clients with us. And if it fails... well, we had more chances with the partnership.

Chicken and egg problem becomes much more complicated if I start solo. No point in hiring a developer first and trying to sell him - he can do that himself. Having client first I would have a very difficult time hiring more than one person at a time (risk of bad hiring). I'm also risking to exchange my 9-5 for another job-business.

Happy grinding!

astr0 · Apr 10, 2019

Implemented new data provider which is 25x cheaper than the first one. Had to change DB schema a lot so that we could switch/add providers easily in the future (was using a schema that is very close to the first provider's API to speed up the development). Realized on the way that the first provider was calculating a lot of derived data and we have to calculate it ourselves when using other providers, but that's fine. The new provider also has more delayed data (he promised up to a minute delay, but we saw an average of 1:30 with max 5 minutes and once their server went down for 4 hours in the night...). That shouldn't be a huge problem for us, but not great either.

Made a small tool in an hour parse telegram groups with potential customers, rate them by involvement and dump in a file for our marketing "team". They grew our group to more than 100 people in 2 days. Join rate is ridiculously high at the moment. And they have around 8k people to spam :innocent: :halo:

.

The client finally decided to go with rather small seed investment round basically to cover the marketing costs and to survive a few months in case thing won't go as we hope. He got verbally covered 10x amount, so there's a high change to raise everything the project needs.

Since we no longer get a lot of stuff from the third party, we'll launch with much fewer features and will add them later. The client thinks that it's even better because his customers will see the progress and will be able to prioritize the features they need most. Also, it's more work for me, so we verbally negotiated not very high extra pay for larger chunks of work. Previously I agreed to do free support for a few hours a week in the scope of my equity%.

Will deploy changes tomorrow, everything should go smooth because investors are already actively looking on it. That means that I have to deploy it alongside and switch after quick testing so they won't notice much difference ).

Hired a one-time QA to test everything, I'm afraid there may be higher than average % of bugs cause of rush and 0 unit/automated tests. We'll go to production over the weekend and do an investment round on Monday.

Kinda interesting how would it go. My share's percent of investment would be 2.5x of a normal fixed price for this project and evaluation% would be over the roof. Too good to be true, too good to be that easy.

Hoping for the best!

P. S. Already told my coworkers that I would leave in June so they can prepare and don't screw up our huge and complex project. Hadn't noticed the boss, it seems too early.

astr0 · Apr 18, 2019

Little off-topic:
There are lots of opportunities for local businesses here in Ukraine.

Came to a haircut saloon:
me: Can I have a haircut?
employee: No
me: Why?
employee: We're busy
me: Ok... so maybe later?
employee: No, we have schedules till the evening
me: So... maybe put me on tomorrow?
employee: No, other girls work tomorrow, they have their own schedule.

Tried to make a photo for E-Residency application, a guy took a picture and asked what size and proportions do I need so he can crop the photo. I've told that before the shot, but that's ok...
Then I've noticed that he took a photo without any zoom. And I need like 2500x3200px 75% head, so there may be an issue. He said that everything's fine and copied the photo on a flash drive.
Feeling lucky to work in a 2-minute walk to them... The result was 300x370 banner from the 90x.
Immediately came back to them yelling WTF, got something that looks decent, still crap but will do...

The point is

I'll never go that haircut saloon again, found a much better one in a 5-minute walk.
Loots of opportunities left on the table just by improving quality and customer service. No need to reinvent the wheel and think outside the box.

astr0 · Apr 27, 2019

Week -8

CryptoDividend No Changes. Have a bunch of useful features to implement and the design is ready. Unfortunately, my partner who did the frontend is on vacation in the US and don't answer in any communication channels for some reason, another partner is working on this, but slowly cause he hasn't written a single line of code in that website frontend before. And I'm too busy with another project...

NDA Project Has high chances to take off very soon. Already quite profitable in 2 weeks. Haven't raised full seed investment amount yet, but it already covered development expenses (me) and heavy marketing for 2 weeks. Reimplemented all the missing features after moving to the cheaper data provider and much more. We were contacted by a huge player in the industry with an offer to integrate our product to his web site in an iframe. It's a win-win: we get some share of their quite large user base, they get a refresh of their platform and "affiliate" commission from us. We were ready to implement this integration, but a few days later we were also contacted by App Accelerator of a rival network to the one we're currently using with a pretty insane offer. Basically, they want us to integrate with their network and would cover all the required development and marketing costs to launch with no other obligations than a promise to do it, which is really sick. They gave us a hint of a possible amount and requested detailed expenses planning for the committee. We'll get a response on Monday and that would be the top priority if everything would go fine. So we tried to negotiate with the first well-established player to also cover part of development expenses since we are pretty sure that he needs us more than we need him. Their CEO's on a business trip somewhere and no one else could make that decision, so we're waiting there too.
We're also launching a massive marketing campaign on Monday basically on every channel in a niche we can think of. That would probably decide a faith of this project short-term.
Update: Got integration funded in less than a day, on Sunday, directly by the CEO. They would also do some marketing on their side. Looks like we were right and this can bring better results than we initially expected.

Done

All 3 of us applied for E-Residency
40h week on 9-5 and 44h week on NDA project, another fixed-price coming next week
Was pretty much absent here
Recommended a bigger company to the referred prospect. Much slower, more expensive, but would probably do the job for him. That doesn't count as a failed sale ).
Investigated where to buy stuff for the office: few used monitors, tables, chairs, router, and some minor items.

Fail

Company website and marketing ideas/plan. Don't know when I'll do it, the NDA project is moving too fast...

Now

Learn how to code for the rival network
A lot of work @ NDA project
Another 8-10h work session tomorrow(today) that would probably violate 80-20 principle, but every hour spent on final polishing now would contribute to the ROI from ad-spend.
Slowly look for an office
Probably delegate the company website to someone
Ask the mentor for detailed marketing advice... Re-evaluate it. Find cheap&good enough copywriter to prepare everything.

astr0 · May 4, 2019

Week -7

I'm a bit drunk but got to post this on Saturday night...

CryptoDividend No major changes, a partner is still working on changes, but they are nowhere near to completion.

NDA Project Seed investment is over 20%.
Integration with a major player is done on our side and we got paid for it. Unfortunately, we found 8 bugs in their software, 5 of them were fixed in a day, but 2 critical are still there and we can't go live before they fix it. Done some deeper analysis - they have around 700 paying customers, which is great but not awesome.

App Accelerator is not responding, and I have an idea why - cause of our marketing plan. But we were not ignored by 2 other bigger investment funds and another one contacted us directly. All want to wait for us to get more data and that's reasonable, but if we're profitable why would we need an investment?

Our marketing went pretty badly. We had around 20 paying customers before the campaigns, got around 40 during the campaigns, but it seems that most of them came from free sources. And we burned $1.2k which makes our CAC around $60 and it's really bad. Even more - the client has negotiated media buying prices and almost halved them, so normally we would have had $120 CAC. And one traffic source that costs $600/week has insanely high bot traffic. I know cause they definitely have JavaScript disabled, Bounce Rate more than 96% and Avg Session less than 2 seconds.

That failure somehow made my client realize that I know something about marketing... So we made a $200 PPM campaign that brought us 1.5k visitors with 0.12% CTR. That's very low, but our product is uber niched and very hard to market properly... We also did a "spam" messaging campaign over 260k users/bots for FREE. Our volumes 2.5x-ed after that, but the results are impossible to track at all cause of the marketing channel.

So currently we have around 100 paying customers, 260+ daily unique visitors and profits allowing us not only to survive but cover 2x monthly expenses. We also passed $1k daily revenue today, but margins are very small so that's nothing major. Although moving ahead of our investment offer plan is pretty nice.

Terminated our cooperation with 2 girls that were luring telegram users to our group and hired one unstoppable girl to manage our telegram and twitter EN community. We've got 30 true twitter followers with her in less than a week. Looking to hire someone for CN and RU community.

Although we got some investments and profits, we've decided not to distribute them now. "Entrepreneurs work for free" once said R. Kiyosaki and it looks better to spend that on marketing than to pay for my 124 billed hours at not-very-profitable rates.

I don't have an idea about our LTV yet, but from experience with similar affiliate projects, we definitely can get 1.5-7$ CAC worldwide, not $30 or $60. Gotta grind in that direction. We're niched and that would be very challenging to laser focus our audience...

Done

52 hours billed and like 10 free @ NDA project.
Read/liked a few posts here.
Gifted 6/12 MJ books to 4 people who have high chances to change their lives in my opinions and 2 friends cause they were jealous...
- 1 Unscripted to CEO of 260 employee outsourcing company. He got money, but not... Unscripted .
- 1 TMF to my current client cause he's money chasing a lot.
- 2 to my soon to be ex-coworkers. One almost gave up after a 1-year long failure, another have high chances to succeed but no ambitions/goal/why/etc.
Talked with 260 CEO about my plans. His only objection was "why the hell do you need partners?". My answer was "cause I have 24h in a day and I need 6h of sleep". And I've instantly realized that it's an excuse... Can hire someone for more hours. The reality is I'm just too afraid of starting something on my own and I don't know what to do with that.

Fail

No time for Comp3. I actually feel like doing more products that services. The grass is greener on the other side??? No office stuff, no web site, no marketing, no meetings, nothing...

Now

Finish integration on NDA (waiting for bug fixes on their side)
UI/UX polishing/improvements on NDA project.
Insane tracking on NDA
Youtube influencer in the nice would publish a video about us with $250 worth give-away. We'll see how it goes.
Trust Comp3 to the partners cause NDA project almost has enough revenue to hire 3 of us as dedicated devs at our future company's rates... And it definitely has a lot of meaningful progress to do.

astr0 · May 25, 2019

Things are getting better.

NDA Project got an app of the month title in a niched online magazine. They've also written a nice article on it and put a link on their main page. Free marketing for us.

The churned user is back but using the app much less (more carefully?).

The project also passed the profitability point without counting the seed round yesterday.

astr0 · May 27, 2019

A little RANT about FAITH and SCRIPT
Just said to my wife that we're thinking of doing products and thing's would definitely won't go nice and dandy from the start, but we'll make it eventually.
Talk quickly went south with her mentioning my previous "startup" failure, the fact that one of my partners doesn't have money for a living, that products are hard, that I'm too convinced we would succeed and that I'm bad with risk mitigation overall.
I deliberately brought it there by mentioning that I would probably need $30-$50k for that to work, and giving Mykola a loan is fine and may be considered as an investment in a product if I would think it's necessary.
She considers 0.02% a huge risk and that we should be accounting for that, yet it well less than the probability of dying in a car crash (1/103) or dying in a pedestrian accident (1/558).
Telling her that I foresee more possible short-term problems, but all of them are about losing partners didn't help.
Those are money we earned with hard work, we should keep them for the kids!
It doesn't matter that I can earn them in a few months, no. "It's too risky!".
Yet, she's completely fine with me working on this for 3 years (which is equal to not earning much more, even on 9-5).
Oh, and 4 times she mentioned that I would fail, lol. Well, she's doesn't actually think I would fail, but was aking to consider the possibility of a complete failure seriously. I told her that I'm actually planning to fail, and multiple times.
And I gave her a promise that she wasn't happy about:
I would never get a job again, ever, no matter what

I don't blame her, that's the SCRIPT. Get a job, avoid risks, stay comfortable, business is very risky.
The fact that she's also a software developer made it worse. It's hard for her to realize that a job is not stable, and there are people who really struggle to get it. We have not enough developers for all people who want to make money on them, so they are treated like kings, the salaries are pretty high and still growing and good software developer would always get a job. During soviet union, 30 years ago miners were in the same position here in Ukraine, now they're striking every year for not getting paid $200-$400 salaries for more than a few months and yet continue to work... Cause they don't see other options.

That got me thinking...

astr0 said:
Signed bigger project. Client honestly told me that had proposals for $28k and $20k, but delivery terms is an issue for him. Both companies estimated more than a month for delivery, he needs it in two weeks. My estimate was 27 days avg, 19 days best, 42 days worst so both companies were right . Since I'm on 9-5 job, I'm getting a vacation for the next two weeks to focus 300% on this project. Looks pretty doable in my opinion, and he's ok to deliver main functionality in 2 weeks and some minor stuff later. Partners were against it cause it's not exactly our focus/expertise and the terms seemed unreal to them. Also, I've insisted on % equity and some fixed payment with some penalties on a fixed part if not delivered in time and big penalties if not delivered in a month. The project might be pretty profitable with almost guaranteed 5-figure earnings and has 6-7 figure potential.

WTF!? Are people that stupid?
He got a $28k proposal from a really large company that's in business for more than 10 years.
He got a $20k proposal from 20+ employee company that specializes on the technologies needed for his project.
He knows that for that money 3 to 5 people would be working on his project for a month.
He believed the project would be profitable, so giving equity was not in his interests, fixed price definitely looked cheaper for him.
Yet, he went with me and gave equity... A solo guy who he doesn't know at all, who has not much reputation, totally has to finish it during his vacation cause he definitely won't have enough time for that with his job, who honestly told him that he doesn't know all the required technologies and would spend 2-3 days from his urgent timeline learning them and also not good web developer as he wasn't doing web for almost 10 years.
That sounds really crazy, no? Like WHAAATTT crazy.
Yeah, I was too excited to see it right away.
What the heck our common friend told him??!!

astr0 said:
My multimillionaire poker friend is currently starting a software product and outsourced it to a local company. They finally showed him something. Nice looking half-working crap full of bugs. He asked me to estimate that project for him. I've done something similar before, so could quickly adjust everything to our current rates.

The total was 40% of what that company estimated and we have almost 2x of their rates. Math doesn't match, right? Yet, I'm pretty sure of the accuracy for this one.

The fun thing is that he had failed 2 times with software products already, blowing low 6 figures on them. I've actually tried to finish one, more expensive of them before, made some progress in two weeks, but had no time to finish it back then (and I've told him that I don't have a lot of time beforehand)... Since that he thought that I'm unreliable and can change my mind whenever I like.

Fortunately, he knows of our recent process so he changed his mind.
Unfortunately, that company already spent 35% of their budget, so he'll try to get his money back by selling everything to them as their owner seemed to like the idea.
And to start from scratch with us hoping to over-compete them cause he has more money and more domain knowledge in that niche.

He's happy with our budget, but I'm thinking of a better win-win deal. We would do it when we don't have other clients work for 0 margin rates. Normal rate if he needs something done top-priority. All that for a small equity %. Same would go for his future projects.

Cheaper failure for him, better results for us since he's aiming really big and not interested in a few K here and there. And we won't have to worry about ups & downs while we're small.

He needs time to think, but I'm pretty sure we're at least got another client.

And this... He just stopped the project by the way. Gave up on the idea for now.

astr0 said:
But who would invest in a company that doesn't even know what to do yet? Definitely, I wouldn't. Fortunately, we have two opportunities on this already...

The recent one shows it best.

Turns out there are people who believe in us more than I do.
Realizing that is the best motivation ever and I'm pretty sure it would last for a long time.

Enough thinking, back to execution mode

astr0 · May 28, 2019

You can't hire yourself
Was added to my signature recently. It's from a talk with 260+ CEO on a Saturday party.
I was joking about his business and explaining our plan to him cause he's kind of my mentor.
How we would put marketing over sales, how we would compete for projects that no big company wants to compete, how we would have better margins than he had 5 years ago and a lot of happy clients to bring us more and everything would be nice and dandy.
He listened carefully and then said: "Yeah, as long as you don't start hiring".
Me: "Why? What's the problem with that? We would just find really good programmers and pay them more than you do)"
He: "You can't hire yourself"
And the plan went to the sewers cause I immediately realized what he means by that.

An employee can have a great skill and be really good at what he does.
But he would never have the same motivation as a business owner.
He doesn't get paid for the output.
He doesn't want to wait for the results to follow.
He wants to be paid now for 40 hours a week of work he has done.
And he won't overwork unless he wants to (and is getting paid for that).

Just good to keep that in mind.

Update:
Had a talk with the client mentioning we think of pivoting to products, but one of my partners don't have enough money for living and it's holding us back.
His response was very simple and genius.
Just delegate the work I have on the NDA project to my partner so he could earn some easy service money.
There's still some 5-figures of service work left.
He also thinks that this is a great idea and that he tried to lean me on that road all the way (which he or his project probably did).
Also got an agreement for doing more startup-like(bigger) projects together in the future on the same terms (discount for development in exchange for minor equity in the project). He got experience, money and a shitload of connections.
We would definitely learn a lot by working with him and it's zero-risk cause we're getting paid for what we do.
Did I mention that "hourly rate" with this heavy discount turns out to be a bit more than my partners currently earn on 9-5?
And that's still a win-win.
NICE.

“Never worry about numbers. Help one person at a time, and always start with the person nearest you.” (Mother Theresa) - thanks, @Andy Black

P. S. Just to clarify: my partners have nothing to do with the NDA project, they voted not to take it for a "company", so I took it for myself and they were ok with that since we haven't "started" officially and I'm wasting my 9-5 vacation to build it. More details here.

astr0 · Feb 1, 2020

Some updates:

NDA Project is doing fine. One of my partners made a quite decent exit and bought a flat for his mother, his part was bought by the initial investor. They've made a decent roadmap for the next 6 months and started executing it. The hired developer started beeing more productive since he started working full-time and now able to improve every part of the project. We're not working full-time on it anymore, so everyone else made up salaries for themselves and we started to charge the project on time&material model. That's great for everyone, we can focus on the service business more as this month we worked only 7 hours on the project.

Service
Our most promising client got a green light from his road-trip to the US. We don't know details, but he's hiring another developer. We have a priority as Ukraine is more cost-effective than Israel, but he's also looking to hire in-house if he manages to find a good fit. Currently, we're working with a recruiting agency, 2 more freelance recruiters and looking for someone ourselves on local anonymous jobseekers directory and through our network. No luck in more than a week. Turns out everyone here needs Senior full-stack JS developers (React, AWS). So far only one interview scheduled on Monday. Recruiting agency services are quite expensive (1.5x monthly salary) so we'll be pinging them for more leads.

Other clients are not that great long-term and we'll try to make them part-time and focus more on building something sustainable, like marketing.

One US client together with his US partner had a ~40 people software agency here and a SaaS product. He left the business, took the SaaS and now together with the agency CTO starts 100% product business. While we're able to do a great job for him, expanding his own staff would be better for him than hiring an agency. So that's short-term money, a good testimonial and maybe some referrals.

Another client is a mess. It's a fintech startup that got to us through two middlemen. We're doing only the frontend, everything else is done by two other companies. Short-term money, no testimonials, no referrals and I'm even quite worried about the project. The development started not that long ago, but they've already overcomplicated everything a lot, missed deadlines on most sprints and can't keep up with frontend development speed and possibly also quality.

Done

Internet in the office (turns out that can be a serious problem in 2020)
Registered the company, opened Transferwise Borderless account for now
Got listed on some directories, but will be revisiting it with updated copy and logo
Logo concept, basic marketing
Done extensive research on the competition in our niche
Made two more clients happy with our cooperation

TODO

Completely redo the website. We're selling web development services so our website should look quite good. We'll keep the color scheme, and most likely outsource the design to other local company (cheaper for us, and we're not that good at design). It should sell.
Ask every client for testimonials
Get listed on more directories, most importantly on Clutch
Start a blog (our topics, our plan/skeleton, written by other agency)
Free one day a week for high-level work
Open a bank account for the company (quite hard for Ukrainian owner of Estonian company as most banks decline without the company's track record)
Pay 2500 EUR share capital
Fill the org chart (turns out that's important)

Summary from the competition analysis
I really wanted to find answers to two questions that bothered me a lot lately.

How did companies grow from a bunch of cofounders to sustainable businesses with hired employees?

Get one client (usually steal from previous jobs) and initially grow with them. That's what seems happening to us. Too much luck involved, too risky, but worked for some companies. Smarter ones started to scale past their initial client when cashflow grew. Not that smarted relied on luck and either went bankrupt or spent tons of cash keeping staff while urgently seeking for more work when that client left.

Upwork. Ukrainian junior and middle developer salaries are quite competitive on Upwork. Some companies scaled like crazy on this channel alone, but that's not what we want to build. Even those who started on Upwork soon realized that they can't keep that high ratio of junior developers. Missed deadlines, losing money fixed price projects, low margins, too much stress on seniors and PMs, people leaving after getting more experience cause the salary cap is quite low. Most of those companies used their portfolio to find better clients outside of Upwork.

I would call it "building a business from day one". Those are the craziest companies from my list. Founders weren't selling their time but instead focused on building a business. They had a vision of what the company should look like in 6 months, a year, 3 years and beyond. Those founders had previous business experience and knew it should be a machine running on processes, while they should be the ones executing those processes while delegating is not feasible yet. They often even picked an easier and more profitable niche instead of going with what they knew best.

Simplified it looks like this (KindGeek story):

Get prospects from the network.
Ok, we have a client, let's refine the specs, start outsourcing the designs while urgently looking to hire developers.
Good, one project is now going. Repeat.
Nice, now we have some capacity and don't have time to hire people. Let's hire recruiters and repeat everything.
Now we have too many projects, let's hire PM.
We're out of clients from the network, let's start more marketing.
Marketing is getting some in-bound small projects and we can't keep up with sales. Let's hire a salesman.
Some of those small projects die, others are getting bigger and bigger. The flow continues, but now the company also grows with their clients.
Ok, now we have a decent company, let's hire marketers, HR and delegate everything to focus 100% on higher-level things like strategy, landing big clients, conferences, road-shows, etc.
Shit, we were hiring too fast and now have a company without a culture. Let's fire half of the company and start again.

How mature companies operate as business machines?

Well, above around 20 people processes are a necessity.
Same with marketing and sales, but those are different.
Most companies rely on sales, lead gen and referrals more. They are able to get bigger projects, but the flow is not that stable, sales process is long and often fails after months.
Minority bets more on marketing, getting mostly smaller MVPs and prototypes. Not everyone who invested in marketing got great results, but those who do look much happier that the sales type. They have a constant flow of smaller projects and are able to train people faster, get stable cashflow and workload and truly grow with successes of their clients.

Programming is really a small and one of the easiest parts of the company, especially for experienced developers. BizDev, Sales, Marketing, Recruiting, HR, Accounting, Bookkeeping and so much more are also very important parts of the business.

astr0 · Jun 13, 2020

3 Months update
I haven't been here for a while and really busy with the company, so I'll try to keep it short.

Both of my partners have exited the NDA project. The second one left when things started to go bad due to COVID and a hack that stole more than half of the project's balances. I'm the only left, along with the main investor, the client, and a new passive investor. After 2 months of extreme uncertainty and losses, last month was a little profitable. Still due to the hack and having to keep the runway the project hasn't paid salaries to CEO and the main investor even loaned mid 5 figures to keep it running, so they are the first priority. I'm not actively involved in it anymore, only some consultancy up to 10 hours a month. They have two developers in-house now, and a bunch of other employees necessary to keep everything running smoothly.

On our service company side, things are going really well. We've hired a great developer for our first client and soon will hire another, already have really awesome candidate. I hope he will pass the interview with their CTO too and accept our offer.

The other client was so happy with our cooperation that he trusted us with another project from scratch. I was personally developing it, together with his designer and our freelance QA. It's already in production here and the client is very satisfied with the results so far. Google is still indexing it at a turtle speed of 45k pages a day, but it will get somewhere soon. So far the traffics grows by thousands percents day-to-day and at that pace will reach the numbers of the client's old project in no time.

We've got some F*ckups too, especially with the office. We've switched 3 offices in 5 months after we left the NDA project. They've moved out too but to a bigger one and more convenient logistically.

Our first one was cheap, good, but sub-rented and the original tenant did massage sessions there once in a month on weekends. That sounded like not a big deal from the start, but after his first session, everything became clear. The smell, things out of their places, footprints on our chairs, missing laptop charger, etc. That office was still ok for us, but not for our first employee.

The second office was a nice 280m2 recently renovated house with 2 car garage and a little backyard. We actually rented it a week before lockdown in Ukraine and been there only for 3 days. Not our style and a house isn't the best place for IT company. It was dark with solid wood furniture and lots of small rooms. AC was missing and the heater barely kept up with heating all that space with panorama windows. After the lockdown, we've managed to negotiate a 50% discount for it but still lost more than $5k on it.

We've actually decided to move out cause a friend who knew that we were looking for an office months ago shared a rent post from his friend with me. The photos looked great and we decided to check it out. In reality, it was much better. Large office with good lighting, good views, just renovated, in style, with a small separate meeting room, WC, good power sockets layout, and AC/Heater combo. And 30% cheaper than the house. We've taken time to think, triple checked everything, and moved there.

It was completely empty (except WC) so we've furnished a kitchen, a small rest zone, and put a horizontal bar there. Some furniture is still missing, but that's ok as we're still working remotely 90% of the time.

Sales and Marking are our main focus areas for the next 6 months.

Israeli tech friend of mine two co-founders have referred us to his friend who was looking for senior React developer for a long term cooperation and something may work out of it. We've also asked our current clients for referrals and the first one have already recommended us to someone. On sales, we'll be mainly focused on our network and referrals from our network until the marketing kicks in. Planing to start lead generation after that. We're also not very interested in jumping on work ourselves and would look for potential hiring opportunities, which means long term cooperation since we don't have a stable project flow so far.

From marketing, we're getting hundreds of visitors a month, but only one cold mail on average. Most visitors come from the directory listings. I'm in fact curious who are those who emailed us as we did our landing page in a day and it's total crap. No info, case studies, clients, testimonials, nothing. Like I would think it's some kind of scam and instantly bounce.

The freelance designer who we hired to do everything for us (like logo, styling, website) did only the logo and had no time to do the rest, but kept feeding us with promises. Hired a new one this week, still nothing except few questions so far. From the talk, he seemed much more professional and had a few big and well-known clients in his portfolio (like Microsoft People). He also worked together with one of our co-founders, so trust him more.

We've decided to focus on Clutch a lot cause that's what works for others. So far we have an extremely good review from our first client and asked another client to leave a review there too. For projects with $25k+ budgets they do a phone interview with the clients, and that takes like 20-30 minutes so a bit of a favor from the client. Already got in top10 on crypto and top13 on cloud consultancy in Lviv, and that's a great result for now.

For the blog, we decided to do the topic research and detail content planning ourselves. We would also write tech articles ourselves and pass them through proofreading from professional tech copywriters who also promised to improve the structure and prettify the text too. For business articles, we would just pass the detailed "topic tasks" to copywriters for now. Most of their clients aren't getting any results, and in my opinion, it's due to poor topic selection and article planning. I've asked them is there any difference between the one who's getting some traffic and his articles are better overall and the rest. They told that that company has a pro marketer, he has a plan for the next month and compared to others give them a much more detailed task. They've actually adopted his template and recommend it to all their clients too. Mine template is really similar, just the target audience is constant (C-level manager or entrepreneur at a web startup with no experience in offshore development) as for CTOs we would write the articles ourselves. Also, I would include "questions to be answered" to make the article more full and solid.

We've got a delivery F*ckup too. Launched the project to the market without the Final QA test. Everything went great and it had very little bugs, nothing critical, but the fact that the client mentioned QA afterward was really embarrassing. That pushed SOPs on top of the priority list and we already have the drafts for many of them. So far the main goal is to avoid missing something important. In the future, it should help to engage new employees, keep the company experience, improve consistency, and make people more replaceable overall. Don't get me wrong, people are really important for us, and we try to hire the best ones that fit perfectly (like 1 hire in 25 interviews and 50+ CVs), but sometimes they get sick or leave. We have to be ready for that.

We've also split the roles rock-solid. Everyone can make suggestions or share ideas, including employees. The one responsible makes the final decision and everyone have a Veto right (haven't been used so far).
Mykola - Sales, Recruitment, and HR.
Marian - Delivery, Learning, Tech
Me - Marketing, Legal, Financial, Office Management, Strategy
The strategy is pretty much decided by all of us and we're 99% on the same page so far. I'm just responsible for controlling its existence, high-level execution, formalizing what's needed, and keeping everything in order.

And almost missed the most important thing. Our priorities have somehow shifted from "creating a company that would made us a bunch of money" to "building great company that will help people". Probably cause it's so fun and thank's to Mykola's influence as he had that goal from the start. Of course, we would have to be profitable to grow it, keep it running, and fund lifestyles too.

Have to keep grinding.

Good luck to you all, hope you and your family are doing well.

astr0 · Jul 11, 2020

Weekly Update

We've signed the contract and started working on the new project. Contract negotiations took almost a week, and the situation was a bit weird. We have a strong NDA on that project, but it should be ok to disclose that they were definitely going with us and still wanted a better deal when it came to the contract. We've met closer to our terms.
Another client is huge. BMW was a bit too low guess. Our "salesman" is still doing its job, and we know they have a strict deadline and a lot of work ahead, so this should take less than usual for that kind of enterprise. Oh, and we're aren't sure we have the experience and resources to help them. Mostly because we zero information about the project besides why they need it and what it is. There will be other service providers involved too.
Hiring article took a whopping 29.5 hours to complete:
- 12.5 to write the draft, pick a few images, and publish (I was eager, and that was a big mistake).
- 1.5 hours to proofread and improve with our co-founder.
- 6 hours for proofreading by a professional copywriter
- 8.5 hours for correcting based on comments, rewriting a few bad sentences where we don't like the proofreader's version either. It took that much cause we did it together with another co-founder.
- One hour to publish it again, cause all the links, images, and MDX got broken. The proofreader took the article from our website.
- Lesson Learned: Never post a draft material that has to go through proofreading. Or at least provide the MDX for proofreading.
July would be the first month when all the invoices would go through the company. Transferwise doesn't allow receiving USD payments from Israel. Due to the C0VlD-19 lockdowns, we couldn't open a bank account in any EU country for our Estonian company. Fortunately, an Estonian LHV bank supports USD now. We have already been paid successfully for the partial test invoice. Still waiting for a big one.
I'm in the process of making a more detailed blog plan for the foreseeable future based on the topics from the DIY tool. So far, those look much better than what I've got using a keyword tool or just brainstorming the possibilities. I've got a cool idea of ordering MVP development topics and grouping them into an article cycle. It should be more valuable than just a random bunch of articles. Filtred out most of the tech topics that exist mostly for SEO ranking and are pretty much covered by reputable brands. Fellow engineers aren't our target audience, so why compete for their eyeballs?
Added a planned article size(XL, L, M, S) and an estimate for all the topics. That would have to pick "small-important" and filter out "large-not-important" and would also help with time management.
Possibly saved the new project from doom at the very beginning by spending 3.5 hours digging into the latest technology they were eager to use. From the first hour, I've got some concerns and wanted to test whether it's that much better than the proven alternative. It took 20 minutes to code a test project on old and robust technology. Translating that to a new one took 1:45 hours, and after the first 40 minutes, I was 100% certain that it's due to the technology itself and not my inexperience with it. Not very surprisingly, the results were also pretty similar. I'm sure that we can do it on an old one and even confident that it's impossible on the one. This technology is very cool, and I bought it too from the description and their guides. However, no one is using it in production yet, and they have many critical issues on Github. In my opinion, in the current "work in progress" state, it shouldn't even be published to an npm registry. At least not without an alpha version mark. Going to discuss everything with the clients on Monday.
Invested only $60 in professional photo-session for our "sales" co-founder. Now he has a bunch of stylish photos for our website, LinkedIn, and other places. With that price, we should've made more.
Opened a vacancy for the new project. Hiring is much easier during the pandemic, so we expect to close it pretty soon.

TODO

Deliver for the new client.
Deliver for the existing client.
Write a blog post tomorrow and another one during the workweek.
Prepare an article task for copywriters to post on business.com.
Other marketing.
Learn English
Hiring is the top priority for the co-founder.

Patrick Jones · Mar 5, 2019

Are you going for Estonian e-Residency? I'm working on that at the moment, too: Estonian e-Residency

astr0 · Mar 6, 2019

My city is kinda IT hub with a high percentage of people working in IT. So no shortage for employees, although competition for them is pretty rough. Margins are not that great now, but back in 2009 our only employee was making $900 doing $2-2.4k of paid work. He was happy, had less before we hired him. Now developers with similar skills have around $1500 salary on average, but external rates grew up a bit too.
Employees are easier to manage: their load planning, quality of work, amount of work. Also, good ones grow in skills faster than their salary requirements. Most huge companies here make a lot of profits only on this fact, bureaucratically slowing down salary growth while doing a lot of training for their employees. The only downside is idling costs (still have to pay salary, even if they're doing nothing paid).

I'll definitely use freelances for work outside of my main expertise that has to be done, like design tasks.

astr0 · Apr 12, 2019

While reading through the forum noticed that I'm sometimes lazy to read long posts, so I'll try to be shorter here again.

Done

Finally polished the UI
Tested everything with the new data provider - it requires more manual support work that previous one due to incomplete data in some cases, but the Client has no choice
The client sent offers to all potential investors he talked
Our 100+ audience almost brought down the server when we opened beta. Shitty VPS on an overloaded node with 2 cores from 200x phones won't take much more simultaneous users.

Now

Finally, a slowlane relaxing tomorrow after 2 weeks of hard work
Bought Audit of critical code that involves moving money on Sunday from a company who has more experience in the field (I'm usually good with critical stuff, but not when working 16 hours straight for a couple of days). Going production after that, so probably no sleep night ahead. (Time to market is really critical for this Fad-thingy).
Investment round finalized on Monday. Mostly to cover my fixed price difference and bring the client to a zero-loss point. Offering 10% equity only.
Back to Comp3 tasks after that
E-Residency, lawyers approved
The website, cause even 2nd level referrals will probably google us first

Set rough goals for the year to make myself accountable and see what needs improvement:

Need help on setting up a numeric goal that would mean "Value Added"/"People helped". Currently, I'm using count small projects done for that because they help at least one person. But some big project can reduce pain points for a lot of people at once...

So I'm stuck with that for now.

Good luck everyone!

astr0 · Apr 19, 2019

Week -9

CryptoDividend is doing surprisingly great for such a tiny project. Got indexed by Google better, it shows part of the table right in the search. We've recently optimized it for a better Lighthouse score and that's probably the cause. 258 members in a telegram group. Pretty small, but unbelievable Ad and affiliate revenue.
NDA project isn't doing that great. Got only 10% of funding secured atm, 3 days without users after launch. Got few paying customers after we got listed in directories and other marketing kicked in, but surprisingly none of the 80 "testers" was using it live. Turned out that we've removed some very important features when moving to a different data provider, glad that we have a telegram group screaming just that. Got to re-implement them fast tomorrow using 80-20 (more 90-10) principle. 10% in code, 90% on customer support cause it would require 9 times more coding otherwise

. Btw, an audit was free cause they've missed a very critical bug...

Done

Company Name
Value array, value skew (not final yet)
Web Site layout, what should be there to sell (not final)
Partners are much more active now, partly cause they saw that much can be done in spare time
Made a pretty important decision to reduce tension in the future - each of us is completely responsible for one aspect of the business and has a veto right to override the opinion of the rest two
Probably helped someone here, and almost hit the first goal thanks to Andy Black
Some work on the NDA project

Fail

E-Residency, cause we wanted to apply together for some reason and postponed it two times because of that. Final date: Sunday. The time is ticking...

Now

Another hardcore 14h+ session on the NDA project tomorrow.
Slowlane Sunday
More stuff on the website and marketing for the company
Spend less time here
Got another prospect referred by the NDA client. His niche, not ours, I have no time for him, unfortunately, and my partners don't have skills to help him. Gone speak with him tomorrow probably, maybe we can figure out something.

astr0 · Apr 19, 2019

TMF Rep Bank - the WHY?
This one is pretty close to the completion and I thought it would be nice to explain why it's on the list.

I like helping people, it makes the world a better place and leaves good long lasting emotions as the reward.
However, there's a dark side to that goal. That numbers are not made up from head for no reason. I've noticed that I treat posts biased on the Author sometimes.
And if haven't seen the author before then I evaluate him based on his Rep Bank:

Less than 200 - someone new here
200-500 - not active member, or still new (I'll check Joined date)
500-1000 - made some contributions, probably been here for a long time
1000-2500 - done some valuable contributions
2500-7000/8000 - probably has great threads
8000 - 30k - active member, likely has a GOLD thread or few
30k+ - I think I know them all

So that goal has something to do with looking better than I'm really am. And that sux...

To get there, I was contributing to the threads where I could provide some value. That happened to be the threads on programming and Intro threads where I thought I could help with some advice or just a warm welcome. I felt like I'm a little ahead in my journey, with 2 failures and some motion going on now than most new members here. And it's definitely a great idea to learn from peers close to you, who made some progress but are still not too far ahead to forget everything that brought them there.

But then I've noticed that someone might be thinking that I'm more successful than I'm really am. And worse, really follow my (stupid?) advice.

Don't get me wrong, I'm not throwing sh1t on the wall in every thread, especially I avoid posting where some incompetent thought may affect someones critical, life-changing or worse life-or-death decision (there was a thread here recently...).

I'll do my best to help my first follower and he's definitely got a huge mindset shift recently and has a rough idea of what to do next. I hope he's putting some effort too.

It still feels wrong... To the point that I want to only contribute on topics closely related to my expertise.

And I don't see a reason in this progress thread, to be honest. At first, I thought I could get some advice or at least validation here. But quickly realized that this forum is not a place to get this kind of help. The Market is.

This thread brings no value to the forum. Even when it becomes a success story, do people can learn something from my goals and my rough tasks/progress to achieve them?

Thinking of dumping this thread and start something that would provide value later, on Day 0 and probably on the Inside. Like a collection of detailed how-tos to drive over all the bumps that would definitely get on our way later. Good that we've chosen an off-road vehicle to the Fastlane

.

P. S. Yeah, it's me-oriented post in my progress thread, right :smile2:

astr0 · May 11, 2019

Week -6

Really have no time for the status update, so I'll keep it short

NDA Project has raised more than 50% of seed investment, have more than 260 unique users online daily and growing, have more than 120 paying customers, ~170 people in telegram group including some well-known people and influencers in the niche. We're not running ads currently, so growth is purely by word of mouth and directory listings. The fund that dumped us came back and asked for a little smaller proposal. They do board meeting each Monday. We don't really need them anymore, but that's basically free money, so why not? We'll reduce some marketing expenses and send them 70% proposal soon, maybe next week. Big player fixed everything on their side and we should be live tomorrow. Everything's going great so far.

Done

Waiting for fund transfer to be paid for 152 hours @ NDA project and some profit % distribution
Complete UI redesign @ NDA project. Nice & slick. We've focused on the functionality from the start, but got 2 complaints about the "crappy" UI. UX stayed the same, we've nailed it, even better than the major competitors from our "testimonials".
Nice & useful tracking @ NDA. Still GAnalytics, but we have goals on everything now.
Told that I quit the job in a month. Boss was not very happy, more shocked, but welcomed the decision and congratulated me with being on "the same side". He also hinted that he may move one of his projects where he's just a middle man to us, cause his clients are not very happy with the current team (another small company in Lviv, 4 juniors and 1 tech lead working on their project).
Spent 3 days looking for an office. Found small & cozy one, will be free in a week. Nice & pleasant, owner, 24/7 security, great location, 73 m2 looks almost perfect. We'll start with another 2 team startup there, 4 people in total. Should be fine for 10-12 people growth.
I and one partner were approved on E-Residency, waiting for digital package arrival. The third partner application still not processed.

Now

3 major milestones @ NDA project: two functionality packages, on 3-rd party integration pending.
No website for the company, but we decided to do it later after we quit. Mostly cause of more work before quitting @ 9-5 and NDA project. Not great, cause I wanted to have some marketing presence asap.
Office stuff
Few urgent tasks @ NDA project
Few critical tasks on transferring my employee responsibilities to co-workers.
Have a discussion today with VR/AR agency business owner, mostly looking for cross-recommendation partnership and got a few questions on running a business in Ukraine.

astr0 · May 15, 2019

First bump on the road.

Got paid by the client... 25% less and it almost ended very badly for both of us.

Me: Ok, so for everything done so far it would be X.
Him: Yeah, but we're a startup, so maybe we should have startup salaries? Like Z (really low)?
Me: I'm not your employee, Z is not an option.
Him: Ok, then maybe Y?... For everything that was done and this major feature and this complex improvement in the next few weeks?
Me: Hm... (calculating)... That would be Y+30%, I think. Look, we had an agreement, you know that I would have much less motivation if I knew I was working for Y, not X? I understand that I have equity, but X is really low already.
Him: Yeah, but we have bla-bla-bla expenses, etc.
Me: Ok, Y.
Him: (pays cache)
Me: (pause, mad, trying to calm down) You know that I'm starting a company with partners, right? I've spent 380 hours mostly at nights and weekend on this and won't give my equity to the company for nothing. I also can't fail my partners by working on your project after day X. So you better look for another service...
Him: (shocked)
Me: I would recommend A or B, they should be a little slower, but still do the job. I'm ok as your partner if we'll be working with them and I'm ok to sell my equity on day X back to you if you want, this project won't allow me to focus 100% on a company anyway. Also, I'm gonna finish really important stuff till day X, so everything should be fine.
Him: How can we hire your company?
Me: Well, we would have employees, office and other expenses. Since we're not distributing profits from the project anytime soon I can't go lower than W (which is higher than X, but lower than normal).
Him: Ok, we can do W.
Me: Great, then I'll give half of my equity minus current valuation to the company to compensate for the difference. My partners should be fine with that. But we should sign a contract this time...

Lesson learned. Contracts, always, no verbal agreements. They are still hard to force, especially international ones, but from my experience, people are more inclined to follow them anyway.

astr0 · May 25, 2019

Week -4

Is probably the worse so far.

NDA Project had to refund 4 clients cause of bugs. One was our (the wrong formula that made sense, but we stated another formula in the documentation and clients were relying on that). Two more from the data provider that we spotted manually, but too late. Can't find it automatically without data from a different source. Unfortunately, our users could lose money cause of this and probably at least one did... He was one of the most active users and now completely gone. The project can afford a more expensive data provider now and we had a long meeting with one yesterday, but I don't have time to implement it sooner than in two weeks...

Done

All non-business related tasks that were waiting for me to have more time or give them a higher priority
Fixed tech, really thinking of buying a decent laptop now or a dedicated PC for the meeting room.
Big milestone on the NDA project was postponed due to more urgent tasks
Interviewed a few candidates for my replacement on 9-5, haven't found a good one yet
More power sockets in the office (by making custom length extension cords)
The office had an ethernet wired, just configured our router and partners did all the paperwork for the internet.
Bought some of the furniture from the previous office renter. He left more for some reason, but that's fine.

Fails

Feeling really tired and burned out. 2 months of sleeping 5-6 hours and working 16+ seems to be my limit. Should've left the job in two weeks as normal people do and don't care too much about the boss, the client, the coworkers, and burning bridges.
Lost and depressed with Product vs Service thinking. Probably my worse trait kicked it here which is giving up on something after achieving better than average results. We're making money, we got inbound prospects reaching to us and everything seems well so far, but I've lost interest cause of that... That's why I totally need a partner to push me through this. We'll have to brainstorm this after my partners get back from a 9-5 week long business trip.
Haven't heard back from the recent three prospects. Counting them as failed so far, although we still have some chances with two of them. They may be waiting for us to go full time on this.
Re-read my NDA... I'm not allowed to disclose project revenue and expenses, which I did here in a few threads. It's a local agreement, so I'm risking to be sued for "potential loses" or "missed revenue". Pretty much every info I shared is public and the relationships with the client have to be destroyed for him to sue me, so I'm safe. Would still be better to tell him and point him to this thread or I'm risking of losing his trust.

Now

Figure out how to rest with so tied schedule. Probably will spend much less time on the forum. I don't want to repeat my first failure.
Buy more tech for the office
Last week on the 9-5
Think of a plan(s) to make products from day 0 idea work and much less risky. I'm am aiming high with this and services was more of a kick-started for stability.
More urgent tasks on the NDA project cause of recent failures. Big milestone postponed by a week, the roadmap adjusted and public already.

Johnny boy said:
With developing software, I think it would be fun to advertise to investors as a fund, advertise to the general public as a software development firm that grows businesses and makes ideas come to life, and you take equity and ideas, develop software and grow the business and position it as partnering with the new business, and use investor capital from your fund. You'd bring together ideas, the expertise to develop software, and money to speed things up. And you'll have your hands on all parts of it, giving you lots of control and flexibility.

Thanks, @Johnny boy, I really missed the whole idea back then, probably was too tired...
Yes, partnering with domain experts that have a need and know how to solve it on a per-project basis AND operate as a fund on the other side is probably the best idea so far. Still can be optimized here and there, but looks very promising. More REP going your way

.

Really feel that I'm unable to help people here. For me, other's progress, ups, and downs are the best source for knowledge and information. So I'm automatically sharing mine in almost every post to back up my thoughts on the topic. Unfortunately, it almost always goes south ending up with a long me-me-me post that takes a lot of time to read and doesn't help at all.

On the other side, I feel I know enough so reading more would be a waste of time. Following the progress of a few software guys here, but more to cheer up for them and to help if they need anything.
My office thread really got attention and I'm grateful for every idea on that. Now, I'm really lost on Product vs Service dilemma, got a thread on the Inside and not sure if the forum would help me with that. Sorry for RANT, I'm a little depressed right now.

Thanks for reading!

astr0 · May 27, 2019

This weekend set the new best days again for the NDA project.
Done some quick analysis and it turns out that top 5% of our users are responsible for 50% of the profits and total profits from the bottom 50% are less than the profit from the top 1 user. Glad we went with micro-payments, as we can still monetize small users and the biggest ones pay us more than with SaaS. Our LTV seems to be higher than we expected too, cause top 30% of the users already passed that point, but still not much data to be sure.

Just got first "profit distribution" payment from my share in the project. The feeling was like money just fallen from the sky really. $2k is not too much, but definitely not small for a share in young two months old product that's on the market for over a month only and made most of it during the last two weeks.

Been thinking lately on what to do next and thinking why I'm thinking of that as thing are going great, really.
I'm definitely thinking too much and probably rushing too much too.
Anyway, everything leads to this
Think of your end goals and build the business that can achieve it. And I've missed that.
I didn't had enough confidence to start anything except service business, cause that's something I know and have experience with. Not from a fixed mindset, more from evaluating chances to success and time & effort required. Totally needed partners for that to grow above freelancing fast.

Great members really helped me with motivation, having faith in myself, don't relying on partners too much, thinking less and much simpler.

So the current situation:

Agreements with two partners who are a good fit for what we're currently doing. I don't want to fail them.
Two ongoing clients with two products, equity in both. One is close to killing it, the other's just making some money on autopilot. Have some recurring income from them and a few months of service work to do.
My E-Residency waiting for pick-up in the Embassy, my partners still not ready.

The end goals (combined):

More free time and flexible schedule at some point. Really important for Mykola (M previously) as he's more for a lifestyle business.
Enough income to not get back on 9-5. Probably all of us don't mind getting more than on the current jobs, but not hundreds of millions or billions. For me, the stability of this is really important so with a business it has to be at least 5-10x of my salary. Not that jobs are stable, but getting a new one is really easy while building a new business is not.
Building something we would grow and care about. So that's a small enterprise.
Early retirement is only Mykola's goal. Marian (DH previously) and I really love what we do and I personally can't imagine my life without building something. Anyway, an exit strategy or autopiloting it later is a requirement.

Typical service business doesn't do well with #1 and #4.
Our version of jumping into products we build is better but at scale #4 is still a problem as we would have many products to support with little equity in each of them. And a lot of employees to manage and low if existing exit valuation.
Own products can be the best (more details here), but considered "risky".

Why?

So the process of making a product is really simple:
Find a need -> fill a need/add value -> get paying customers -> scale
With software products, programming and marketing experience and after reading MJ's books #2 and #4 are easy.
#3 and #1 stand very close to each other. If there's a problem people are willing to pay for solving they will become paying customers of the solution. So the hardest part is finding a problem worth solving.

Let's get back to how we see it from the service business perspective:
Good idea + money + building it + marketing = successful product

We build it, give advice on marketing and help with improving the initial idea and some details along the way. And take some money for that.
We don't do all the marketing like actually managing ad campaigns, finding the best place to put them, designing banners, copywriting, free marketing, etc. I have some experience with that but would be better if the clients never know this as it's not our service focus, just adding more value.
So we only setup tracking for the funnel, do performance analysis, some split testing, CTAs, and the overall layout for banners.
On the NDA project, an employee/contractor is doing all the design work, managing social media and two community groups. Freelance copywriting is polishing everything the client pushes to her. They are not expensive.
So building it + marketing covered.

The part we missing is Good idea + money.

Not that we don't have ideas or money. The first problem is that our ideas are coming from the wrong place. We brainstorm them, which means we guess the solution and hoping there's a need for that. Wrong! Wrong! Wrong!
Let's start with the need (probably have to re-read a chapter in Unscripted on that).
How to spot it?

Problems you're facing yourself. Close to zero that can be solved with software.
Needs you know exist from your experience in the industry. Yeah, some library ideas mostly for the open-source model. Some projects with HUGE entry barriers either because of pure size&costs to build or a requirement to be an authority in the industry (trading software).
Looking for existing markets and finding one with a room for improvement and competition. The world isn't perfect so that's an unlimited source of ideas.
Combining #2 and #3 by solving problems in one industry with an improved solution from another one. That's huge and that's what NDA project is doing.

So we can come up with good ideas using methods #3 and #4. They won't be that good as our client's ideas cause clients were thinking of them for a much longer period of time, has proven need either for them or their customers and believe in them enough that are willing to spend their time and pay us money for building them a solution.
Still much better than the ones from brainstorming. We definitely have to validate them before building the solution, but it's not that hard.

Now money... Do we have them or we don't? It's tricky.
We definitely have less money than our clients, who are successful business owners or businesses.
But we do have fewer expenses as we don't have to pay a service business for building the product. We are a service business that's building the products). Still, need some money for a living and for marketing.
Again, do we have them or we don't?
I have some, but funding my partners would be too risky. Not justified $2.73k / month expenses, not good for a "startup".
Marian has savings for 6+ months.
Mykola would be starving in a month without salary unless he sells his car and motorcycle. Well, not really, but pretty close to that.
We also have $32k in the company funds, which should be enough for 8 months without marketing, equity in one so far successful product and service work on it for, maybe, two months more that would probably double its profits.
But we probably still need more funding, at least for marketing and other expenses. Where to get it?

Leave Marian on the job to fund everything. He won't bring much and we would definitely have to get him out asap and that would be easier with a service business.
Split efforts and build a service company that's doing their products too. No way (right?) to build a small productized service company in our industry, so that would be more like two companies sharing the bank account. Twice harder, not good.
Raise external investments. But who would invest in a company that doesn't even know what to do yet? Definitely, I wouldn't. Fortunately, we have two opportunities on this already...

Don't know where this road leads and we haven't decided anything yet. Looks more promising than staying in a traffic jam.
Scheduled a brainstorm meetup after my partners get back from the business trip.

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