We shot for the stars and we landed on Mars (lessons learnt in our fourth year)
Diario del capitán, fecha estelar d637.y37/AB
Alright, I know the saying isn't exactly like this. I wanted to give the famous Shoot for the moon. Even if you miss, you'll land among the stars by the American author Norman Vincent Peale a little twist.
We have just wrapped up our fourth year of operations, running our specialised Ruby on Rails & Angular development agency, and we wanted to share the things we've learnt in the last year in this post.
Sirenum Fossae, Mars - Photo by NASA on Unsplash
On March 7th, 2014, MarsBased was incorporated as a legal entity to start working with our first clients in San Francisco and Barcelona.
Since then, we have been very open about sharing our highs and lows, because so far it’s been one hell of a fun ride. In the spirit of transparency, one of our core values, we have been publishing our lessons learnt blog post every year, with the key learnings for the year. You can find them all here:
- Lessons Learnt: One Year Running Our Own Business
- We Don't Need a CEO (Lessons Learnt in Two Years Running a Development Consultancy)
- Three Years Running Our First Business: Lessons Learnt
Alright, let's start!
We've been four years without an office or a CEO
Four years ago, we decided to start the company with the goal of being only the three founders, working on small development projects.
We had worked together in the past, both in offices or remotely, but decided for the latter. Also, a company of three people didn't really need a CEO or roles per se.
Four years later, and being 11 people-strong, we still have no office, and we don't plan on opening one. It's a sunk cost that for a company like ours is hardly justifiable. We have always planned to be remote-first, and our culture and methodologies have been built upon this foundation.
As for the roles, we had to adopt them along the way in order to make it easier for our potential clients. When they want to talk to someone in the company, they might want to know what's expected of him/her.
Lesson learnt: Don't invest in things you don't really need, and acquire them when they're really critical. In other words: don't buy vitamins (nice to haves), buy painkillers.
Consultancies are not sexy
The previous point is the sexiest part of the company, and this is important if you want to get some press love.
We have never been too attracted to appear on the media, but once you accumulate recognition, cool projects and four years operating a company with no office and no CEO, suddenly you've got an interesting story.
We have learnt how to maintain relationships with the press, but our main impression is that nowadays only product-based companies & startups get all the press. Investment rounds, M&A, changes in the board, advisors joining, fancy partnerships and such are marketable events more likely to happen on product companies.
Lesson learnt: To be honest, we haven't really needed the press so far. Focus on creating a good company and your happy clients will be your best press.
Keep pushing & improving
In order to be the best in something, you shall never quit. You all might have heard the famous quitters never win.
Although a company can be off to a good start, and even further it with a fledging progression, there are always bumps in the road.
Building a culture of constant improvement, where all processes can be questioned, brings a very positive dynamic: the cost of applying new changes is low.
On the other hand, if you never innovate internally, you will perceive every slight improvement as a big thing and will postpone it until it's too late. Usually, this is what happens to big corporations, when they are disrupted by smaller and agiler companies.
The best at innovating aren't those who do it only once, but those who do it constantly.
Hitting a plateau doesn't mean reaching your limit, it's a warning to change strategy and test new things.
Lesson learnt: The trade-off between innovating and staying afloat is a hard one, but small companies should always favour the former. Eventually, it pays off.
No more fixed bid projects
Moving away from fixed bid projects is particularly tricky in Spain. Every company is used to work like this in software development.
In the last year, we have managed to upgrade all our clients to a time & materials (aka retainer) flavour. It was not only possible, it was necessary.
Throughout the different projects, we have observed that clients are happier with this approach: they can request changes as needed, and participate more actively in the project when they don't feel constricted by a formal document & contract. Oftentimes, by the time projects start, such documents are already obsolete.
For the company, it means being able to tell our clients the cost of developing. This process of learning reduces the friction & back and forths of negotiation when they want to add new phases to the project or simply want to change the scope of the project.
We wrote about it last year, actually: Three Years Running Our First Business: Lessons Learnt.
Lesson learnt: Once you've been in the game for a while, you'll be able to pass on potentially interesting projects bound by a fixed bid, in order to fix on the time & materials ones.
Working with a time & materials approach is both a blessing and a curse. The good part is that you're able to predict your revenue by signing longer contracts that'll keep your developers busy for the length of the project.
The downside of it is that once you reach full capacity, you can't take on new clients, especially if all your projects are long-term. With fixed bid projects you just stack one after the other, but here is not possible.
However, this is a nice problem to have: it means you've got business.
We've been lucky to have been 100% booked for four years straight, and that's very unusual. Talking to our peeps in the sector, they always have some vacant weeks, which they use to work on internal projects or to take some time off.
If there's a way to prove the quality of our team, is by highlighting the above. We always try to be booked up for the next three to four months, and if we see that it is getting impossible to manage, we hire another developer.
Lesson learnt: Organic growth has proven to be the right way for us. By hiring only two to three people per year, we have had to say 'no' to a lot of projects, but we've never had a developer unassigned.
Losing two big clients in a week is a big blow
Sucks, but we survived this in 2015 and we have survived it again this year.
Sometimes, our clients have to shut down a company or a project overnight, and no contract in the world can prevent this.
When this happens, we've pushed our commercial efforts a bit and we've always gotten new projects right away. Sometimes, we had some of them buffered for later, when they're not urgent projects.
Circling back to my point above, this is really one of the only ways to onboard new clients with a fixed team.
Lesson learnt: Offer clients discounts to start the project later in time, if they're not urgent projects. You might need them when a project or a company has to shut down suddenly and your assigned developers free up.
If your company gets better, your prices should go up
There's a feeling of guilt when raising prices, because of the fear of current customers not liking it. If you become too expensive for them, they might replace you with someone else.
Truth is, every year the prices of rent, employee salaries, gas, power, water, office supplies and so on go up. Everyone raises the prices to keep their companies afloat in turn.
Although we were a bit scared the first time we raised prices, after our first year, we have successfully done it again without losing any client in the process. What's more: they've always been very understanding.
They know that:
- A) The risk of replacing us with someone who might potentially not be as good is too high.
- B) All of their other providers are doing it, so it's only logical that you do it as well. If you don't, on the other hand, might be perceived as a sign of weakness.
Legendary Silicon Valley investor Marc Andreessen put it bluntly when asked for advice to startups: "Raise prices". Also, when negotiating, it's a good occasion to entice your customers to longer contracts in exchange for a discount.
Lesson learnt: Every single provider you've got will raise prices on a yearly basis. You should do it too.
Don't outsource to just anyone
Related to the previous points, we find ourselves often peaking with work.
It's funny, but we also outsource some projects. Sometimes, it's internal projects, like the design of our current website while some other times it's client work, always after agreeing with the client.
In four years, we have had really bad experiences outsourcing development, especially when hiring other companies.
We have really high standards of quality and our deliverables undergo strict quality assurance processes. Sadly, most companies aren't aligned with us in this regard.
Maybe it's a bit far-fetched, but I'd only outsource to companies I'd feel comfortable working for.
Lesson learnt: When looking for providers, you should scrutinise them as if you were to hire them permanently. Also, talk to them until you're convinced about being sufficiently aligned both in values and in expectations.
Keep the balance & invest in culture
One of the things we've gotten right from the very beginning is that we wanted to be known for having a healthy lifestyle. In fact, we wrote this blog post about it: We're Not a Startup: We're a Lifestyle Business (and We Love It).
We defined a strong company culture from the beginning, based on remote work and good work/life balance, and we added positive initiatives throughout the years: company retreats, internal hackathons, running competitions, incentives to learn other languages, etc.
This does not only keep employees happy, but it gels really well with the message we want to send to the world: consulting can be a nice, healthy and fun job.
Lesson learnt: Lead by example. We've never asked any employee to work over 40 hours per week. The best way of preventing this is to have founders practise what they preach.
Once you're past 10 employees, hire someone for operations
It's a well-known mantra, and it's a piece of advice we've been given many times over the years.
It has also proven to be really true. We hired our Office(less) Manager Bego in Q3 last year and she's given the company an extra boost.
By working shoulder to shoulder with her, we've been able to improve many things in the company, adopt new methodologies and even rethink most of the things we considered solid enough thanks to her outside-of-the-box thinking.
Read more about what does an Office Manager in an officeless company do in her post I'm an Office Manager in an Officeless Company, so… What Am I Supposed to Do?.
Lesson learnt: If you're too busy to think about whether you need to help you with operations, you definitely need someone.
What has helped us getting clients this year
We're actually investing a lot in this. Most of our dealflow comes through my network, and we need to diversify.
- Keeping up with former clients & investing in long-term relationships.
- Having worked in a high-impact project like Decidim.Barcelona.
- Keeping a good relationship with developers we've interviewed in the past.
- Blogging, again and again.
- Going to Websummit.
- Publishing content daily on social media to stay top of the mind.
What has not helped us to get new clients this year
- Belonging to any association.
- Appearing on the press/media.
- Outbound strategies.
- Speaking at conferences/events.
- Sponsoring events.