It’s the dawn of 2019 and we just made a big decision: We are stepping away from doing web design services and film production. This is really big for us because we were not doing bad business. In contrary, considering that we built up the company during our studies, we did really well. We always had something in the pipeline and did roughly 100K$ in revenue in the last year.
So why did we quit the traditional agency business? And what are we doing now? Let‘s dive in.
The quirks of traditional agency business
Way back in 2016 we started the company by meeting in a local pub. As you may guess, there was no business plan involved. Or let’s state it differently: There wasn’t any plan involved. We just saw the opportunity to work on cool projects, have fun and get paid at the same time.
And this worked out for us. We started to pick up our first clients very quickly and got things rolling.
On our way to the first client (Just three weeks after starting the company!)
After the first project, we realised what probably everyone realises after the first project: We need business cards. So we did that. Then we realised we needed a website. So we made one. And at the drop of a hat, we had a running agency with real clients.
In the summer of 2017, we changed our legal form to a GmbH (German corporate form equivalent to an LLC) and made it official. At the same time, we got the first really big client, which we did a lot of film work with.
Jumping forward to the end of 2018 and we where investing a lot of time into the company. But the more time we spend, the more we understood what’s wrong with the traditional agency business. Or: what’s hard to avoid.
Trading time for money
The sad truth about selling services is, that there is a linear relationship between time and income you can’t escape from. Getting paid by the hour is the industry standard and something every client company is used to.
And it’s like being on a hamster wheel. The more you want to earn, the faster you have to run. Or you get more people into the wheel. If you stop running, the wheel stops moving and you stop making money.
For us, it’s important to build something valuable, but we don’t want to sacrifice ourselves in the process. For us its all about building a *calm company*, where we are not forced to keep the wheel running 24/7.
The mere production of websites is becoming a common good
The world moves closer together and gets more connected every day. If you want a website today, you can hop on fivrr.com and get one for as low as 59,95€ (~ 70$). Or you can sign up for wix.com and start building the site yourself.
Can it go any lower?
While we can’t recommend anyone to get a website from Fiverr (please don’t) nor WIX, it’s great that there are options out there. The more accessible and easier it is to create websites, the better. If more people can get a website without investing a lot of money or time, more cool things will happen.
This means that the reality of making websites is changing rapidly. The high competition is going to drive prices through the floor and it’s going to be increasingly harder to find clients who pay for quality work.
The impact on our company would have been huge. In the end of 2018 most of our revenue came from doing websites. The only way to prevent is to find a niche — either in technology or industry –and go all in. But for us, the cake is not worth the candle.
This and a couple other decisions made us rethink what we are doing and eventually to head into a new direction.
A new business model
At the end of 2018 our thinking was highly influenced by three things:
The article “State of Digital Nation 2020” by Jules Ehrhardt
Design Sprint is something we have always been waiting for. We think it’s the best process right now to get an initial idea of the ground and test it against real users. For us, it’s also a great opportunity to extend our skills more into the creative process of creating digital products.
State of Digital Nation 2020 shines a light on the agency and the direction in which things are going. Many of our thoughts about the industry are reflected in Jules writing. His view gave us confidence that its good decision to get back to the drawing board.
It doesn’t have to be crazy at work, reminded us what is really important to us. We love doing business and helping companies to make real progress. But what’s far more important is to build a healthy and calm company. A company that supports Employees to live a balanced life and that provides massive value to clients.
In November we took some time off and booked an Airbnb in a small remote town in the Netherlands. Our goal was to put our heads together, talk a lot and think about the company. It was a great experience as we spoke a lot about values, opportunities, and deep topics. And on top of that, there was a lot of food involved.
Defining a new strategy using the business model canvas
We came to the conclusion, that it is time to make a shift and rethink our business. Creating websites and films for clients was always our passion, but its now time to step up and evolve.
Creating digital products is now the bulls-eye of our business model. We want to do this very fast and lean by leveraging the power of Design Sprints and time-framed development.
In the coming year, we want to help companies create digital products in a better and faster way. While leading by example and creating digital products on our own, in-house and with the goal to create lasting ventures.
We are excited. Let’s get started!