Moving from services work to having a successful product is probably one of the hardest things to do. Well, perhaps no harder than doing any startup from scratch, but the benefit in doing it from a services company is that you have a built-in way to bootstrap yourself.

As a single consultant or small development shop, you work for a number of clients on different projects. You might become known as an “X” shop, where X is some particular framework or programming language, being the go-to team when the complex or large projects come up. You get to learn about different verticals and different problems, coming up with technical and design solutions to fit. And you make consistent income ¹ with a high flexibility around work hours and location.

With a product of your own, you get to invest in the things that matter to you - the design, the vision, the care given to the technical smoothing, or perhaps the user experience of contacting support. Really, you can invest in whatever parts of the product that you’d like. There is no client to wreck the design or insist on the wrong features or really, any of that other complicated dealing-with-clients stuff.

There is a fantastic recent post by the makers of Harvest, a time tracking app, that really speaks to the pride that a team can have in building a product:

Our team is comprised of people who believe in crafting beautiful code, sweating the details and pixels, and working hard to find the right words to express our ideas. At the end of each day, we want to take a step back and say, “that’s our best work yet.”

It’s somewhat ironic that a time tracking web app – likely an essential tool in the profitability of service companies – is referenced in the context of building a product instead.

Buying your time back

One of the things I’ve started using in my discussion with services companies is the concept of making the first $10,000 with their product. That’s $10K per month. I came up with that number as short hand for two intermediate developers working on it full time. That’s usually when it hits home that products are hard. Because I’m not adding in the cost of offices, or hosting, or, you know, stuff like marketing. The math for startup founders is a bit easier. Even in high-cost-of-living Vancouver, my standard back of envelope assigns $2K / month for founder salaries ². As a single developer, any product that makes you $2K per month means you have an unlimited runway. Do you try and build another product to see if it’s easier or harder to get customers? Do you add new features or add new distribution channels – you’ve got lots of options, since your base cost of living needs are met.

In any case, that first X dollar amount can be something that focuses your effort. In essence, you are buying your time back, by having customers who are funding your product.

Productizing Your Services

One of the discussions I have with many people is how to productize themselves and their services. This doesn’t apply just to software developers, but anybody who is being paid for their expertise on an hourly basis.

What I mean by productize is to have standard packages and pricing. Even if you translate those packages back into hours, this gives you the freedom to look at investing in tooling & automation – in building products inside your business that aren’t just hours.

Hourly billing is a fools game. It misaligns the motives of clients and consulting shops. You, as consulting shop, are driven to equate billing more hours with making more money. When instead you should focus on becoming more awesome at what you do, while continuing to rent that awesomeness to your clients. My friends at Denim & Steel call it “invention for hire”.

The switch to agile makes things a little bit better, especially with custom software development. You can set a flat rate per iteration for your team, perhaps with a flat rate “on boarding” with the client to set the features and timelines. An interesting new startup that is helping connect teams and clients who want to practice this method is Group Talent. I haven’t had any direct experience with the site yet, but anything that moves us away from RFP responses and hourly billing is a good thing.

Investing in your product

Every startup blog under the sun talks about customer development, lean, and various other ways to go through the process of building a startup product. This doesn’t change when you are doing it from inside a services company, but you should consider the time as an investment.

I started by talking about buying your time back. You should track the time you put into your product, just as if it was another client. If you’re lucky enough to have high margins on client work, you might just be able to buy back big chunks of time to invest. This could be a time period for the whole company, or having individuals dedicated to the product full time.

One note about building a product that scratches your own itch. If you are spinning out a tool that you are using yourself internally, you’ll need to work extra hard to be objective about the customers for the product. There are many many MANY project management, time tracking, and proprietary CMS platforms out there: why will yours succeed where so many have failed? As always, the test is will customers buy it? And I do mean “buy it” – having your clients use it as part of your consulting work is not a good enough test.

To get real feedback on whether this is a viable business, you have to actually attempt to sell it to people. It can be tough to flip the switch and attempt this. It also means that actual non-development hours (and potentially non-developer people!) are going to be needed to spread the word, get feedback, and generally dedicate time to making the product a business, with all that entails.

As a service company, you can trick yourself into carrying the cost for a product that simply isn’t making money. Setting sales goals – such as X paying customers after Y months – can be a good trigger to do further investment on your own, like dedicating a full time person before the product is bringing in a full salary. But, this can’t continue forever: the product has to be showing enough traction that your investment pays off.

No VC money required

I think this is one of the big things that people aspire to – to say they didn’t need a VC (or angel).

The recent story of MetaLab, a Victoria-based company, entitled Build the rocket first: From $0 to $500K in 1 year with no VC money had all sorts of attention. There are some great stats that make for interesting reference points:

• three people were dedicated to the project for nine months
• 25% of the team’s time was allocated to client work
• the estimate of the cost of their product, Flow, came in at $300K
• there are now 10 people working on Flow full time

The article says “We broke all the rules”. Well, not really – I think they did all the right things in doing a services to product move. So the stories about the MetaLab team focusing is, I think, more about making a plan and sticking to it until they literally bought all of their time back (and more!).

Focus

I’ve been looking for an excuse to spread this post by Matt Henderson of Makalu Media more widely.

Matt wrote a post on How to schedule focus, suggesting that all of their projects get planned in blocks of a week. This means the entire team can be working on one thing - so everyone can be in this flow of having context and riffing off each others’ ideas, problems, and solutions. Versus the context switching overhead of juggling multiple clients, multiple project teams, and so on.

If you’re able to “buy” an entire iteration of work for your entire team, this would be the ideal way to move a product forward.

Consider this both a recommendation to follow more of what Matt & Makalu are up to, as well as a prompt for Matt to get us an update of how it’s working out!

Let’s Talk

I’ve been having all sorts of discussions with teams on both sides of the services vs. product equation. The title of this post specifically says “services to product” – since I believe that you should be investing some of your services time into trying to make a product.

I’ll be at the 2012 Polyglot Conference on May 26th, where I hope you’ll join me for a live discussion. Bring your own experiences and questions. Track the talk on the Polyglot Session Suggestions site, as well as adding your own comments and links.

Footnotes

1: I have heard some gripes recently that barely funded companies having their founders take home a “regular” salary of that $5K / month mark, or higher. I agree that that’s too high, barring special circumstances. Your payoff from a successful startup should be a lot more than a couple of thousand per month. With two founders, dialing back your take home pay means you can pay another person to be full time.

2: Most of @ASmartBear’s post focuses on the difficulties / painful realities, but he ends with this quote:

Most consulting companies don’t make much profit, and it’s one in a thousand that has the discipline to launch a successful product during off-hours. If you’re going to make it happen, you yourself need to be serious, disciplined, and relentless.

But you can do it.

And if you do, you’ve just self-financed a startup, made a nice living, mitigated much of the risk of product-only startups, and built a great team in the process.

Brad Feld is finding a lot of noise in the system, saying he is noticing:

…lots of drama that has nothing to do with innovation, creating great companies, or doing things that matter. I expect this noise will increase for a while as it always does whenever enthusiasm for startups and entrepreneurship increases. When that happens, I’ve learned that I need to go even deeper into the things I care about.

So, he identifies areas that he is obsessed about, and is going to dive deeper into them.

It’s pretty easy to tell what I’m obsessed about. It shows up in my tag clouds and the theme of my link blog. But it’s useful to reflect and broadcast these areas as well.

Here’s what I’m obsessed about:

• death of binary documents: Evernote is a more powerful platform than Dropbox if you consider that native apps aren’t needed at all; Evernote is a giant distributed database with some layers on top of it that make it look like a notepad. Data flows seamlessly and can be mutated easily. Binary docs are flies in amber. This is a long arc that will take a while to complete. A supporting arc is the move to paperless for all things.

• collaborative flow: Flowdock, Hojoki, Grove.io, Ginger, and HipChat are examples of this; this means both real-time “chat” rooms as well as connecting in various bots and agents to feed information and alerts into an always-on challenge. Tools like Yammer also fit, but are meant for company wide usage, while the tools I list are targeted more at dev teams

• re-invention of email / inboxes: we can’t quite leave email behind, but look for ways to either offload traditional email comms (like the previous “flow” tools), or different approaches to “the inbox”

• signal vs. noise: this is a long time obsession. It’s a common phrase, across industries, and across activities. These days social is adding to both sides of the equation. While I think algorithms are doing ever more interesting things in this space, I like the concept of curation, agents, and simply better tools for people to use directly (again, the previous two likely connect into this as well)

• ebooks: the rise of the media rich EPUB3 format plus the social adoption of digital reading plus the recent move to DRM-free ebooks is opening up a lot of interesting opportunities

• business data platforms: we see many small businesses or departmental teams adopting web SaaS tools; but, start looking at multiple tools and it becomes much more difficult - how do we not re-enter data? how do we create workflows that span multiple tools? how do we manage identity & billing across apps? we have several early solutions in this space, but there is only going to be an accelerating need for these types of tools. Chris Devore has written about this as well.

I probably can’t finish off this post without admitting that I’m still obsessed about startup ecosystems, specifically what it means to build more (and more successful) startups in Canada and Vancouver.

Brent Holliday writes about what is needed for BC’s technology industry to succeed, which is itself a follow on to Jevon’s StartupNorth post on Canada’s next 5 years. I have some further thoughts on the five areas that Brent discusses:

Education

I have heard this “start ‘em young” story before. But I don’t think this is the battle that the startup tech community should be fighting. Absolutely we want web-literate youth, and Mozilla (as one example) is an organization that is doing amazing work here. But the pain the startup community faces is talent.

Let’s build more hackers. Intern, mentor, hire juniors. Code (and design) as craft, and move people up the ladder (rather than moving away because you’ve hit the ceiling in Vancouver). Hacker School is something that New York is doing that we could emulate locally. Promoting a startup as your first stop after university. Connecting with university co-op programs. But this is most appropriate for companies that are already heading up their growth curve, of which there are few at the moment.

Community as the framework

I agree with Brent a 100% here. But the web entrepreneurs don’t yet have a voice that is listened to by policy makers. Again, not something I feel like fighting, so let’s just double down and continue to work together without creating unnecessary bureaucracy. Let’s try lots of things and do more of what works. If it isn’t sustainable or doesn’t work, it’s just not meant to be. Danny Robinson’s proposed model for BCIC, with a UserVoice forum of the community voting for initiatives, and a model of early small investments leading to long term sustaining investments is perfect. Let’s clone that out in the open in the community, not run through some government entity.

Tighter Silicon Valley links

I think Vancouver is doing a good job here, but I don’t think Silicon Valley is the right answer. Rather, let’s build tighter links all over the world. Turkey, Romania, and the UK are three areas that have come up in recent conversations. We can be an excellent launch pad for those countries to connect with the North American market, as well as a convenient point to connect with Silicon Valley.

Policy

I see this as a supporting piece to make Vancouver-as-landing-pad succeed.

Grow like hell and don’t stop

The message is, make big bets and don’t cash in early. Still a tough thing to see for people going through their first startup loop. I believe we should be doing it, but it’s currently harder than it needs to be to follow this path. I don’t see enough Canadian investors on board with this model.

Brent ends with: “Shout about it or be proactively involved through the various organizations that are available. Right now”. Well, vantechia is my attempt at shouting about it. None of the current organizations are ones that I feel represent me as a web entrepreneur, so there is nothing that I can get behind and push. So, I’ll keep helping to grow companies, and spend a little bit of time shouting.

I need to migrate my old blog posts off Posterous. I need to migrate my Drupal off Drupal. All will likely end up here.

Current thinking is that I will run three sites:

• bmannconsulting.com - likely to be a simple landing page + a static exported-to-Octopress archive of the current BMC; perhaps hosted on Amazon S3 via rsync
• blog.bmannconsulting.com - runs Octopress, hosted on Heroku (this site); long form posts, project pages, and so on.
• links.bmannconsulting.com - running on Tumblr, high volume links + short commentary

Err… three sites for the main, public “tech” brand of me, which is the 10+ year old bmannconsulting.com domain. I have recently moved bmann.ca to Tumblr as well.

I’m going to likely outsource some of the work of moving posts around. I need a Posterous-to-Octopress script. The archive of Drupal posts need to be turned into markdown files as well. Not sure where to put those, might just go onto Github Pages as well.

Update: OK, I’ve got this running nicely. I’ve got a git checkout out sitting in my Dropbox, meaning I can use WriteUp or Byword to create / edit posts on the go. But, I have to be at a computer that has both my Dropbox and the full Ruby stack setup to generate the Octopress files.

So: how do I save updates to Dropbox and then have those updates generated and pushed to Heroku? I’m thinking it involves running another server just to do this and then involve the Dropbox API in some way. Thoughts?

Also, I have a job post on oDesk to write a Posterous Export - if you know anyone that could do this, point them at the listing, or look at project page.

Allen Pike posts about how important homes for startups are and what his experience has been like here in Vancouver. Here’s the closing sentence:

Bringing startups close to one another is, dollar for dollar, more helpful to the Vancouver ecosystem than tax breaks ever could be.

Once again, I realize that my gut agrees with this 1000%, and it has for years.

In May 2006 I wrote about what I called the Innovation Commons; at the time, I didn’t think coworking / community spaces could / should be for-profit. Last summer I referenced that post again in writing about coworking and supporting it with dollars and wrote this:

Vote to have something exist by supporting it beyond a retweet: with blood, sweat, and tears, or with cold, hard cash.

I think shared spaces are fantastic, and deserving of your dollar votes.

We are lucky to have spaces like The Network Hub and The Hive. If the economics of those spaces work for you, then pay for them.

If you can find a shared space and shack up with other startups: do it.

The article I was riffing on said “You cannot make a profit selling community”. And there is a whole bunch of other stuff in there about what coworking MEANS.

So, all of us that have an irrational desire to have the Vancouver tech community be, and happen, and grow - we need to go beyond the dollars.

I’m thinking back to an idea that we had in the early days of the Bootup Society, about a membership based program. About paying to have the Vancouver tech community exist.

I’m saying right here: let’s do this. I’m in for $50 / month or $500 per year. Maybe you can let me into some sort of space on evenings or weekends, but really, I just want to vote with my dollars that the Vancouver tech community is important.

Update May 1, 2012: I’ve ported this piece over to my new blog. At the time, Hack Hut was not yet in full swing, and I didn’t mention VHS.

Let me start by saying that it feels like we’re actually in a golden age of great online support & feedback tools. I’m sure there are more than the ones that I’m listing here. Also, at different times, I’ve recommended each of these tools for a specific purpose - many of them have broad feature sets.

With that in mind, I recently did a mini-analysis of 5 different services that provide support & feedback functionality. I was analyzing from the perspective of a small company that is just starting out, for a mainly B2C product, with desired features covering both support (email / widget / etc.) and public feedback / user suggestions. Low cost growing to a projected small number of support people (say: 5 people) was also a factor.

In addition, domain aliasing aka CNAME support to be able to use the domain name of my choice was a must have (I’m not going to build web traffic to somebody elses domain). In other words, I don’t care if you have cheap starting plans, I’m going to care about the level at which I can do domain aliasing, otherwise I won’t use you.

I actually started with Assistly, and really liked the system. But the deeper into it I got, the more confusing it was, and the more it was clear that it was built / optimized for much larger organizations. It is a relatively new service, so it may be going through some growing pains.

Testing all of these other services again*, it was clear that all of them were built around per-agent pricing, which seems to be optimized for the way larger companies work: there are support people, and there are the rest of the organization. Assistly’s Flex Agent plan does a good job of recognizing that everyone in an organization needs to do some form of support, but at it’s core, it also had the per agent pricing.

*except for Get Satisfaction, which I’ve used in the past. It doesn’t offer domain aliasing (or private email support) until their $99 plan either so didn’t meet my needs in terms of price. I think it’s a great community support system and the one you should look at if you’re mainly doing public community management.

And so, we come to Tender, which seems explicitly geared to small company support. It starts at $24, but includes 3 agents and pretty much everything you need to do support and public feedback / knowledge base out of the box.

It’s next tier adds (more) custom branding and more agents, but in both price and features seems to be designed to be something you grow into (rather than the infinite progression of per agent pricing of the other services).

Tender is optimized for email. Notifications are sent out, and you can then either reply or perform administrative actions via email. Technically, it’s also optimized for RSS, since it has both unauthenticated and authenticated RSS feeds which let you consume everything in it from the comfort of your RSS reader.

Perhaps more broadly I should say that Tender seems to be optimized for conversation. Which also seems to be a fit for how smaller companies help their customers, rather than “support”.

Below, the table with notes on all the contestants.

Got other suggestions for great support & feedback services? Please add them in the comments.

Update April 30th, 2012: I manually ported this entry over from Posterous.

Assistly was acquired by Salesforce and rebranded as Desk.com.

I know that our own plan at Goodbits for Tender was grandfathered, and I suspect many of the other pricing plans have changed as well.

One other item to add to the list (although it’s not really support, per se) is Intercom. It’s an awesome customer dashboard and communication tool. See Kalv’s write up about Intercom.