Companies very often pivot at some point during their existence. Many start-ups even pivot to a completely different type of company (Groupon was famously a cause-rallying site in its inception.)
Where the transition gets hard for companies when they change their basic business model, is possibly giving up built-up market share and clientele. How a company weathers these changes is largely down to management and dedication to a cause.
Such was life for the team at 4ormat, who were previously very successful as a development agency for clients all over the GTA. They decided to go in a different direction: a SaaS which empowers designers and creatives to showcase their work online without knowing how to code.
I recently spoke to Lukas Dryja, CEO about 4ormat's new direction.
Karen: You started your career in a slightly different way (by having your own web development firm.) What lessons did you learn from building that business that you now apply to 4ormat?
Lukas: Back when we were consulting, often a client would come to us with a proposal for a product that had every feature they could dream up. It would be up to us to say "no" to some parts of it in order to pare their feature list down to only those which would deliver real value to the end user.
We apply that process to our own product development. There's no end to the list of things we want to do, but focusing on the actual realized value to the end user allows us to say "no" to ourselves on anything that doesn't fit that requirement.
Karen: Where did the idea for 4ormat come from? Did you do any research to see if there was a market?
Lukas: Having graduated from OCADU, I had helped countless friends set up online portfolios. The process helped me realize how broken and difficult this process was. You could say that their frustrations really defined our product-market fit.
Karen: What was your MVP like?
Lukas: My co-founder Tyler Rooney and I started working on 4ormat one to two days a week which really required us to focus on the absolute bare essentials. Because of that, some of our MVP is still in production today.
It took about a year and a half to get to the public beta because of our part-time arrangement. A great example of how lean we ran things is that when we announced our pricing and signup, we actually didn't have any of the billing code written and had to give everyone their first month free because we had to wait four weeks for our merchant account to get approved.
Karen: How did you get to your first 1000 users?
Lukas: Before we launched, I had personally contacted hundreds of creatives and shared the news about 4ormat's launch. From there, the majority of our growth has been from word-of-mouth and making sure everyone received really great customer support. It probably helped that in our first year, every customer got a reply from a co-founder for any support request.
Karen: How did you scale your business once it became successful?
Lukas: Slow and steady. Because we're self-funded, we've always focused on making sure we don't waste time on operational tasks by automating as much as possible. We focus on building a world-class team and we've been vigilant about hiring people who have both amazing skills and are a great culture fit. On that front, we've been incredibly fortunate to have found such talented and passionate people.
Karen: A lot of people would think creatives who are sometimes spottily employed, might not be a great market to try to leverage, especially with subscription-based products. What have you found in usage patterns/churn?
Lukas: Subscription churn is really driven by a lack of value and engagement. We're a product-driven company so we strive to continuously deliver the features and product our communityvalues. We've also had success by proactively reaching out to our customers and having a fantastic support team who really take the time to provide support with a personal touch. When you deliver on those two things, you'd be surprised how low your churn can go.
Karen: Knowing what you know about developing for clients, how did you approach building 4ormat?
Lukas: We were always firm believers in time and materials billing for our clients, which meant we always developed products iteratively. This allowed crucial feedback at small intervals which honed the product as it was built, rather than going back and having to rebuild parts later when requirements or specifications changed.
As it turns out, this iterative approach works great for the process of finding market fit that all startups go through. We targeted a small group of avid early adopters and catered to their every need with a tight feedback loop in order to iterate through the early stages of the product as soon as possible. This allowed us to very quickly bootstrap a product with wide appeal.
Karen: What's the structure of your company like? Do you have specific cultural mandates that you implement?
Lukas: We've got a beautiful brick and beam office with everyone sitting at desks in the same big room. It works amazingly well with a team of our size and enables everyone to chime in with a different point of view whether they're a designer, developer, or on customer support.
The structure of 4ormat is pretty flat, we find this emboldens people to challenge each other more and helps only the best ideas to survive.
Company culture is incredibly important to us and we focus on evaluating culture fit when interviewing new hires. Every other Friday we all leave early for a company get-together on a local patio where we can hash out crazy ideas in a relaxed atmosphere.
As with any other startup, we learn as we go. That said, we're very lucky to have so many great people all gathered together in one office.
Karen: What's your feedback loop like? Do you poll or survey customers? Do they willingly reach out and provide feedback?
Lukas: We poll users on a regular basis to gauge how they're feeling about the product, and we have two dedicated support staff who gather feedback from users and distil it into data the rest of the team can use to inform decisions.
Karen: What's next for 4ormat?
Lukas: We are incredibly excited to be working on our second product which will complement 4ormat quite nicely. We hope to release it at the beginning of 2014. That said, we always have lots of different features in the pipeline for 4ormat.
Karen: Anything else you want to talk about?
Lukas: We're hiring! Check out our current job listings at http://4ormat.com/jobs.