My goal with this article is to illustrate the philosophies behind our approach, and hopefully provide a useful resource for small teams, startups, and those curious about dipping their toes in entrepreneurial waters. This is an outline of a digital marketing agency which provides the foundation for a SaaS development team, bootstrapped and without outside investment.
The Intellitonic team formed to take advantage of a spectrum of experience from the founders, and to better address marketing needs the team’s talents were suited for. Conversations between Alex, Courtney, and me initially started when each of us were at jumping-off points in our careers and looking for what was next.
The vision we settled on (and still maintain), was to grow an agile and adept marketing team that can deliver a high quality of service to a select group of clients. We also identified offering unique to non-profit organizations like the Google Ad Grants program that offers $10,000 a month in free advertising for 501(c)(3) organizations on the AdWords platform. This aligned with our values and gave us conversation topics with local organizations.
That seems like standard stuff, but as the agency grew we also started an internal “skunkworks” product development team. If you’re unfamiliar with the term, a skunkworks typically refers to a department in a company working on experimental projects, in this case essentially a startup within a startup. The skunkworks team explores and identifies needs and problems common to our agency and our client base that can be addressed by software products and services.
Here’s the thinking behind this approach:
- Validation of need: In the software-as-a-service (SaaS) and software development community at large there are a lot of solutions looking for problems. We’re firm proponents of methodically observing and validating a need before developing a solution to address it. Establishing the agency first allows us to better characterize our own needs, and provides a client community to listen to.
- Start generating revenue: With the experience of the initial owner team, we were able to begin work and establish income immediately via the agency model. Software development can have a large up-front cost and takes longer to establish revenue.
- Funding for product development: This is a continuation of the previous point, but by establishing the agency side and initial revenue immediately, we also have an option to finance the development team ourselves instead of seeking outside investment.There are pros and cons to accepting outside money from angel investors and venture capitalists. For us, it’s more important to maintain ownership and direction of the business, rather than directed down a path that benefits investors over clients and employees. This is an important take-away for entrepreneurs, especially those in SaaS businesses: there is a big world outside of seed rounds, angel investors, venture capital, and equity investment. Don’t underestimate what the path of accepting money costs.
- Long-term business viability: We can’t make business decisions about the predicted stability of our business or target market. Investing in product development allows us to add controlled risk in exchange for a viable SaaS product (and another stream of revenue) in the future. It has also been a huge benefit to have a little technical horsepower on the team with a development staff – they can make quick work of issues that plague digital marketing (website bugs, data and analytics tracking, problems with conversion tracking, adopting and learning new tools).
There are drawbacks to this approach as well. The most obvious one is that we’re already running lean as a bootstrapped startup business – there isn’t a lot of spare capital to finance a development team that isn’t directly generating revenue right away. My advice is to operate lean, be realistic about what you can pay people (and what you can live off of), and be up front about the vision, goals, and growth of the company. We were fortunate to find people that resonated with the culture we were building and were enthusiastic to help us build it.
Ownership and Key Members
Replacement of key members is critical. I don’t mean having these people leave the company. The guiding philosophy for building a team should be replicating the skills and experience of highly valuable team members should be the. Trust me on this one – if you’re building a SaaS business or an agency, you don’t want to go it alone (think emergencies, backlog of work, vacations).
As is common, the founders of our organization represent unique experience and skill, but are also a liability. A founder has a long-term view and a more deeply vested interest in the success of the business than the average employee would, and therefore can justify longer hours and low or no-pay for a longer period. On the surface that sounds like an asset to the business, but if that individual leaves, burns out, etc., it is unlikely that you’ll find a comparable employee willing to work the same wages and hours. Prioritize hiring people with the skills to replace you.
A note on the division of ownership – this is a tough conversation to have by nature, which is all the more reason to talk about it with the other founders in the group right away. Dan Shapiro of Geekwire wrote a great article exploring The only wrong answer being an even split. There are a lot of factors to consider, so take some time exploring the equation Dan illustrates.
The strategy of a business falls somewhere beyond the vision and philosophy, but shouldn’t dig too far into the tactics or the details of the work.
We wanted to hit the ground running and not leave too much of a gap in income for the team. To cover critical systems and build our initial recurring revenue, the founders drew on our personal “black books” and investments. Beyond that, everyone had to commit serious time into:
Services: Establishing and developing our suite of services (SEO, PPC, Social, site speed optimization, suite of Google products, and detailed but easily understood reporting).
- Promotion: Involvement in the local community attending and hosting events, working with non-profit organizations. Generally getting our business name out there, as well as ourselves better known in the community.
- Reputation: We hinge on our reputation, so we have always prioritized efficient, professional, considerate communication with our clients, employees, and vendors. It’s integral to our personal values to treat everyone with respect and celebrate the success of our peers and colleagues, and we’re deliberate about communicating these values and embodying them in our work. It’s also important to be bold and request public reviews from clients to establish that reputation online.
- Team: This is without question the most critical piece of our business. As soon as we were sure we could afford it, we reached out to and chatted with people who we thought would be good fits for the culture that was beginning to form.
There is a lot to be said about a team and how to build it, but it’s far too broad and deep of a topic for a bullet point here. Suffice it to say, find the people that will be the right culture fit for your team, be transparent with them, empower them, and pay them as much as you can afford.
Beyond these basics there’s so much more that is difficult to capture. Things such as the weekly founders meetings, monthly on-one-ones, sales strategy meetings, and establishing our processes. No part of it is easy or happens by magic, but that’s not we’re asking for here.