Modern testing for modern stacks

We have gotten into the habit of thinking deeper about one topic on a weekly basis. We pick topics based on anything interesting we read - so the topics can range from 'how to express the value of testing' to 'Dieter Rams' design principles' to 'effective remote work habits'. Employees are guided to spend no more than one hour researching the topic online. The emphasis is on coming up with their own ideas and interpretations. We then meet as a group to exchange ideas. I love this habit and consider it one of the more unique benefits you will enjoy at Qxf2.

Topic: Moving to selling product from consultancy

29-Nov-2016

We are trying to build a revenue moat around us with our first educational product. And I'm pretty sure you are all tired of me quoting basecamp as an example to emulate. I read a couple of articles that tried something similar to basecamp. I found them realistic and a good antidote to thinking our path is set/easy/straight-forward.

References:
1.http://lesseverything.com/blog/service-business-37signals/
2. https://medium.com/fresh-tilled-soil/the-myth-of-the-design-studio-turned-product-company-fceb670aa74a#.wue6kcrz8

Our thoughts

Arun

Count me among the 37Signals (now Basecamp) fans. As our financials improve, I have been flirting with the idea of developing products. So I thought I should study more before investing more money and having a dedicated product team. I was looking for opinions that 37Signals is an outlier. These two articles among the best I found.I like the article busting myths. I found one point unintuitive: it is harder to build a product in a bigger consultancy. I had to mull over that for a while before reluctantly agreeing with it. The article by 'Fresh Tilled Soil' was good too. I think it reinforces the idea that it is probably a better bet to continue to invest in R&D. Their one-year initiative to let people study any topic of their choice is a good alternative.One piece of caution, though. We live in India and most of our clients are in the USA. So the runway and cost calculations for us is different from what those authors/companies faced. Either way, irrespective of whether we end up going the product route or not, these articles provide a realistic view of what to expect. And I like that.

Avinash

Most of the Indian companies are service based and was wondering why they dont build good products. These blog gives me some idea on how its hard to build or change from service based to product based companies. There are lot more risks which need to be taken. I agree with lot of myth busters mentioned by Allan Branch. After the success of Basecamp, many companies wanted to be product based. There are companies which succeeded and some failed badly. Good Insights on both sides of argument. You can easily end up incurring loss. Liked the argument which says "As you're selling client services you're also marketing and building a product, so you're basically working two jobs. You're promoting two company offerings, the product and the consultancy." At Qxf2 services we are trying to go with the product route so its good to know this things beforehand.

Rohan

Nice articles by Allan Branch and Richard Banfield. I read about the story of 37signal. Basecamp is first product and solution to their problem. Allan is the co-founder of Less Everything and he loves to create videos about his family adventures. He went through Richard article and summarized in few lines. He shared his experience about few myths of converting from client service to product company. He said moving from client service to product company is not easy. It is really very very hard. I agree with him, it is really really hard but not impossible. Usually, when we start something new, we come across problems, we need to face it and move on. It is very common. I like and am agree with his view on myth. 'If 37signal can do it, anyone can do it.' I agree, outlier business has a huge profit margin in beginning. We need to think about it. Building product involves way more than design & development skills. Usually, developers are not good at selling the product. We also need to think about marketing.

Indira

I agree with the author that its not easy to move from client services to products company because as a service provider the goals are easy and clear, finish the project on time and on budget, and make sure the client is happy with the work. The company knows what clients exactly need and work towards the solution and know how to implement it, and they are good at it. Being a subject matter expert and with this mindset we tend to solve individual instances of the clients problems.Also there is much less risk involved in the services company, you get paid for the work done depending on the number of hours spent. There is not large investment here, so you get used to this and hard to break out that habit. One more myth is that when you change to products, and revenue from those products, happens quickly. I disagree, generally by selling services, you can make money from day one but not the case in product development.When you try to switch to a products company you need a different mindset, the financial needs of the company change dramatically and there will not be any guaranteed payment. You don't know what future customers might want. The potential revenue of the product -based company is limited on the amount of people who are willing to buy the product. So It's tough to make that transition. In my opinion client services is the best for a start up because the Startup and overhead costs tend to be lower, margins are more attractive and is the fastest way to make money. A service based business will survive longer if the service is really good . After a certain period of time depending companies financial status it can extend and start working on products with more planning and improvements. But clearly prioritizing client work against product is important for the success.

Viraj

It's not like you can't go from Consultancy to Product development. You can if you really want to. It's completely wrong to expect success following someone else's path. People who don't know how to go to Mars and just follow the shooting star Will definitely get shot. The facts and figures are completely true. But the success behind the 37Signals was only half understood by the world. The rest of the half was filled by themselves of what they wanted it to be, Not the fact. Success is created, Not followed. And what bad happened with some of the companies was 'They didn't even follow the success properly' :) . One more factor for 37Signals to look like a shooting star was 'The product they ended up with developing was the urge requirement at that time' This was the Catalyst for their success. I feel like we should keep a record of all the internal projects we go through. This is because all Startups go through the same stages and sometimes same problems. So we can sell or help the solutions we found to others. We can't say 37Signals distracted the industry but we can say they set a good example of jumping into Product based company. If we want the same, We need to do it our way, not the 37Signals way.

RohanJ

Both the articles were good, especially the journey of how basecamp turned into a product based company from a web consultancy firm 37 signals, how they built a product to overcome the problems they were facing with project management to be used internally and how that product turned out to be the need of other organizations as well.Alan, has very put up some myths and realities, among which i truly liked what he has explained to going from client services to product company is really hard. Client services and saas based product offerings are completely different,for a product you will need your own idea,specs,marketing and sales of the product. What i found interesting about the article 'The myth of design studio turned product company' was that to encourage building internal products. It helps is solving the needs of other organization as well as the internal team needs.

Shiva

It is really hard to read about Basecamp not become a fan of how they operate. I agree with the myths that were listed one of the articles. There are few facts that cannot be overlooked when you are a service industry and want to come out with a product of your own. It required more than just design and development skills. Marketing skills are necessary to sell a product. I also liked the discussion about the how to decide how long a resource spends on clients. I agree that our path towards building products is never easy and straight-forward.

Smitha

A great and awesome article from Richard, this is way different than the ones which talk about laws, principles. I might want to read the book that he suggests.The myth is true that design dev studio becomes a product company.I like the story about how clients thought each of them had a product which was under-wrap.I agree that building a product is hard, way more than design and dev skills.Products don't sell themselves, you definitely need business/marketing skills.I like the way he's talked about product nirvana and also mentions that you should do what you are good at, which has given you an ROI than the product pie.

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