How I Started A $160K/Month User Experience Design Agency
Hello! Who are you and what business did you start?
Hello, my name is Dávid Pásztor, and I am the founder of UX studio, a user experience design agency based in Budapest, Hungary. We work with clients from all over the world, providing them with a wide variety of UX-related services. We design impactful products that people love to use.
Our teams create digital products, such as apps or websites, that provide meaningful experiences to users. To summarize our work in a few sentences: We can help our clients from the point they have a product idea by validating it through research and, based on the findings, building up a logical flow for a website or application. Research, testing, and iterations are vital for a successful end product, so our teams always consist of at least one designer and a researcher. Working on the UI, the user interface is the last step of the process.
We don't do development, but our teams usually work with our clients' in-house or external development teams. This is just an overview of a complex process. We can provide support at any stage of the product development process, from validating new business ideas to redesigning and optimizing existing digital platforms.
Our UX design and research experts work with tech startups and enterprises in various industries, such as fintech, fashion, digital solutions, traveling, education and healthcare. Along the way, we decided to create our own products too. By today, we are running two independent product teams and plan to start working on two more in 2021.
What's your backstory and how did you come up with the idea?
I think there are two reasons why people become entrepreneurs. There are people whose parents are entrepreneurs, and there are ones who can’t find their place at traditional workplaces. For me, it was a combination of both of these.
When it comes to mistakes, I generally believe that you feel that something is off from the beginning when you are making one. The important thing is to admit you made them and start working on fixing the issue as soon as possible.
My passion started a long time ago during my school years. My brother and I sold our massive lego collection so we could buy our first computer. After playing around with it, I created my very first website. To be honest, this was probably a pretty lame website, but it was an important moment that started my journey.
Then I started studying computer engineering at university and topped it off with a master’s course in information technology. By this time, my skills were a lot better than back at high school, so I worked in this field besides my studies as a part-time UX designer. I worked on fun and exciting projects, I had cool colleagues, but something was off. I felt that the traditional office setting was suffocating me. I still applied to a few companies after finishing my studies in 2013, but honestly, I only wanted to work for one of them. Unfortunately, they did not offer me a position.
When I received offers from two other companies, I came up with counter offers: I would work for them, but not as an employee but as a contractor for UX design and consultation. One of them laughed at me, but the other was open to this setup, so I started working for them as a contractor.
Take us through the process of designing, prototyping, and manufacturing your first product.
The company I started my first cooperation with recommended me to another company. Soon, more and more recommendations began to add up, and I ran out of my working hours I could sell to clients. This led me to crossroads with two options: I could decide to continue working on my own and only work for selected companies, or I could set up a design agency to be able to offer UX-related services to more clients. Evidently, I went with the second option.
Around six months after I kicked off my first contractor project, I had a team of three part-time UX professionals to help with our client work, and by the beginning of 2014, they became full-time employees. I am not sure if it was at this point, or before I hired them, but I had to realize that starting a business with employees would mean that I’d have to do more management and less actual UX work. Even though I loved doing UX design, fortunately, this did not stop me.
In the beginning, I did both UX client work and business management, but at one point, I realized that I had to concentrate on the operations fully to be able to run the company successfully, so I handed over all of the UX work to my colleagues. I learned about marketing, I did sales, and I tried to do administrative tasks. This is where I needed some support, so we soon hired our first operative team colleague to help with our finances and administrative tasks.
To talk about the logistics: I started with an official self-employed status, which is a flexible option in Hungary as it doesn’t require financial assets and has a fixed, pretty low monthly tax rate. To create a company is a bit more expensive. There are lawyers' costs, and you need a minimal amount of financial assets, but having a digital service business that I already started as a contractor, these were easy to manage.
Creating our own product was also a huge milestone a few years after our launch. Over a few years, with excellent in-house developers, dedicated UXers, and marketers, we managed to build our first product, UXfolio. Talking about that journey could take up another whole interview. My main point now is that even though it was another risk, with some time, determination, and obviously investment from our agency business, we managed to create a successful product by ourselves.
Describe the process of launching the business.
The launch was smooth. As I explained, I started the business because there was demand, so we didn’t have to wait for the customers to come in at the beginning. But we soon reached the point when people recommending us to each other for UX services did not generate enough leads.
This is when I started learning more about marketing, and also trained myself how to do sales. We started our blog, attended conferences, and created a newsletter. It was a great experience to learn about different marketing techniques, but it was also nice to be able to hand these tasks over when we hired our first dedicated marketer.
Our first website — only a landing page, to be honest — was designed and built by one of our first designers during a week he was between projects. This instance inspired us to make "projectless" days useful by working on something for the company. We have task forces for different tasks, such as writing blog posts, updating our portfolio, modernizing our presentation templates, or even working on pro bono projects.
A lot of people say that starting your own business is very expensive and you need either a huge amount in savings, loans, investors, or a combination of these. I think this is a myth. Determination and the right idea are a lot more important.
We never got loans along the way, we started small and built up the company step by step. We also don’t have investors, so we can make decisions and shape the company the way it is best for us. Starting, and also being on the journey can be hard without the help of a loan or an investor, but I believe that the struggles that come with this are inevitable if you want to learn how to think and how to become a successful entrepreneur.
Since launch, what has worked to attract and retain customers?
We concentrated on Hungarian clients at the beginning, but we also had some international clients. These were usually foreign companies with offices in Hungary or with business connections with Hungary. The Hungarian market is not huge, and we enjoyed working with our international clients, so we decided to try to attract companies from outside Hungary.
While discussing the plan, one of my colleagues said we should probably have an English landing page if we wanted to attract international clients. Since then, we have switched the whole website to English. We also write all of our blog posts in English, and, especially because we started employing international colleagues, the company's internal language shifted from Hungarian to English too.
Changing our online presence got us some organic leads from smaller companies. Then we managed to start collaborations with some big names. Having famous companies in our portfolio seemed to be an excellent reference. Since then, we have a lot more international clients.
Most recently, one of our new directions is concentrating on LinkedIn to engage with UX professionals and product owners of possible future clients. We boosted our social media engagement rate from 0% to 4.3%, and the total number of our LinkedIn followers grew from 27,737 to 61,748 since April 2020.
The impact from our work and the value we deliver to our customers got recognized by world-known companies, such as Clutch and Zeplin. We are honored to be featured among the Top Design Agencies 2021 by Clutch. UX studio is also a member of Zeplin Agency Membership, a community of talented digital agencies that deliver the most impactful experiences with Zeplin.
How are you doing today and what does the future look like?
We closed a very successful year in 2020. The first wave of the pandemic affected us, we lost a few leads and clients, but we managed to create new successful cooperations, some of them still running a year later.
We have very important rules to ensure our financial safety. One of them is to have enough liquid savings that could support running the whole business for at least three full months, even if we lost all of our income. This is a very unlikely scenario, especially since we have UXfolio running with a growing number of paying users. However, the knowledge that we had financial safety gave us peace of mind during the uncertain times at the beginning of the first lockdown. Thanks to this, we didn't make any bad decisions regarding our business plans or our personnel. We didn't have to cut back on the number of team members, and we even managed to start a new product team.
Our operations are a lot different from the starting days when I did all the back-office work. Today, we have an operations team, our Business Team, with dedicated marketing, sales team, and supporting roles for Finance and Administration, HR, and office management. This team together works on acquiring new leads and supports the operations of our Service Team, which is a team of UX professionals working on our clients' projects.
Nurturing existing cooperations is a shared task between our Business Development Managers and our UX leads the projects. We find this setup effective, as the UX leads are the ones who know our clients' products and businesses the most from our team, so they can make sure we offer the best services or new ways of cooperation that will be useful and make the best impact on their businesses.
We closed the year with almost 2 million USD revenue with an average of 20,5% profit rate, a profit rate we plan to keep for 2021. We also plan to invest in another two new product teams. The mid-term goal is to have the same amount of people working on our product business as in our agency.
Through starting the business, have you learned anything particularly helpful or advantageous?
What makes UX studio unique is how we built up the company together in a transparent, self-organizing way. We are a bigger team now, so having the flat organization structure we had with fewer team members is not maintainable anymore, but our core values remain the same. We have total transparency, we make important decisions together, and we encourage everyone to make decisions independently, speak up, and share constructive ideas.
When it comes to mistakes, I generally believe that you feel that something is off from the beginning when you are making one. The important thing is to admit you made them and start working on fixing the issue as soon as possible.
We made a lot of mistakes since starting the company, but one of the bigger personal mistakes that come to my mind is that I put off asking someone else to manage the Business Team for too long. The other team had their leader, which helped both the team and me, so it should have been evident that the Business Team needs the same. So my mistake was not admitting that I couldn't fully concentrate on my team.
A very useful habit I developed over the years to help to create a more direct relationship between us is using lunchtime for work. But not in a workaholic way! I have at least one lunch a week with one of my colleagues, and the team leaders do the same. During these lunches, many topics can come up that wouldn't be mentioned in a traditional meeting. The smaller teams also have team lunches together once a week, where they mainly discuss fun, not work-related topics. This is great for team morale, especially nowadays when everybody is working from home.
What platform/tools do you use for your business?
All of our teams use different combinations of tools. The whole team uses Google Workspace, and our main communication channel is Slack. Some of our colleagues like to use Trello for keeping track of their projects and Zapier for integration solutions. Our operations team members use the Pipedrive CRM system, Hello Sign for online signatures, and marketing tools like Drip, Social Pilot, Google Analytics, WordPress, and Ahrefs.
Figma is a beloved tool of the design team, as it can be used for complex things. Obviously, it is a great platform for creating UI, but it is also easy to use for building prototypes and design systems. It enables collaborative work between designers who can use the cloud-based platform simultaneously. Another big plus for Figma is that it makes collaboration with developers easier as it already creates CSS codes based on the design. Zeplin is also good for the designer-developer collaboration as it doesn't only generate the CSS, but also stores pictures and icons in the right format along with the design.
Today, when in-person meetings and workshops are not possible, Miro is a great solution to use as an online whiteboard. We've been conducting remote workshops even before 2020, as most of our clients are based outside Hungary, but since the pandemic, Miro is used a lot more often. FigJam is a newer online whiteboard tool developed by Figma. I believe we'll shift towards this new platform as it is more suitable for our UXers.
Some other design tools we use include InVision, our oldest tool for building prototypes. Sketch is another tool we started using in the olden days. While we still use it, we prefer the tools I mentioned earlier as Sketch is not as appropriate for collaborative work.
We also started using Webflow, a no-code platform, recently with one of our clients, and more and more of our designers are learning how to use this product. No list of design software is complete without mentioning Adobe. While many of their tools can be helpful, our designers mainly use Adobe XD.
The list could go on forever, but let me finish with a few more useful tools: Axure is a great tool for creating prototypes if we want to test more complex flows, so this tool is used by designers and researchers together. Useberry and Usability hub are just examples of great tools our researchers use. They are useful for smaller tests, such as A/B tests or preference tests for only one or a few screens with only a few questions.
What have been the most influential books, podcasts, or other resources?
I will start with two companies that served as an inspiration for me along the way. Buffer's company values and their dedication to support the personal growth of their team members inspired me to create a flat organizational structure with total transparency. At UX studio, everybody can access our financial data, our contracts, and everybody has a say in important decisions. When we decided to start working on our own product, I use Basecamp as an inspiration. This company also started as an agency and managed to create a successful product.
A surprising inspiration came from a movie. In The Intern, there is an entrepreneur who assigns a lot of tasks to her assistant but never thanks him. Watching this made me realize that I didn't thank my teammates for their hard work as often as I should have. It doesn't mean I wasn't grateful, I just forgot to let my colleagues know. Since then, I make sure I praise my team members and thank them for their efforts.
As for books, Reinventing Organizations by Frederic Laloux influenced me a lot in my determination to create a humane, flat organization. My most recent read is Turn the Ship Around by L. David Marquet, a book about creating a team where team members are encouraged and able to make decisions without their leaders.
Advice for other entrepreneurs who want to get started or are just starting?
As for starting your business, the most crucial element you need is determination. Don’t wait for a very large amount of money saved, don’t wait for a loan. Start small and build yourself and your business up from the ground.
Also, admit if you need help and don’t try to do everything on your own. Yes, I am grateful for all the things I learned along the way. From being a UX designer, I went to marketing, sales, and people management, but I admitted when I wasn’t ready for something and hired someone to help me. This also goes for people management. Don’t put off choosing team leaders when the size of your team grows. Even independent people who can make decisions on their own will need someone to lead them and make sure they are listened to. You alone won’t be able to do it for 30+ people.
You obviously need to find a product or service that is in demand, but a good core team is also essential. Your team should be outstanding at what they do, but it is also important that you have mutual trust and respect for each other.
I wrote an article about this topic on our blog quite a few years ago, but I think most of it is still valid. If you’d like to read more about what I believe to be the most vital stages of building a successful company, you can read it here.
Are you looking to hire for certain positions right now?
We are expanding our teams at the moment, so we are looking for amazing people to join us in different full-time paid positions. We are looking for designers for both our product and agency teams and marketers for our new product. All of our open positions are advertised with detailed descriptions on our website.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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