Don’t run a startup, run a business

Piotr Zaniewicz in

Blog/Don’t run a startup, run a business

A lot of founders face a big dilemma whether they should focus on rapid growth, or build an organic business that most probably won’t become huge. That’s the same dilemma SoftwareMill’s team had to face, and they’ve come up with an interesting alternative for growth.

Lately I had a chance to talk to Jan Zborowski – co-founder and COO of SoftwareMill, a premium software development service provider based in Poland.

Why premium? SoftwareMill is all about quality – having the best team, developing the best software and working with clients that are ready to pay for it. It’s not about becoming a market unicorn – it’s just about being a great company.

This idea is the core that drives the company forward – and has influenced radical decisions like making everyone a CEO (flat organizational structure) that made SoftwareMill one of the best software dev companies to currently be working at.

So how do you build a strong company that generates big numbers in revenue without sacrificing the quality of your work… or even having a dedicated marketing and sales team?

Keep cash flowing in from multiple sources

Developers in SoftwareMill used to have too much time inbetween projects – when they had 3 contracts and finished one, people would find themselves with nothing commercial to do.

For the first two years, they had up to 15 developers on board, working on long-term projects (over 6 months) in 3-4 person teams.

The founders came up with a few ideas to reach new customers, while also encouraging developers to do something when between projects.

The first thing was going to industry conferences around the globe to connect with potential customers in person and learn about different markets. They additionaly started to use RightHello to increase profits from their trips by cold emailing to schedule meetings with targeted potential customers (case study here).

The second, more important idea was building their blog. A big part (currently 20 out of 33) of SoftwareMill’s team are bloggers.

Developers share their know-how and learnings from interesting projects, proving their expertise. That’s why potential clients are more willing to reach out and ask about their services, opening up new sales conversations.

All in all, they have great marketing without a dedicated marketing team.

Their third source of new clients took a while to build – SoftwareMill’s first 2 years were troublesome because they didn’t have a portfolio (because of long project timelines).

But when they started finishing up projects, their online portfolio grew and now is the third main reason why potential clients contact SoftwareMill.

The founders don’t want to increase outreach – they wouldn’t have time to work multiple sales processes anyways, being busy with projects and having no dedicated sales team on-board.

Okay, no sales team, no huge marketing team, what are they all about? How do they survive?

Not a typical management structure

Only professional, business-savvy, top-of-the-market developers work at SoftwareMill. As the company grew, founders could create more managerial positions and develop a traditional company structure – but they decided to make everyone a CEO instead.

Why?

Complex management makes decision making hard and extremely time-consuming.

Instead of making an instinctive call right at the heart of the problem, you have to go through a whole process of contacting higher management and waiting for approval.

Such a waste of time!

SoftwareMill’s founders also made company data transparent within the team. The interesting part was seeing how financial transparency affected developers.

Earlier each project developer had a limited budget for new expenses, and they would do their best to hit the limit.

Since everyone can make their own buying decisions, with no budget limits, they just focus on pure necessities without overspending. A completely different outcome than you’d expect, right?

Everyone is their own boss – and everyone has their own office. SoftwareMill’s team works 100% remotely, meaning they had to develop a good process to communicate.

They created one by trial and error, trying out different communication tools, meeting once a month, feedbacking and troubleshooting for 6 months.

Speaking of meetings, Jan gave me a great tip for gathering feedback from your team. SoftwareMill’s founders found that directly asking about project details and pain points didn’t give them the real answers they needed to improve team productivity.

So they started asking about their team members’ moods instead.

Because of this they got the information they needed, really rooted in developers’ pains, meaning they could help them much better.

These are the main things that make SoftwareMill truly agile – teams of 2-5 developers run projects from A to Z without any middlemen.

Developers are in direct contact with their clients from initial negotiations to delivering ready solutions.

Scaling doesn’t have to mean extensive hiring

SoftwareMill’s founders have an interesting approach towards scaling their company. They have no plans of becoming a corporate-sized moloch, they prefer to be an agile, mid-sized company.

A year ago the team decided to freeze hiring. Thanks to this move, they managed to resolve all complicated client relationships, improve their workflows and improve team morale.

But unfreezing hiring turned out to be problematic. Now they hire whenever they come across exceptional developers – which are a diamond dozen, meaning that ultimately they’re not hiring many people, maintaining the mid-size stability they want.

As for scaling, SoftwareMill founders want to do it with startup-like products. The first one was Codebrag, a top notch app for coders to feedback each other’s work, catch mistakes and help everyone build better software.

But they didn’t verify their idea with the market first. Which is why, long story short, Codebrag didn’t return the cash they spent developing it. Now it’s an open-source project that even further established SoftwareMill’s position as bonafide pros’, so it still paid off.

Jan mentioned two important product lessons from this:

  • sell as quickly as you can – validate your solution, and then develop it further
  • fail fast – pitch new ideas to clients and if no-one is willing to buy, let go

Their new project is about automating time-consuming HR tasks – basically it’s supposed to solve their own problems. It will feature automatic outreach to candidates, analysis of CVs and more.

This time around, they highlighted the 3 top functionalities they could create, created marketing messaging for them and collected feedback, comments and signups online to verify if the market needs this.

There are many roads to success

As you can see, SoftwareMill, next to Netguru and Arkency which I covered in previous articles, offers yet another fresh take on software development companies.

When you focus purely on quality like SoftwareMill’s team, scaling becomes hard because exceptional developers are a diamond dozen. You can choose the product route to solve 2 problems – delays (long-term projects finish and developers have nothing to do, you delegate them to work on your product) and scaling.

Even though SoftwareMill doesn’t have a dedicated sales team – they’ve made sure they have the fuel for sales, leads. They come from multiple sources – conferences, blogging, references – which is why SoftwareMill can choose who they prefer to work with.

They can let go of some clients and focus on the best, mutually beneficial business relationships. Isn’t that what all entrepreneurs should strive for?

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Piotr Zaniewicz

Founder and CEO at RightHello. Believes that the most important validation of business ideas is to find paying clients. That’s when you know you’re going in the right direction.

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