I Put My Entire Life Savings Into This Startup Idea & Turned It Into An $6M Business

Pavel Shynkarenko

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Published: October 22nd, 2022

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Pavel Shynkarenko

Founder, Solar Staff

$500K

revenue/mo

Founders

Employees

Solar Staff

solarstaff.com

from Limassol, Кипр

started November 2014

$500,000

revenue/mo

Founders

Employees

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Hello! Who are you and what business did you start?🔗

I am an entrepreneur with a background in both internet business and legal consulting. My entrepreneurial journey began at the crossroads of my engineering and legal education mixed with my passion for internet law and curiosity surrounding the digital business sphere. All of that transformed me from a legal professional into a fintech entrepreneur and let me grow my company to what it is today.

Solar Staff is a solution that helps businesses work barrier-free with cross-border contractors. There are indeed other products similar to ours, but I believe that no one is doing what we do the way we do it. Solar Staff is unique because we go into countries that are typically challenging to work with (e.g., developing regions and ones with complex regulations), and we help businesses connect with freelancers in those areas as easily as if they were local specialists. We are not afraid of challenges, tough bureaucracy procedures, banking limitations or complicated tax regulations, and this is what makes Solar Staff unique.

Our clients are all types of businesses – from startups to mid-sized and large corporations. What unites them is their desire to work with freelancers from different countries and create teams based on their skills and talent, not their location. This, plus a determination to make the process as easy and convenient as possible for everyone, makes partnering with Solar Staff ideal for these companies. Our product makes interaction with freelancers 5 times faster, and this optimization helps businesses grow quicker, manage workforce costs better and become overall more productive and efficient.

I consider myself a successful entrepreneur, but success isn’t defined by money for me. Rather, it’s about freedom and the inner peace you get when you are open to possibilities and see the future you want to create for yourself and others. It's all about impressions, and money is just a necessary resource.

Solar Staff has been profitable since 2017, but to make that happen, we had to face the “valley of death” when we only had about $10-15K left in our accounts and the future was quite vague. We managed to survive, and now our future is bright and full of opportunities.

How it all started

What's your backstory and how did you come up with the idea?🔗

In 2013, I was at the peak of my work with CPA networks. I was closing successful deals and constantly on flights for business, but I realized that I had reached a ceiling in terms of challenging myself, furthering my legal practice, and growing my earning capabilities. Working with CPA networks to increase their appeal to investors and partners was no longer a challenge to me. I wanted to automate those processes and move on to something more ambitious that allowed me to operate in a more strategic, visionary role.

While this was going on, the G8/20 summit was happening, and the U.S. presented a trend toward transparency in macroeconomics and finance. This was when I decided to found a web service to make freelance deals and settlements simple and transparent for businesses. It was important for me that my new business was based on a team and technologies and not on my personal efforts and talents.

I spent all my savings to launch Solar Staff – that's about $1 million.

Since Solar Staff was my first large business idea, I was experiencing doubts and uncertainties about how everything should look and how operations should flow.

The “aha moment” for me happened in 2018. One of our first clients – The Moscow Times publishing house – was going through an ownership change at the time. The new owner had decided to give up our service. In response, the team went on strike; the managers and the authors refused to stop using Solar Staff and threatened to leave if the service left. At that moment, I knew we were doing something right.

There are no universal do's and don'ts when it comes to entrepreneurship – always take in the ideas and knowledge of others, but make sure to adapt them to your situation.

Take us through the process of designing the service and building the MVP.🔗

When we began working on Solar Staff, our development team consisted of just two developers. We purchased external payment software and paid about $150,000 for it, thinking we could just add our own interface on top of the existing structure.

We initially thought that quality was more important than aesthetics. As long as it worked well, who cares how it looks? Thus, the first version of Solar Staff looked more like an Excel form. However, we soon outgrew the external payment software because it wasn't able to give us enough freedom, so we decided to develop an in-house solution.

We took the existing frameworks and built on them, still focusing more on quality and less on the user interface, which took about a year. We moved on to a more sophisticated (and attractive!) design in 2015 when our own technology was ready. Over the first three years, we spent around $800,000 on software development, but we finally hit upon the right balance of design and functionality.

This is how our product looked in 2020

This is how it looks in 2022

Describe the process of launching the business.🔗

Our pre-launch strategy was quite funny. I have a broad network, and at least 50 people told me that they were super interested in the product and would for sure use it when it's launched. In reality, only two of them actually did start using it! This is when I had the realization that people can promise a lot, but they may not follow through, even if they had good intentions.

Our launch strategy was initially focused on the advertising market. I knew this sector pretty well and thought that advertising companies with a big number of low-cost contracts were our main customer type. It turned out that, as the saying goes, we couldn’t see the forest for the trees.

In 2016, companies of all sizes across several industries started becoming our clients. The real moment of revelation for me was when a startup built for the wild berry collection wanted to pay its gatherers via our service. I was so amazed at the lengths Solar Staff could go to and just how useful our service could be. I realized then that a product initially created for webmasters had a much wider customer and market reach.

Our product went through a huge transformation, and there were quite a lot of doubts and hesitations about things like which functionalities were most important if we should build a task management system, and so on.

While working on the company strategy, I had to "bully" the lawyer inside me. Solar Staff is a borderline product that exists at the intersection of legal tech and fintech. Because it’s right on the line, we spent the first few years trying to communicate the benefits of our service in complex “legalese” which made sense to me but confused our clients. Transforming our texts into normal language came as a difficult exercise for us, and we went through several iterations until we found the “sweet spot” that let us communicate our services in an effective and accessible way. In 2018, we ended up with the "Pay freelancers via Solar Staff" positioning, and that worked really well for us for quite some time.

Here are the top 4 lessons I received from the launch and what I would have done differently:

Lesson #1 – Do not blindly trust the promises your network gives you. They may like you as a person and as an entrepreneur, but this doesn't necessarily translate to buying your product when the time comes.

Lesson #2 – Do not underestimate product-market fit. Creating a product just because you find it brilliant will not get you anywhere. Your product should meet the needs of your customer and provide a solution for their problems. Yes, sometimes your idea may be well ahead of the market's needs, but you should see them growing into your solution within 2-3 years, not decades.

Lesson #3 – Make sure to build a great team around your product. When you first start working on your service, you become the center of the process and make every decision. That works well in the beginning because you need to keep a close eye on things and know all of the nuances of the product every step of the way. As your product grows, you need to gradually relinquish a measure of control to let your team grow, make their own mistakes and learn from them. Having people you can trust who are ready to learn is an important foundation for a successful startup.

Lesson #4 – Make sure you have a broad vision and can “see the forest for the trees.” As the founder, you need to be the one who can see the big picture and examine all aspects of the situation. It is really hard to both be involved in every small decision and process and also have a strategic, long-term mindset. It turns out that I am much more effective in overall strategy and global vision than in day-to-day operations. Thus, I delegate as many operations as possible, and Solar Staff grows at a great speed.

Since launch, what has worked to attract and retain customers?🔗

Our main sales tool is leveraging business networking and my extensive personal connections. While I recommend that founders should critically evaluate the promises their network gives, it is still one of the best ways to make your product visible to a business community. Another great sales channel for us is themed conferences and context advertising. For us, promotional budgets account for about 20-25 percent of our revenues. We spread this budget into performance (digital, ads, and SEO) and brand (PR, event, content) shares.

As for the website, in terms of sales, it acts as a useful source of information for our clients and freelancers. Usually, our new clients and freelancers are full of questions: how legal is your service? How can I invite my performers? Which companies use your service? Our website helps answer all of them and makes it easy to understand our product. Our monthly traffic this month is around 250K visitors with an average time on site of 2:30 minutes. We mainly promote Solar Staff’s website with direct ads via organic search and referrals and, so far, direct advertising shows the best acquisition metrics.

At Solar Staff, we have two types of clients – permanent and temporary ones. Those who do not usually work with freelancers may use the service for a one-off task, manage it, get results and then return to us a few months later for another one-off project. Companies that work with independent contractors permanently typically use Solar Staff for more than 4 years.

Sometimes, a longstanding partner may decide that their flow of freelancers is so large that they require their own task and payments management software. That's a healthy indicator of business growth, and we do our best to provide them with advice on how to build such a solution. In some cases, it may take up to 3 years for them to build and implement their in-house solution. During that time, we support the company fully to ensure their workforce processes are not breached.

How are you doing today and what does the future look like?🔗

Solar Staff has been profitable since 2017, and in July 2022, our revenue topped $950,000 with YOY growth of 92%. Our total revenue for 2021 is an estimated $6.1 million, and we forecast it to grow by at least twice that in 2023.

Today we have two products – one for business and one for freelancers. We divide them by marketing and expansion plans. Our B2B product is launching in the U.S. this year, and we plan to expand it into the UK as well. The freelancer product will be expanding into India, Mexico, and Brazil because we are focusing on emerging regions with compliance and financial system transparency issues.

Our big goal is to become a true industry standard for deals between businesses and freelancers. Whenever a company plans to start working with freelancers, we want Solar Staff to become the first service that comes to mind.

Through starting the business, have you learned anything particularly helpful or advantageous?🔗

Over eight years of building Solar Staff, I have made some great decisions, and I have made poor ones too. My biggest failure would be the creation of FLIME – a completely new version of Solar Staff that we built solely for Western Europe. It cost us $2 million, and we shut it down two years into the project.

We tried to build a solution that would take the best parts of Solar Staff but avoid its early-stage problems. As it turned out, FLIME had problems of its own from the start because we didn't do enough research at the pre-launch stage.

We thought that countries in northwest Europe were more or less the same, and that was our mistake. We assumed that if we created a solution that works for Germany, for example, it would work just as well for Sweden, the Netherlands, and Denmark. Well, it didn't.

While these countries may seem similar, the customers' needs were very different in each region. We learned that you need to dig deeper into what an individual country’s business problems are so that you know how to help solve them. Only when you have a clear understanding of how companies think and act in every country can you penetrate the market and provide a solution that would be well-received.

One of my best decisions was handing the wheel to an experienced CTO who had a technical background and was able to make the right decisions for all of our technology-related issues. Neither of the Solar Staff co-founders had that background, and this was something that held us back from growing the service for a long time.

Another right choice was providing team leads with complete autonomy in decision-making. When our support lead suggested that we needed two separate teams for freelancer and client support, it seemed like a waste of resources at first. However, we soon realized that contractors and companies “speak different languages,” as it were. They each make decisions differently and thus require a completely different approach to problem-solving. Having separate support units for our two major customer pools brought us to a whole new level, making Solar Staff the most service-oriented solution on the market and raising our customer LTV.

With the pandemic becoming a major factor in lots of startups' success or failure, we cannot underestimate its effect on Solar Staff. When COVID-19 hit the world in March 2020, it almost killed us. At the time, we were primarily focusing on the events, tourism, and movie industries, and they were all almost completely shut down within a month because of the lockdowns in Europe. We had to quickly adapt our strategy and shift our focus to edtech and gamedev to survive. Not only did we manage to get back on track and recover losses, but these industries still work really well for us and contribute greatly to our revenue.

Since I am a visionary and a leader strategy-wise, my habits and skills became crucial to Solar Staff`s success. What helped me the most?

The ability to look further than others do and foresee situation changes. It helped me build a service today that would become indispensable tomorrow.
Being open to innovations. We always share our experiences and speak bluntly about our plans. I think living in Cyprus helped me a lot here, as the local IT community taught me not to hide goals and plans but to be open about them and receive help and advice from fellow entrepreneurs.
Choosing to cooperate rather than compete. I understood the meaning of the expression "cooperation is the best way of interaction." Being open to competitors rather than becoming weaker because of them lets our product grow and reach new heights.

What platform/tools do you use for your business?🔗

I would not call myself a very tech-dependent person. I have a great team supporting me, but, of course, we do use several tools for productivity and time management. Among those I would name Hubspot to connect various external services, Pitch to create presentations, Asana to track marketing tasks, Jira for interacting with developers, Slack for communication, AmoCRM to track performance while working with clients and Intercom for support. And, of course, we can’t forget about Zoom for video calls and Telegram for communicating with colleagues and family.

What have been the most influential books, podcasts, or other resources?🔗

I greatly enjoy reading and listening to founders' stories. I liked Remote by Jason Fried and honestly, if I had read it earlier, my perspective might have broadened, and I probably could have saved myself a few gray hairs. From the company-building perspective, I enjoyed reading the Netflix story.

Although I do read business and motivational books, I pay more attention to fiction. It can act as a great source of inspiration and wisdom. When I was younger, I was impressed by the Strugatsky brothers, who I feel helped me in business too. I often cite their idea that "To succeed, you need to believe in yourself and ignore all difficulties along the way. If you do that, you can breach any wall you want.” Despite its simplicity and naivety, Atlas Shrugged affected me as well. I changed my perception of entrepreneurship, and I now see entrepreneurs as brave people marching ahead, not as the frauds I used to see them as before.

Overall, I see the most inspiration coming from people, whether they are fictional characters or real people. Anyone's story can act as a huge inspiration, and this is why I enjoy living in different countries. Traveling and getting to know new cultures enriches you and teaches you to understand different types of people. After having lived in Hong Kong and Bangkok, I now understand how Asian people think. After living in the Netherlands, I became open to different opinions and now don't judge those who think differently than me. Overall, Amsterdam is the place to come if you want to see true freedom of speech and diversity of opinions. People here do not aim to proselytize you; every opinion counts here.

Advice for other entrepreneurs who want to get started or are just starting out?🔗

Beware of the product-market mismatch. People often can't take an unbiased look at their product. When they have a great idea, they lose perspective and the ability to critically evaluate its value or prospects. You should be able to catch yourself in this moment, slow down, and look at what you are doing from the outside with an open mind. You also need to give people you work with a chance to give their opinion and act as detached viewers who can help you improve your product. Although being able to persuade people you are talking to is also very important, you should know when to put your foot down and when to embrace the critic.

The greatest advice though would be to not blindly follow advice. There are no universal do's and don'ts when it comes to entrepreneurship – always take in the ideas and knowledge of others, but make sure to adapt them to your situation.

Are you looking to hire for certain positions right now?🔗

Right now, we are looking to hire a sales manager, business development manager, country manager, and editor to help Solar Staff grow its client base in the U.S. and further develop our product to meet the needs of businesses and freelancers.