 Hello, we're camp Europe great to be here chat some business with what I look to be a lot of people who own businesses or agencies Clearly looking to do more level up and be really awesome, and it's awesome to talk today here in Vienna The talk today is about business processes going through to create a successful product company out of a web agency There is a lot of things that you'll need to do I mean this has been the last ten years of my life, and we only have about 25 minutes this morning So we'll talk about some of the stuff that I think is helpful trying to focus on The sort of business ideas some of the business processes and some of the tips and tricks that I've known and seen to grow Product companies out of out of services companies, and it's going to be basically the same kind of advice Whether or not you're trying to make a premium theme offering out of a design consultancy If you want to take some VC money and bootstrap like a hosting or platform Infrastructure company or if you just have a really awesome plug-in you think can turn into more of a SaaS solution that the kinds of business processes that sort of you go through are often the same and A lot of this knowledge and a lot of these kind of tips come about from sort of my experience Living and working in San Francisco, California Startups and businesses and technology is all the rage there like a lot of places But it's something I talk about a lot. So hopefully we can get into that today This is not a talk about some of the technical details of building a product There's lots of great stuff around that for sure, but we don't really want to get too deep into that So let's talk about this and sort of my background because I think this is relevant just in terms of establishing Sort of how this is all going to work So I'm the person to get this talk because I did services I started my career doing web development with a company called chapter 3 I had sort of founded that out of out of university and was very much looking at you know How can I use technology to learn and grow and be really awesome? And be really awesome on a sort of hourly basis for people doing design development Support these kind of services and did that for about four or five years and had a lot of fun with it We sort of did a lot of big work for big clients. We did a lot of creative stuff in our open-plan office and We really learned to have sort of the web and grew up with the web and a lot of technologies and this was a lot of fun But one of the things that was limiting I think a lot of folks in the room who might do services may feel the same way is that inevitably the projects we were asked to do were We didn't have enough time. We didn't have enough budget You know We didn't have the ability to sort of like green field our own vision that we were working for somebody else and their constraints It's something that I think can be really frustrating You're inevitably wanting to do your best work, but you can be limited by these circumstances You're also put into a position where you want to sort of be a perfectionist do do products Do things that can exist independent of this sort of hourly kind of wheel of service work So of course working in technology. We decided my business partners and I we need to make a product company So we created a product company called mission bicycle, which does like what you might expect It sells bicycles to the beautiful people who like to ride bicycles every day. I absolutely encourage it I know Europe's awesome for bicycling and it was interesting because I share this experience because Selling bicycles is a product. It's a flat fee service to you or flat fee thing you buy We have our bicycles are pretty cool You can like customize them and change the colors and stuff like that But it's definitely a real company. It has about 15 people We took some invest like friends and family investment money to get it going including for mr. Mullenwag who loves bicycling also, which is very nice and We sort of used a lot of the same processes that I'm talking about or we'll talk about for technology companies With the bicycle company that there is a sort of design process that goes into what things we should offer What kinds of pricing we should use how do we motivate team people to work together and stuff like that? And that this experience to me I like informed a lot about sort of that transition from agency to product Primarily that you're not dealing with the sort of hourly services model You're not trying to like engage and sort of keep this wheel going you are in fact saying here is the thing It costs this much money. Please buy it and tell your friends to buy it and buy it and buy That we got into very much this concept of design thinking Which is something where if you're in a sort of consulting arrangement, you're sort of working through a design process The iterative process getting requirements and pulling it together But in a sort of product company a lot of the buying decisions a lot of the decisions that people use to formulate their own Consumer intent comes about from a process that happens totally in their minds totally independent of your engagement You know, we're not sending out RFPs to folks to say buy this bicycle We're not respite, you know, they're not putting out a call for transportation and people are like saying here's my solution Go for it. You're trying to engage people around the actual You know sort of thinking and this is where I think some of the said tactics of Building product companies come into play because you're very much talking about what are emotions that people have and connect with bikes Where can we go like to Facebook and advertising the internet to like push that out there? and how do we create this situation and From a process of going from a sort of tech consultancy to the bicycle company We also had to deal with a lot of challenges that I think a lot of you folks will deal with Starting out honestly first and just getting the money to do this kind of stuff The bike business is a pretty competitive business. You need to maintain a Significant amount of inventory to sell bikes and you have to pay for all that up front before people buy and So our process in terms of bootstrapping mission bicycle was to take some of the investment from friends and family But also to dump a lot of the basically the profits We had made out of the consulting company into into the bicycle company And so like inevitably we look at you know Trying to run a business at about a 20% margin Which I think for a services firm is very good if you can get to 20% and we took the 18% of profits and just threw it in the bike company and that's something it takes a it takes a lot of confidence or at least a tolerance for risk to do this for your own companies because You maybe you're paying yourself a salary out of your services firm You get a little bit of profit sharing, but if you want to go do products You have to dump a bunch of those resources you would otherwise do and put them into something else And I think that's that's important sort of as a step to go forward Bikes all stuff went really well, but I'm a technologist I like to build things and so after sort of mission bicycle got off the ground jumped into starting a company called pantheon which does Website hosting and development tools for the WordPress peoples and it's a monthly fee kind of situation or yearly fee if you're a large customer you basically hook it up and you Get all these tools and you got this hosting and this is this company is a lot of Everything because in order to actually provide sort of you know this huge kind of hosting infrastructure and all these tools Sort of what we did it took five years We now have a hundred people that were coordinating in like ten countries around the world doing a hundred thousand sites And to go from basically an idea that like we had way back at chapter three about how can we do? Sort of a product to something that has a lot of different moving parts Required a lot of different you know pieces to go together and I think you know one of the things I'll talk about what I talk about venture funding a bit later Is that the idea of you know your goals as a business not you know next year, but five years ten years are really important? The goal of mission bicycle is to provide bicycles for people to ride in the cities because Cars are awful and the environment needs to be saved and you're like healthier and sexier and like everything on bikes And the win for this company is just selling as many bikes to as many people who use them as possible The goal for pantheon is running 30% of the internet which you know working with WordPress gets us a good way to there But we have a lot of ways to go and you have different tactics and different strategies in terms of getting there And I think sort of keeping in your minds What do you want to be in five years ten years are really important goals? It you know sometimes can be a little frustrating if you're just like having this idea for a really cool plug-in or or theme process But if you actually look five years ten years you start to make decisions that actually can can lead to those kind of outcomes Which is great So you know in general I think there's this journey you go on with the road to product I shared mine just because I feel it's relevant to some of the examples I have and some of the ideas I have but I think that You know a lot of the process and for people the room comes down to a sort of journey that looks Briefly like this, which is you know, we're technologists. We like to build things We sell our services and our expertise as part of those kind of companies and we have clients who we love But they ask us to do a lot of these things And it's hard to sort of get that hourly work going all the time It can be very like you know on the wheel over and over again And that there's this appeal that people have which is they wanting to make money while they sleep which you know Maybe motivates a lot of the business Folks or business minds in the room. I would say that's not the most motivating thing for me I do think that having sustainable income is important But I think what a lot of people when they talk about services companies turning into products They do want a better business They want to be the kind of business that I think with product companies people really get into well known You know very valuable often profitable and having repeatable solutions that care But there are also people who are building products as builders they're technologists You want to build the great thing you want to make it work? so Getting into this things to keep in mind terms of goals for building products You have a lot of strong reasons for doing product companies over service companies It's fun to work with new technologies to get excited about building new things to be in the in the sort of you know Race of it all it's fun to learn new technologies to try to do cutting-edge stuff It's great to solve problems. You already have the best businesses You're gonna create our things that are solving problems that you yourself have or your friends have Because you internalize those and you mostly connect to those You can as an agency build products not necessarily to have big product companies But as lead generations for your other lines of business Here's a free plug-in that you can use you can then hire us to do all of this kind of stuff You can be known as a thought leader for having that expertise. You're the best people at doing this kind of work Here's a product that we represents that work and by the way hire us will do tons of that And then you can of course make money. These are reasons to do products to build product companies But there is this reality that most of the startups most of the businesses that you might spin out from your companies or start Will in fact fail. It's not necessarily Horrible it's good to have that kind of turnover, but a lot of companies fail for a few reasons. I'll give you three One is I think a lot of companies fail to sort of capitalize on this and turn it into a business Because they end up not getting a product market fit. I'll talk about that in just a minute Basically like they could have some good technology, but it doesn't address an actual need a need people will pay for Second is I think people lack the resources to properly pursue their product vision like they may have some extra time or some extra Jazz with their services company, but they don't have enough. They're working on weekends They're taking a little bit of profits and their competitors lap them and go much faster And I think that can be a problem and then third is that I think there are basic execution issues I think people who are you know services companies are different from product companies require different skills To do it and you got to sort of find that balance especially if it's your first time requires some work Plus the reasons can get soured really quickly right like what is fun and novel to start a company can be a ton of works It won't always be fun You know when you're trying to learn new stuff you can get like unfocused with like the stuff It's really important. You're always chasing the new thing You know things that like internally you have problems to solve, you know You'll build some crazy solutions just way more than you needed You know you can get lead generation of people that call you up to want to work with you But I'd not be the right kind of of clients with the right kind of budgets you know if you're be a thought leaders you got to keep being a leader and Sometimes with products you make met less than your hourly rate if you're a good WordPress developer or good WordPress designer You can make a lot more in many cases than a product company at least for the first few years So but there's ways to make all this sort of you know go away some challenges You'll see some technos and stuff you can do to become better product kind of people First up you absolutely want to create a business plan for your products If you're thinking with your business partners your friends, I want to start a company I want to be this kind of thing put down on one sheet of paper your business plan I know that sounds like sort of and business school and sort of weird like that It's not you don't need something super formal what you need to do is you need to connect the like idea You have to like a addressable business market of people who will buy it and Provide some way to measure that that process. This is sort of you know There's a website lean stack comm that talks a lot about this. I'd recommend that Because the important thing when you're building a product and if you listen to one thing I say It's that when you're building a product you want to create the absolute minimum viable product to address the business need you have To say this another way you want it if you're creating a product you want to find the smallest the easiest But like functionally the most complete solution that you can go out to people who will use it Who will pay for it and who will actually prove to you that it's valuable? Because this is a huge problem that I see with my friends and folks I meet doing product product work is that they're used to doing Services or used to building a lot of stuff and it's like more is better more features is more client budget is better But in products you want to very quickly have a loop if you're gonna fail fail fast If you're gonna succeed you're gonna succeed because you've iterated so many times Your thing is really really good think about any product that you use on the internet be it a search or a website It's changing if it's successful It's changing and updating and being new and those changes are because of feedback people get and that's really important And to get that feedback you need that minimum viable product It's about figuring out the product of the problem You're solving the way you're gonna solve it who you're gonna solve it for how you're gonna actually market this Which is huge right like we can build the best solution in the world But if we cannot tell people we're not gonna be able to Sell it and then you've got to figure out what it's gonna cost I've seen businesses where they just charge too much and no one buys it or they charge way too little and people don't take it Seriously that they're having that kind of balance is important and I would sort of iterate the idea of this is a quote from a friend of mine who is Product owner and he's very important sort of dealing with getting a minimal viable product He says the biggest problem people have is this feature itis is this idea of building Things that you think are needed, but your users or customers aren't telling you and that that is as a services company It's against your nature as a services company You want to propose new features to get more budget to grill grow your business and a product company You want to do less you want to just create the minimum thing in this case? Christoff he built a company that does sort of tours of of websites and products and his like technology It's like jQuery with some text bubbles is what he started with But it was proving that people need jQuery of text bubbles to learn about you know product walkthroughs and that was huge for him Product life cycle terms of actually sort of building this stuff out you get that problem solution fit You write a business plan one page you build a minimum viable product that can address that solution You give it to people or sell it to people better to get it working Then you go out and try to get sort of that larger market you try to say Who what are the possible customer bases for this particular product? Let me go ahead and you know try to try to fit that market make sure that my solution meets their needs and Then you actually go ahead and scale it and I think you don't want to jump ahead of yourself But there are as a moment once you've built a product. That's good Once you found a product market fit where you're clearly cycling and selling What you then need is is resources to scale your business And I would say this is important like most companies that are successful take in that take investment from themselves their friends VC Etc, but the idea is that you need to get the first two parts right first There's no reason to invest in something if you're not reliably turning, you know $1 into $20 or something like this So you want to be be sort of careful But once you're ready to get investment or or money to bootstrap you can go a few different ways Sort of the common ways from a services business that I could I could share with you is that a lot of folks in building products are Going to use sort of their nights and weekends to build the product They're going to take that extra time that they're not working on deliverable work work on the product Sometimes they have free cycles inside the firm. So they'll go ahead and you know address This is what we did at chapter 3 to build pantheon We had a few people who were extra would go in have them work on the server stuff while we make money with the agency Sometimes you just take your profits straight off the agency like with mission bikes Sometimes you get your clients to pay for your for your stuff a lot of what pantheon sort of conceptually started as was a project for the Economist magazine where you like had to go and create a whole infrastructure to do their work Some of those ideas come into to play sometimes you can get grants to help and your friends and family can also invest That can be a little tricky if you don't do well, but you know, this is sort of common And this is how most businesses get funded for what it's worth that you know They bootstrap product companies through their own internal budgets and their friends and their own resources But it is probably we're saying that it's important that if you're gonna go really big you want to go to be sort of get venture funding Venture funding sort of as a as an overview the best Venture funding investments are the ones that are gonna take like ten dollars and turn it into a thousand that Venture funds don't want to turn, you know clean ten dollars into twenty dollars. That's not actually very good for them They want ten dollars into into a thousand dollars. It's it's the sort of hits business It's like Hollywood you want the big movies make the big money and that that's something that like if you have an idea That's gonna be a hundred million dollar a billion dollar company Getting venture funding getting that kind of resources is important and it goes in a pretty predictable cycle There's a lot of stuff written on the internet about this Basically, you get a seed round from friends and family and like you know small small angel investors just to prove your idea You then go out to these more professional venture venture capitalists who will like look at your idea Sort of see your plans sort of feel you out as founders see if you're good We'll then give you some money and then once you sort of get down to the more more business thing You're talking to a lot of bankers just to show the numbers and growth patterns and stuff like that It's a bunch of resources for venture for venture stuff. The internet is full of these things very very helpful. So Couple things sort of then sort of closing I think just ideas around actually just the kinds of stuff you need to care about so quickly If you're having a product company And you're spinning it out from your existing services business the sooner you can have it be its own business entity with its own office space And it's own like headspace the better I have a friend Alec Reynolds who runs a company called Calibox They basically spent two years Co-locating with their services business and they were making progress But they were getting drawn back into meetings drawn back into client work as soon as they got their own office As soon as they got outside of that they did they did much better So having that visual separation between your old business your new business really important Obviously customer development, you know that same idea of doing an MVP is Something that you're also very much going to be interested in Overall the business you want to create a minimal viable product that addresses some key problems But you want to keep that feedback loop going you I spend in many cases more time talking to customers of Pantheon Then I do writing code or managing people that write code You need to be in that their headspace constantly improving and taking their ideas and turning into a project roadmap You want to have an idea of what you're doing in the future and you want to validate those pieces against Against what your users want. It's very very important here what people want assess how much of a market need it is and then build it and Then absolutely make sure you measure it. Here's some metrics slides every startup every product company You should have the things called KPIs key performance indicators It's numbers that you and your company will look at and say this is what we care about How many people downloaded the plug-in how many people paid us for the plug-in how many people read our newsletter? How many people you know how long was it since we launched something we go and getting that kind of thing and there's a Lot of tools to help you with this but these are really really important and this all feeds into a standard business funnel You want to get people who care about your your product to pay attention You want to like fit make them learn the value of what you're doing you then want them to do something sign up For your newsletter list download your thing you then want them to go ahead and purchase at some point Then we want them to keep them around and make them happy And if you can get them super happy and they really like your stuff, they'll be the best marketing You'll ever get and they'll do it for free because they're honestly they like what you're doing So it's good to have also a nice team. It's important to have people who want to build products product people are different than services people People are doing you know really good at client work or not Honestly, the people can do the best for product although sometimes they are and it's just figuring out sort of the team You want there's a lot of stuff until you dynamics you can deal with Give some people some stock I think the way venture and like businesses structure I think is actually pretty unfair to most people who work there But I think the more diverse you can do the people who are going to be your winners that are going to help build your business You want to cut them in on the stock for the the company be it stock options as part of some venture deal Or just be it a percentage of the profits or percentage of it more people are personally invested in the outcome the better The work they're going to be So in closing I would just say like you know the best advice sort of beyond all this I could give with doing product work is like you want to know the problems you're solving and you want to have that sort of North store that kind of vision for how you're going to do it to keep going because your plans are totally going to change Your team is going to change the way you get money is going to change your customers might change But if you know the problem that you're trying to solve and you know the sort of values and reasons Why you're trying to solve it? Like you're you'll go really far and you can help weather a lot of ups and downs Because doing startups isn't just like a straight growth curve. It's sort of a little bit ups and up and down like that So I encourage all of you to go out and have a really good time building products I'll be around the conference and ask if people have other questions that want to chat But thank you very much for your attention