How I Started A $69K/Month Software Agency After A Failed Product Launch
Note: This business is no longer running. It was started in 2014 and ended in 2022. Reason for closure: Acquired by GreyNoise Intelligence.
Hello! Who are you and what business did you start?
Hi, I’m Andrew 👋I like to joke that I’m a jack of all trades and master of pun…
I run Krit, the software agency for non-technical founders. We partner with people who are experts in their field to help them design and build their Minimum Lovable Product. We get in super early and truly help our clients design and build apps from the ground up. Sometimes they’ve prototyped their ideas with a spreadsheet or a couple of no-code tools, but they don’t have any software yet.
We’re massive product nerds who care about all of the little design details the make great products stand out, while also having deep technical knowledge. Basically… come for the pretty designs, stick around for the well-written code.
In the past 3 years we’ve helped:
- An attorney take her legal tech startup from $0 to $1M in Annual Run Rate.
- A 71-year-old financial consultant build his first tech company and close customers like Yale, Brown, NYU, and Dartmouth.
- A doctor in Texas launch the first HIPAA compliant text messaging service.
- A photo booth startup build tools that are used by Amazon, Uber, Red Bull, NBC, the NFL and more.
What's your backstory and how did you come up with the idea?
I never set out to start a software agency. Growing up I never thought I would be an entrepreneur, or even get into tech.
But when I got to college I decided to take an intro to Computer Science class. My plan at the time was to teach math in the Peace Corps. I didn’t like math enough to be a math major but figured Computer Science would be interesting and involve a lot of math.
Learn what makes you great and where you need help. It will be worth every penny.
Luckily I had an incredible professor - he explained object-oriented programming to us using LOLcats - and I got hooked. I started reading everything I could about programming and discovered the startup world. The idea of being part of a small company working on interesting problems was super exciting.
Through a friend of my uncle’s, I got an interview with a new startup in town. I bombed the interview, but they had no money and I was willing to work for dirt cheap ($500 per month) so I got the job. I was lucky to be in a situation where I was a student with scholarships and some college savings from my parents, so most of my costs were covered.
In the first 6 months I was there we launched 6 mobile apps, and I was a lead developer on two of those. It was trial by fire, and I can’t imagine a better place to learn. But being the precocious punk that I was, I started thinking of all the things I would do differently if I was running the show.
Through the company, we met some people who were starting an accelerator program. They were looking for technical founders (this was Columbia, SC and all of their other applicants were non-technical) so they recruited us to join. We applied, got in, and they gave us $16,000 and 3 months of mentorship to help us get the business off the ground.
We still weren’t thinking agency, though. We wanted to be a VC backed startup. We were going to bootstrap long enough to get some traction and then raise money and build a big team.
When we entered the accelerator our idea was to build a design community like Dribbble but centered around critique (this is where the name Krit comes from). I was trying to learn design at the time and was frustrated by how hard it was to get advice and critique online. Over the first year and a half, we pivoted multiple times. We went from a design community to a project management tool for designers and ultimately launched a contract tool for freelancers called Ink.
We launched on Product Hunt and made it to #2, acquiring a few thousand users in the first few days. Then we hit a wall. We had all these users, but no one was paying us for the product. The more we talked to people to try to figure out why the more we realized most freelancers didn’t value contracts.
We thought about trying to find a new market or launching a new product. But at this point, we were burnt out and running out of money. At the same time, we had started taking on some consulting projects to pay the bills. We were actually making money doing that and we're also really enjoying it. So two years into our business we made the tough decision to shut down our product and go fulltime as an agency.
Take us through the process of designing, prototyping, and manufacturing your first product.
Our very first consulting gig came from my old bosses. They needed some extra design help and reached out to us about designing an app with them. We charged something like $5,000 to design it for them, which at the time felt like a huge amount of money.
Then, we got another gig from one of the guys running the accelerator. He was working with a local non-profit to develop a new system that would source ideas from the community for local improvement projects, then fund them. We designed and built a Hacker News/Reddit/Product Hunt style website where users could submit ideas, vote and comment on them. We got paid a whopping $2000 for that project, but we were just excited to be working on a cool product that helped the community.
Our first big project came from the Workshop service, which at the time was a paid newsletter full of project leads. We saw a lead for a Cannabis startup called Stonius looking for help with a landing page. I emailed the founder cold, and we got the job. The landing page did well, converting traffic at a roughly 10% rate, and so the founder approached us about building their Cannabis jobs platform.
This whole time, we weren’t really designing the service at all. We were just trying to make ends meet. We would take any kind of work we could get and then do the best job we could. I credit my partner Austin for getting us most of our work. Our code was alright, and I could talk to people, but it’s his design work that has always helped us stand out.
Again, it helped that we kept our costs low and undercharged too. We kept paying ourselves $500 per month through this whole time, all just scraping by. We charged $60 per hour for Stonius, and made roughly $32,000 on the MVP. One of the requirements was also that we would sign a contract using Ink so that we could dogfood our own product.
Describe the process of launching the business.
I remember the day we decided to shut down Ink vividly. We were working out of a coworking space in Columbia. There was no conference room, so we would hold our team meetings while walking around downtown. We walked over to the State House and were sitting in the grass. We had to reckon with whether we were willing to abandon the last year and a half of work, and if we were satisfied building an agency.
Once we decided that was what we wanted it was full steam ahead. We let our users know we were shutting down, and spent the next month creating a new brand and website.
The launch wasn’t nearly as dramatic as launching Ink had been. We didn’t stay up all night beforehand, or suddenly get thousands of customers. We pushed the site out to our network, told our mailing list what we were doing, and then focused on looking for work.
We tried blogging, cold email, and reaching out to other agencies for overflow work. But just like before, most of our early work came from our network.
- Photo booth software - cold email
- Non-profit website - Austin’s cousin
- Edtech website - a friend from the incubator we originally worked out of
- Real estate platform - overflow work from my old bosses
In early March, we got our first serious traction. A friend reached out because an investor in his company was looking for a team to help him build a HIPAA compliant messaging service. We met with him over the phone and took a week to quote it out. Our initial quote turned out to be massively underestimated, but it still came in at just over 6 figures. We were thoroughly convinced he would laugh it off. Then a few weeks later, before we even had a contract signed, a check came in the mail for $100,000.
Since launch, what has worked to attract and retain customers?
Finding new clients is our biggest struggle. “Non-technical founders” is a much smaller niche than we started in (when we would literally work with anybody) but it’s still broad. Our clients have been real estate agents, lawyers, financial consultants, doctors and cybersecurity professionals. But 99% of the people in those fields will never even think of building a software startup. And for the 1% that will, we need to be in front of them at precisely the right time.
This means that outbound sales (cold calling and emailing) and ads have never worked for us. What does work is content, word of mouth and growing my personal network.
The majority of our clients still come in as referrals from my personal network. So I spend a lot of time online and in real life trying to meet interesting people and be helpful.
If I get hit by a bus tomorrow though, that won’t help the business. We can hire salespeople and encourage them to do the same, but I haven’t figured out yet how I would train someone to do what I do.
So instead, a year and a half ago we decided to start investing heavily in content. Right now this means producing super high-quality blog posts and newsletters, although in the next year I want to launch a video series and/or a podcast. It’s showing some early signs of traction, in the last year we’ve closed close to $300,000 in business through our content. This often still looks like referrals, but it’s a referral from someone we’ve developed a relationship with through our blog or newsletter instead of through coffee meetings.
The main ways we promote the content we write are email (through the Krit newsletter and the Startup Watching newsletter which I purchased in 2018), organic search and twitter (largely through my personal twitter account).
When it comes to retaining clients, we do a much better job than we do acquiring clients. This has been our main source of growth. A client typically stays with us for 2-3 years once we start working together.
I can’t tell you exactly why that is except that:
- We care about producing business outcomes, not just making money off of our clients.
- We’re honest, there are a lot of dev shops out there that are shady as f*ck so we focus on being transparent and honest even when it’s hard.
- We do what we say we’re going to and try not to create additional work for our clients - the consultants I’ve hired personally that I’ve hated working with are the ones that make me babysit them or think MORE about the thing they’re supposed to be taking off of my plate.
How are you doing today and what does the future look like?
This year we’re on pace to do over $700,000 in revenue, with a profit margin of about 20% which we’re tremendously proud of. Last year our revenue was just under $400,000 with a profit margin of about 15%. That’s 75% growth YoY which is pretty huge for a small agency.
Coming into this year our goal was to focus on profitability and stability. We wanted to really improve the mechanics of the business to set ourselves up for stronger growth in the future.
We’ve considered reinvesting those profits in the business, potentially expanding into products of our own. While I expect we will eventually launch one or more info products (books, courses, etc.) for now we’re continuing to focus on what’s working, which is our core service offering. This means in the next year we want to grow our development team, double down on content and find someone who can focus full time on either sales or marketing.
We’re also excited to start a profit-sharing program for our employees this year, and so we don’t want to dip into those profits just yet. We will keep enough cash in the business to have 90 days cash on hand, whatever we do.
Our team today is 8 people strong, with 6 full-time. We’re a majority remote team, with members in Canada, Ecuador, and the Southeastern US. We’re planning our first team retreat in December, flying everyone to Charleston where we’re headquartered and renting a beach house for a long weekend.
Our longer-term goals are intentionally nebulous. I like to say that my 5-year goal is to get Krit to the point where I could walk away but won’t want to. We know that we want to continue to focus on building a world-class culture and designing products that delight and help users.
Through starting the business, have you learned anything particularly helpful or advantageous?
There are a few big turning points from the past 5 years that jump out at me. These concepts took me a long time to learn, and I’m still learning them, but they’ve helped us by leaps and bounds.
Someone needs to be focused on sales and marketing
We started as 3 technical founders and so we spent most of our time doing what we did best… programming. As a result, we constantly struggled with sales and marketing. While we certainly aren’t world-class marketers these days, as soon as I stopped coding and started focusing on the business full time we started trending in the right direction.
Embrace positioning
It took me a long time to realize that how you talk about yourself is just as important as what you do. Customers don’t have time to sort through your work or your product and figure out what you are and who you’re for. You need to tell them. The narrower your positioning the better (although we’ve built a solid business around a broad position).
Free quotes are a waste of time
This is specific for consultants, but unless you have a completely productized service don’t waste time on free quotes. You’ll end up spending tons of time doing free work for tire kickers. We developed a Roadmapping Session which costs $3500 and is a requirement for working with us. It’s the perfect way to weed out who is actually going to be a good fit for us.
Leveling up your clients is the fastest way to level up your business
At the beginning of 2019, we were struggling. Our team was overworked, I was stressed about the direction the business was going, and even though we were making money we weren’t happy. We fired two of our clients, which is one of the hardest decisions I’ve made yet, and things started to turn around right away. Now when we hit road bumps I’m not scared, I know we can handle it, and part of that is the trust I have in our clients.
What platform/tools do you use for your business?
Oof. We use a ton of software to run our business. Here are just a few:
- CraftCMS - website
- Airtable - Content calendar, CRM
- Figma - we’ve used every design tool out there, but lately, we’ve really been liking Figma
- Notion - internal company wiki (I’m hoping to publish this soon)
- Trello - project management (maybe the most important tool on here)
- Superhuman - email
- Blurt - writing
- Google docs - writing
- Convertkit - newsletter
- Google sheets - financial dashboard, project planning, frickin’ everything
- AHREFs - SEO research
We’ve played around with a bunch of social media tools, but I’ve become convinced they’re a net negative. At least for a business our size. They take you out of the platform and thus out of the conversation. I look at Twitter as a tool for building relationships as much or more than a place to promote content.
What have been the most influential books, podcasts, or other resources?
We wrote a whole blog post about our favorite articles, podcasts, and other resources for entrepreneurs. Laura, our lead writer, and I spend a ton of time reading the content. We both love learning from others. Here are a few of my personal favorite books:
- Atomic Habits - how to design your environment to build good habits and be successful
- Lost and Founder - how to be an empathetic leader and not get fucked by VCs
- Traction - a crash course in marketing, I give this to most of our new founders
- No Hard Feelings - reading this now, it’s an excellent book about emotions at work
- The Alchemist - everyone should read this, it’ll make you a more thoughtful person
And a few of my favorite podcasts:
- Armchair Expert - my favorite podcast, Dax Shepherd interviews experts and celebrities and asks about their insecurities, motivations, addictions and all that good touchy-feely stuff
- Startup - the first season came out the year we started Krit and listening is like therapy for a new founder
- IndieHackers - Courtland Allen runs one of the best communities for founders on the internet and is an incredible interviewer
- Listen Money Matters - all entrepreneurs should care about personal finance and this podcast makes it fun
- The Catch Up Call- one of my new favorites from Jon and Marshall, two former co-founders, there’s no one else who does a better job of staying on top of weird trends
Advice for other entrepreneurs who want to get started or are just starting out?
Business is 90% about positively manipulating your own psychology.
I’m becoming increasingly convinced that business is less about tactics and numbers and more about understanding yourself (and your team members if you have a team). Almost every problem you will face is a people problem. Sales not working? The problem is either the salesperson (probably you in the early days) or you don’t understand your customers.
Some marketing tactics don’t work simply because they’re not authentic to the people implementing them.
Go to therapy, hire a business coach, work on your shit. Learn what makes you great and where you need help. It will be worth every penny.
Are you looking to hire for certain positions right now?
We’re not hiring right now, but plan to grow more next year! In 2020 we want to hire 3 new full-time positions:
- Backend Developer
- UI/UX Designer
- Marketing Director
If you’re interested, email me at [email protected], I’d love to talk to you. We’re a transparent, remote company with competitive salaries and full benefits. We’re also obsessed with building a healthy and supportive culture to help our teammates grow while maintaining a healthy balance to life.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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