Failure is not an option

[astr0]

So we're back to the start, just with a little better starting position.

The NDA project is back on track. This made already brought x2 revenue compared to failed November.

After getting 4 emails from $60 on ads, getting a dozen interested QAs here and even a promise for presentation to local ~1k employee software agency by its VP we dumped the QA recorder.

Main reasons:
- No one googles it
- Competition exists, but pretty much dead
- DOM session recording has some issues with accuracy. Videos + console and network logs are a way better approach.
- Most companies don't want even test sessions to leave their company (probably because of NDAs).
- We simply don't have enough money to get enough traction.

So we're back to the initial idea with the web dev agency.

What we have now:
- Not bad almost passive income from the NDA project. I'll be working on it on urgencies + helping to onboard the hired developer, probably only on the deepest and hardest parts of the project cause he's doing a great job already. The rest of the team is free.
- Sold one of the cofounders to a recently funded startup from our network. That gives growth opportunity as they plan to expand the dev team in February and are very interested in Ukrainian developers. This also provides good baseline income to focus more on growth than on making money now.
- Promised to find a full-time Java freelancer for a short time job to the same client. We were willing to do it for free, just to build the relationships, but the client insisted on paying us if we find someone good enough.
- Passed an opportunity to out-staff everyone to a larger company, also from the network. This would've given us much better income than on 9-5s, but would also put an end to all the growth opportunities. They made it very clear that they are interested in us as great developers, but can't trust us to build a team for them in Ukraine. And they have around 20 open developer positions, so not even close to our scale.
- We have some network in bigger companies, but at the current stage we are too small doing business with them, we can only provide some non-coding value in exchange for mentorship.
- Our good friend, also a developer/PM is moving from Poland to Germany. Quite possibly he can get us some introductions there.

Overall, income-wise our start is much better now.

Next steps:
- Finally register the company. The sole proprietorship isn't enough and now we really need it for many things.
- Open a bank account for it (not straightforward for Ukrainians with an Estonian company).
- Find a new office. Co-renting with another company is a disaster. Zero focus and we're running out of space. Almost done and we have a blueprint for the future - business center directory, diesel, and phone.
- Since we don't really have a non-NDA relevant portfolio - start on Upwork and similar marketplaces to land "tier 0" clients. It's mostly to get leads, referrals and build a few projects for the portfolio, not income. 10 years ago, in my previous business, we even had enough margin on Elance for hiring. Now things seem a little more complicated, but probably we can figure something out.
- Work on building relationships with bigger agencies, preferably not Ukrainian.

The end goal of this 6 months stage:
- Build a relevant portfolio of 3-4 projects for improving odds with cold emailing.
- Grow our network of clients/referrals with 10+ smaller clients.
- Hire 1-3 developers to extend our delivery capacity while being profitable.
- Get some sort of sales presence in higher-economy regions like the US, Germany, Israel, UK, etc. A man-in-the-middle in form of salesman or another agency would be great for now.

 

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[astr0]

Some updates:

NDA Project is doing fine. We're not actively involved now, they have their own developer full-time as I'm assisting him here and there for an hourly rate (approximately 1 hr/week). They've changed strategy, for now, to focus more on highly-paying customers that resulted in the churn of some users, but an increase in profits. Longe-term they also have a plan to acquire many more users by going out of a niche. The project now has 8 full-time employees and 4 part-time, also data provider raised prices due to higher-quality data that he now provides thanks to our collaboration, so the expenses are quite considerable now. One of my partners decided to exit the project and now in the process of selling his equity to the initial investor.

The service business is slowly starting off, but now it's more like freelancing.

One of my partners has been working for a client for half-a-month already and yesterday sent him the first invoice. This startup will have an event that would probably decide it's faith for the near future and my partner is responsible for the technical side of it. If everything goes well we can count on the first hire, if not... they have funding to push it further so I bet the development wouldn't stop soon.

Another partner is working on a small non-NDA project for another client that will most likely lead to a bigger one and possibly good long-term relations. It should be finished in a week. The client was referred by a middle-man for a commission.

I'm kinda stuck, waiting to start working on a third project from the same middle-man. It should be a 2-3 months project under very strict NDA. The project started a month ago and the middle-man now waits for full payment for the job done before starting any additional work. I'm not very excited about this one, but it kinda came in a pack with another lead, so we could only skip both or accept both.

Going with a middle-man was actually not the best idea either. His commission could cover hiring a lead-gen employee or even a decent salesperson. Still kinda ok for the start.

Overall, I feel not very aligned with the business we're building. It's too much stress compare to the NDA product. Have to get better at dealing with people to fix that. Probably any high-ticket business, especially service one is all about people.

We still can't clearly formulate what somewhat unique value we provide as a business and what problem we're really solving for the clients.

NDA project client had a bad experience going overbudget and getting a product full of bugs with two local software companies. He trusted me cause he worked with me before and knew I'm quite fast and reliable.

The second client worked with both of my partners and knew they are good. He barely managed to hire one decent developer locally for his startup and was very happy when we told him that we're doing services. That resulted in an almost instant contract.

The middle-man is obviously more interested in a commission, but his clients also had a problem with finding good developers to do the job in time and within budget.

The common problem seems to be that it's hard to hire good developers in some locations or without having a tech background. We can solve that in a somewhat scalable way. Building trust that we can is a completely different story.

Not counting on Upwork anymore. It got overcrowded (and I've even been rejected) and it's not worth it to get clients there now. There are quite a few companies in Ukraine that grew out of Upwork, few of them are doing really well, but I feel we should try to get better clients from our networks to gain more relevant portfolios and referrals.


I spent some time researching how other local software houses scaled.

One grew from founder's extensive network in a startup community. He had funded startup that ultimately failed cause the idea, but his execution was excellent and his next business was software house that built software for other startups. Friends and reputation in a startup ecosystem is what provided him growth to 140+ employees in 18 months.

There are quite a few Upwork stars. They are usually low-margin companies with more than a half of capacity filled with junior developers and few salespeople grinding Upwork. This is the most controllable scalable way I found so far, but it's doesn't lead to a company we would like to build.

Most of other companies grew together with one of their clients to the point where they had capacity, reputation and cashflow to scale on their own by sales&marketing. This is the way we're on, but it feels like too much luck involved. There's around 190 active software companies in my city alone and the majority of them are 3-7 people. Some haven't got the gold gumball yet.

Next steps:
- Do the job to get more service income and build company funds.
- Think of how to get out of "freelancing" and start scaling in more controllable way.
- More research on 3 to 20 stage.
- Start marketing to gain some authority

 

[astr0]

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):

1. Get prospects from the network.
2. Ok, we have a client, let's refine the specs, start outsourcing the designs while urgently looking to hire developers.
3. Good, one project is now going. Repeat.
4. Nice, now we have some capacity and don't have time to hire people. Let's hire recruiters and repeat everything.
5. Now we have too many projects, let's hire PM.
6. We're out of clients from the network, let's start more marketing.
7. Marketing is getting some in-bound small projects and we can't keep up with sales. Let's hire a salesman.
8. Some of those small projects die, others are getting bigger and bigger. The flow continues, but now the company also grows with their clients.
9. 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.
10. 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]

Monthly update

Despite huge expenses, the NDA project still made a nice profit last month. They've added one more data feed and hired another developer to completely redesign the frontend. The complete design is not ready yet, but sketches look great.

We haven't managed to hire a great developer for the client yet and he couldn't find one in Israel too.
We've done lots of interviews and forwarded him four candidates, but he (actually more our partner who currently works for him) rejected all of them. One was flawless on the technical side but failed the third interview on soft skills. The client trusts us and told that if we are sure that anyone of them was good, we can hire him. We think that as it's a technically challenging startup in active development we better look for a perfect fit. Now he has two open positions and doesn't mind hiring through us for both.

My partners were on a business trip to Israel last week. Now many people they've worked with know about us and after we close the position for our current client we may get more business.

We got a first cold email from the prospect. Unfortunately, they wanted mobile apps and thought that we're physically located in Tallinn so the only way to help was to refer them to another good company that does mobile development.

Opening Transferwise failed as they now require to make a deposit on the account either from other business bank account or director's personal bank card. We don't have other bank accounts, bank cards failed and after a week of pinging their support they said that they don't allow to make card payments to bank accounts from Ukrainian and Russian banks. Transferring from personal TransferWise also doesn't work and other EU neobanks don't work in Ukraine.

Done

• New Logo, looks nice but colors may change (reddish and purple)
• New website design although it still isn't confirmed by partners, we would probably hire a designed to tweak it a bit more
• Got listed on dozens of directories, except Clutch - we're waiting for clients ready to post reviews
• Some planned article topics for the blog and chose the agency that will write it
• Got approved at LHV bank, will be visiting Tallinn next to open a business account
• Finalized roles between founders and what to delegate for now
• We got much better at hiring, know many agencies and recruiters and have good candidate flow. We have a hiring process now

Todo

• Open LHV and TransferWise
• Finish website
• Find better office
• Hiring
• Do client work

 

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[astr0]

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]

Tiny 2 weeks update

• Changed the logo colors. The old ones chosen by the designer were really bad as the main brand colors. New ones are much better in our opinion. Left the shape intact.
• Finally had time to finish our website. Designed & built by me. The second designer just disappeared. The third one started on the concept and finished there. I knew I'll have no time for this during the next couple of months, so I just did it. Turned out to be pretty fast on GatsbyJS and Netlify and looks decent too.
• Configured a lot of analytics with this website, so now we know where the visitors are coming from and even what they are doing there.
• Wrote the first blog post/article in my life, or at least in the last 12 years. Targeted for startup founders / C-levels so tried to be not too techy. Benefits of JavaScript on the Server.
• Had 3 prospects this week. One probably would go with another company, but at least got some insights on his decision process. Another one is on the early/idea stage and it's a short prototype. The third one is close to the start, got a final meeting with them on Tuesday, no contracts signed yet except for the NDA.

What was important for the first prospect:

• He or his partners must have previous positive work experience with the contractors. He's a local AR/VR agency owner and knows a bunch of other agency owners in a design/programming space. He had a positive working experience with me, although the project never made it to production.
• It would be great, but no critical, if the same team could handle the designs too. We can't.
• Timeline and the budget. We are the fastest and most expensive here.

TODO

• Sell and start the new project.
• Do more marketing in the background. Like more case studies, testimonials, listing on different directories, etc.
• In case the designer gives feedback for the website - implement that. He already spent some time on us and we haven't paid him yet, so he has the incentive to finish I suppose.

 

[astr0]

Weekly Update

• Almost sold the project from the previous update for two developers and up to 3 months. They've said they wish to proceed with us but should sign the contract tomorrow. It's a project with a hard deadline tied to another event, so we better start soon.
• We got another "lead" or something from an Israeli C-level friend. He has NDA with them, still selling us, and hasn't provided much detail yet. From his words, we would desperately want to have this client in our portfolio and should drop everything else to work for him. He also wants two of us on that project, which is not an option as we barely can free up one. Fortunately, we convinced him that one of us and one hired developer under close supervision would provide similar quality. I guess that this client is from his connections, not corporate. It should be a well-known one, but not a major tech giant, as they wouldn't work with an unknown company. There are lots of talented programmers in Israel, and if the prospect already has an established presence there, then he wouldn't even consider outsourcing. It should be a company that recently opened an R&D center or something like that. I bet on TripAdvisor or BMW.
• I also wrote a few articles for our blog. One of them, about hiring, should be on our sales landing page for quite a while, so we sent it for proofreading. Surprisingly, the company we work with estimated 5 hours for that. We'll give them a shot and then decide if they worth the time and money based on the results.
• Created a "keyword research" tool in 20 minutes and generated a blog plan for a year with that. Figured out that we will need like 5-8 ideal articles for the landing pages, and others should be more targeted to a lurking audience from Google. The titles for those should be good, as prospects are already looking at our blog. The quality of content must be decent and solve the reader's problem. But we won't bother going the extra mile with proofreading and polishing those too much. I'll probably be the one writing them, and just ask a friend to proofread and leave some comments. So far, it takes 13-15 hours for a 15-20 minute long read article and 6.5 hours for crappy 8-minute read article with tons of programming examples on CodePen. I aim for 6 hours on long-read ones, 3 hours for regular, and add some little tips on particular topics that shouldn't take more than an hour to write. This way, I'll be able to write one long or two regular articles on weekends and short tips during random evenings when I'll have spare time.
• The designer... "done." Said he couldn't manage to improve anything on our current design and pointed out to a paid theme. He wanted to tune it a bit for our needs, like change colors and combine blocks a little differently. The theme looks nice, but first, we already have an okayish website. Second, it relies on excellent professional photos to finish the design. We don't have those photos, don't have what to photograph, and don't have a budget to make those for every blog post and case study. Stock photos look decent, and we can use them for the blog, but there's not that many of them related to web development. We want to be more specific with graphics and create our pictures and diagrams for every article. We paid him for the services and just said that we don't have time to implement anything for the next couple of months. Somehow he asked for only $100, and that was way lower than I've expected.
• I bought Grammarly Premium to help me with writing and was instantly amazed by what it can. It gives a feeling that Skynet has already made a humanoid to evacuate itself to Mars, far from those humans. It suggests quite a few mistakes, and won't replace human proofreader, but it's probably the best value I've paid for recently.

TODO

• Start the new project.
• Hire another developer.
• Somehow manage work on existing projects as clients want me and no one else.
• At least brainstorm how we could potentially handle the "important" client.
• Finish one more case study.
• Write more articles. Start with one per topic that we're planning to cover.

 

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[astr0]

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.

 

[astr0]

Three months update

The NDA project is back on track. One of my current business partners left the project when things weren't going well and got 2*X for his equity, another one later when everything was even worse due to COVID lockdowns and got X. I've stayed cause I was from the very beginning and wanted it to succeed. Well, things got a lot better and it now makes me almost X every month three months in a row.

Since my partners left, I've worked on it for less than 40 hours (as our new company), mostly consulting the CEO and new development team, and those were paid by the project at our normal hourly rates (which is nothing compared to % of the income).

They have a bigger team now with analysts, translators, a marketer, a designer, two developers, and a few freelancers.

The service business is going well too.

We're seven now, and would be eight in a month, just waiting for a new team member to leave his current job. Have two more open positions.

Don't have issues with the clients, although one of them has net 60 days in the contract and paid us on the last day (got 90 days of work upfront). It seems he'll be doing it all the time, cause his business is about turning money, so we should get used to it.

We have six active clients now. All the clients are happy, and it seems that all of them who can afford that and has work to do want scale.

All the clients are from previous contacts and their recommendations so far, but we've already got a few hundred people visiting our website every month and a few cold emails from prospects. The majority of them come from search and directory listings.

Had close to ZERO time for blogging these months, so got back to it as soon as I could. That's our plan to get some flow of prospects, look more solid, and gain a better reputation in their minds.

We've worked a lot on SoPs and making everything more scalable. So far I would say we've completely covered legal, hiring, HR, financial, office management, and delivery aspects of the business. Marketing is covered by 80%, which is almost enough to delegate. We're not that good at sales and complete newbs in lead-generation so it's pointless to write SoPs on that. Wanted to hire an HR/recruiter/office manager, but we're too small yet and can't promise a steady workload on that position.

It's still two months, but we've already hit 7/10 OK goals and 5/6 Great goals for this 6-month milestone. The ones left are:

• Land a project with Y+ budget from cold
• Make a marketing presentation that we're supposed to send to interested cold prospects
• Delegate lead generation, recruiting, and office management

The last one is partially completed, partially makes no sense cause we haven't done any lead generation yet. We've outsourced a lot of recruiting to recruiting agencies and hired a maid that also does part of the office management (and that's for $35/month, cause we're in Ukraine).

Unfortunately, we've failed one of the OK goals completely. That was that our first employee would stay with us. Stupid goal to be honest. He wasn't a good fit for the project. Turned out that someone who worked in enterprise application the whole life just can't switch to startups that easily. He was too stressed out by learning new things all the time and working at a fast startup pace instead of thinking everything through and write perfect code like they do in the enterprises. Leaving was beneficial for all sides: him, us, and the client. He got a new job in a bit bigger company of our friend with a bit more management positing just as he wanted.

We've also started working a lot on mentoring and training our non-senior developers. We know their weaknesses thus able to provide feedback, guidance, and suitable courses. Also, one of our cofounders doesn't work on client projects on Friday and does this full-time instead. In the near future, we hope to host small workshops free or at zero margins both to train our staff and gain some reputation in the local developers' community to make hiring easier. It's pretty hard for such a small company to prepare something valuable, so we're thinking of partnering with another small company(s).

We're also thinking of paying for learning, like 4-8 hours a week of paid hackathon stuff for our middle and junior developers. People are motivated, but don't have more than 8 hours for learning a week outside of work. So far, we don't always have margins to afford it for all developers, but we'll try to make it work somehow.

One of the cofounders burned out on his crazy complex project with 40% of the time spent on actually important meetings with different developers from the major tech giants. Glad there's three of us to support each other. It would be crazy to run this thing alone already, too much context switches.

Hoping to be 10 by the new year, although it's not a formal goal

 

[astr0]

It's been almost a year now, and I'll try to keep everything short.

NDA project had first (as far as I remember) 6 figure profits month, and that's after paying salary amount as a bonus to every employee except the lead engineer (he declined). They've had their first dividend distribution earlier this year, and my share was like 4*X of passive income, which is more than I've earned with a service business for the whole year. They have fewer people, a bit higher expenses, and a lot higher income.

We're 16 now in LeanyLabs. Failed to hire good people for two clients and had to decline a bunch of clients too. In short, with a post-COVID spike in software development services demand, we, like many other companies in Ukraine, have no shortage of clients.

On the other hand, hiring is extremely tough now. Not only are there a lot more open positions than candidates, but one of the local online magazines/dev communities spread the idea that salaries skyrocketed. While previously Y was good pay, they've written that some mystical companies hired many people for 1.6*Y, which is a bit more than senior engineers get in the US after taxes. We know the math, we have access to a subset of actual hiring data, and the top3 were 1.2*Y, 1.2*Y, 1.1*Y during the past six months. Anyway, some people do believe it's possible and are just not willing to bother for less. So yeah, we have huge issues hiring middle+ developers, and the overall closed positions/month in the country dropped substantially. Fortunately, there's no shortage of talented junior developers in our city.

This summer, we've moved to a new bigger office after renovation especially for us. Cool, but we'll soon outgrow it. Our first employee had 12 months review recently and got a good raise with the M1 Macbook Pro. Also, we had an unplanned and unbudgeted summer party, which was awesome). The culture inside the company is insane to the point that some people declined other offers to work for us after offline interviews.

Besides growth and margins goals, we plan to make founders completely non-billable by year-end. Otherwise, it's just not scalable. We already have a couple of projects going great with close to zero babysitting from our side and know how to do it. So far, one of the founders sells/hires, talks with the clients, and helps to manage one big project part-time. Another is primarily mentoring people and helps with the most challenging decisions, and he's 95+% non-billable. I'm leading and coding one small project (30-60%), trying to do marketing and hack recruiting, but mostly occupied with legal paperwork, finances, office management, and everything else that's difficult to outsource or not enough for hiring a part-time employee.

We've decided to create our small products. The first one is already in development.

 

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[astr0]

It's been more than two years since the last update.

Due to the war in Ukraine, our focus heavily shifted to volunteering, with tremendous achievements there. Logically, it hurt the business quite a bit. After growing to 20+ developers, LeanyLabs is back to 16 again. Hiring great engineers is a breeze now, but finding new clients is challenging. The demand for custom software development services has decreased drastically. We had zero clients from full-time cold outreach this year, one from marketing, and only a few from referrals. Still, it would be another year with seven figures in revenue and a decent profit margin.

We've decided to put the business on autopilot and reinvest the profits into a new venture. This time, it would finally be a SaaS. With services, we've gained some expertise in workflow automation. Many of the projects we've delivered were data synchronization and integration apps. Zappier and similar trigger-action or workflow-based software can't do it easily. There's a strong demand for a product if multiple companies pay decent money for custom solutions.

We're building resynced.io, a tool that enables two-way data synchronization between multiple applications. It is useful when a company prefers a single tool, like monday.com, for managing all their workflows. Another use case is merging data from various sources where one needs it, for example, pulling revenue data and decision-maker contacts into your favorite CRM. Finally, it could bring powerful calculations from, for example, Google Sheets into other apps.

The new journey needs a new progress thread.