What a wild an in-krit-able year.
We had a founding partner leave, and then grew the team to 6. We crossed the $400,000 mark in annual sales and came this close to crossing the $1 million all-time mark. We launched a new company on behalf of a client and shuttered one of our own. We dealt with critical bugs and burnout.
We narrowed our positioning and went all in on content. We signed up for health insurance. We struggled to get our finances in order, but finally found a project management system that works (for now).
We traveled for a consulting project for the first time and won a project over one of our heroes. We realized we had no idea how to hire people. Then we figured out how to hire people.
This year epitomized the up and down nature of entrepreneurship.
Let's take a closer look.
Here’s what I’ll be covering, feel free to skip ahead to the section that looks most interesting to you:
- Goals - What were they and did we hit them?
- Stats - How much money did we make?
- Best resources of 2018 - Our favorite books, podcasts & blog posts
- Highs - What went well?
- Lows - What didn’t go well?
- Iterating on how we manage projects
- Going all in on content & positioning
- Personal lessons learned
- Goals and focus for 2019
At the beginning of 2018, our overarching (unwritten) goal was growth. We were getting by with a team of 4, like we had been for about two years. But we weren't doing any more than getting by. It was time to take the next step.
We finished the year as a team of 6, so I'd call that a win.
We actually changed direction halfway through the year, though. After bringing on two new full-time developers, our margins weren't where they need to be. So we shifted our focus from growth to improving profits.
Each quarter, we used OKRs to guide us. Here's a look at our goals from each quarter, how we did, and what the takeaways were.
Objective: Kill it this quarter so that we’re at a place where we have to hire at least one person.
- Hit 80% capacity in Q1 ❌
- 1 Roadmapping Session per month ✅
- Launch 1 workshop ❌
Takeaways: This was our worst quarter of the year - we lost money almost every month even though our burn rate was low. Historically the first quarter has always been a slow time for us. Luckily we had enough cash to get through it, and the work we did this quarter set us up well for Q2.
But finances were tight.
Objective: Raise all our salaries to market rates.
- Book four Roadmapping Sessions ✅
- Turn a profit every month ❌
- Close $24,000 in recurring revenue ✅
Takeaways: Even though we didn't turn a profit every month, we came close. That turned out to be one of our most powerful Key Results all year; it gave us something clear to work towards. Interestingly, we changed our objective away from hiring and then were able to hire. One mistake was that all these were sales goals, so they fell on my shoulders.
Objective: Start hiring another developer by Oct 1st.
- Hit 100 billable hours per month ✅
- Close $24,000 in new recurring revenue ❌
- Grow local website users by 100% ✅
Takeaways: A large client told us there was a 99% chance they would close, only for the project to fall through. Lesson learned: we weren't communicating with the ultimate decision maker.
It turned out to be a good thing. We realized that adding another developer so soon could put us in an unstable position. This is the turning point I mentioned earlier, where we decided to on profitability, rather than continued growth.
Objective: Improve profitability so we can launch a new product in Q1.
- Close 5 Roadmapping Sessions ✅
- Hit a lead to conversion ratio of 25% ✅
- Line up 9 meetings with potential referral partners ✅
- Average less than two projects per day per person ✅
- Average less than 1 critical bug per month ❌
Takeaways: This was our best quarter of the year by far, but it was also one of the hardest. We had big checks coming in from new clients, but we had to do all the work for those clients. We also deployed a major update from Q3 too soon and had to spend a ton of time dealing with scary bugs.
Our mistake was treating an established platform in the healthcare space as a startup. We finally realized we had to treat it like an enterprise product.
Stats for 2018
Here are a handful of interesting stats for Krit in 2018. We're still wrapping up our finances from the end of the year, but these should give you a good snapshot.
- Sales: ~$405,000
- Expenses: ~$375,000
- Profit: ~$30,000
- Team growth: -1, +3
- Best month: $72,453 in sales in August (not the same as cash flow)
- Traffic: 21, 823 users & 42,600 pageviews
- Highest performing blog post: 5 examples of no-code prototypes
- Clients who came from content: 2
- Newsletter subscribers: 1,638 👉 1,863
- New subscribers: 759
Our newsletter subscribers in 2018.Note to self: I need to figure out what happened in May and then recreate it. I believe that was the month our newsletter was featured in an article on Forbes.
Best resources of 2018
Here are some of the resources our team found the most useful in 2018. These are books, podcasts, blog posts, and more.
The best moments from 2018:
- We recruited and hired 2 incredible new developers to join our team full time.
- We launched B3i Analytics. They've since closed Yale as one of their first customers.
- I helped surprise Austin and Kevin when Steve (the founder of B3iAnalytics) flew down to Charleston.
- One of our best friends joined our client Case Status as CTO. They got accepted into and ultimately graduated from Techstars.
- Another of our best friends joined us as a contractor to write our newsletter in February. In September she went full-time as freelancer.
- Our client Remodelmate won first place at the AfroTech pitch competition!
- We became an Open Agency and shared our financials with the world. The outpouring of support we got in response was incredible.
- We crossed $400,000 in sales for the first time.
The Startup Grind summer party at the Krit office, Austin and Garrett messing around before the photo shoot, and Andrew pitching a client's company
The worst moments in 2018:
- Having to part ways with one of our co-founders.
- Dealing with critical bugs on behalf of one of our clients.
- Struggling with burnout because of poor project planning.
- Getting our finances in order was a constant struggle throughout 2018. It's something we're still working on.
Iterating on how we manage projects
One consistent theme throughout the year was improving the way we manage projects. For software development agencies you have to consider: estimates, the size of projects, juggling multiple clients, etc.
In 2017 one of our biggest problems was inaccurate estimates. To fix that, we focused a ton of time on figuring out how to track our actual time compared to our estimated time. We ultimately built our own software tool to help.
Over the course of 2018, this problem became smaller and smaller. Our estimates have gotten better, and we've changed the way we structure projects. We now charge a flat monthly fee for most new clients, based on a bucket of hours that we'll work with each month.
In 2018 our biggest challenges became:
- keeping everyone on the team informed as we grew and I moved away from development
- distributing work in a healthy way
- keeping our clients up to date with what we're doing
We're still improving on the last one. My partner Austin has developed a nifty system in Trello that's making a big difference.
All of the cards from the "Working on this week" list then flow automatically (through a plugin called Unito) into our "Weekly schedule" board.Our weekly schedule board mirrors the individual client boards. As we move cards in our weekly schedule, Unito automatically updates the client boards.
Going all in on content and positioning
Our biggest strategic moves of 2018 were going all in on content and positioning.
The Power of Positioning
Positioning was something we'd been thinking about and testing for a while. But at the beginning of the year, we finally decided to go all in. We now position ourselves as "Your technical co-founder." It's not a perfect niche; it's still fairly broad and startups are often cash-strapped. However, it's one we are passionate about serving.
In January we redesigned the website to totally focus on non-technical founders. Honing in on our positioning has made it so much easier to explain to people what we do and why we're different. It's allowed us to focus our skillset, hone our marketing message, and appeal to the right people.
The results from positioning are best summed up from a meeting I had halfway through the year. I was getting coffee with a potential client I'd never met. He said, "I saw on your website you help non-technical founders, that's so cool, that's me!!" I'd never heard anything like that before.
On the content front, I finally accepted my shortcomings. In February I decided to hire our friend Laura Bosco to help with content. I am good at creative thinking and high-level vision. I'm terrible at consistent, repetitive work. It's something I'm trying to improve, but I'm so glad we hired Laura to help in the meantime. She has taken on more and more responsibility for our content over the year. I attribute 90% of the content success to her.
One of the most underrated secrets of marketing is the importance of consistency. Showing up on a regular basis matters more than any growth hack or brilliant strategy.
Content takes a long time to start working but there are two signs that I'm excited about:
- We got two new clients in 2018 who found out about us purely through content, not a personal referral.
- Our organic traffic is growing slowly, but steadily.
Personal lessons learned
When I realized we redesigned our website one year ago, it blew my mind. Surely that was at least two years! Nope. I've packed an incredible amount of learning into one year. Here are some of the biggest personal lessons I'm taking away.
- Setting the right goals is hard
- Hiring is hard
- Running a business is effing hard
In all seriousness…
The importance of psychological safety
In Q4 I found myself snapping at my team over issues we were having with client products. I immediately knew I was wrong, and apologized for it. Then I read Rand Fishkin's book Lost and Founder. It took reading his book to realize how serious my actions were.
In a study Google conducted, they found something interesting. The single biggest indicator of team performance is not IQ, or prior experience, but…
Anytime I snap at my team, I'm not creating an environment of psychological safety. Anytime I let a client make me feel unsafe, I'm not fostering an environment of psychological safety. And if there’s not psychological safety on the team, then mistakes will happen, the quality of our work will suffer and we’ll all be less happy. That's something that's going to stick with me, and will be a focus for the rest of my career.
The greatest value of transparency is that it's a forcing mechanism
One of our biggest decisions last year was deciding to open our financials to the world. We were honestly doing it in part because it seemed like a savvy marketing move. It's something that has stuck with people. But the marketing implications have dwindled off, and October reminded me what the greatest power of transparency is.
Transparency is a forcing mechanism. It forces us to be:
- Financially responsible
- Good partners
- A resilient team
Being transparent with our financials on a regular basis has forced us to get our numbers in order. Since then Startup Financial has been helping us clean up our books bit by bit. It also forces me to think about the implications of financial choices we make.
Being transparent with our clients forces us to do right by them.
Being transparent with our team forces us to discuss hard issues early, before they become big problems.
There are limits to transparency, but I am convinced more than ever that it's the right way to build a company. And not because it's good marketing.
The biggest shortcut in marketing is to stop taking shortcuts
I touched on this above, but we had our best year ever from a marketing standpoint. The difference? We stopped trying short-lived experiments and focused on content for the entire year. Small experiments still have their place. They're the best way to find what works for you initially, and we use them now to try new ways to promote our content. But showing up consistently is the only way to find long term success in marketing.
Never take your team for granted, and put in the work
Losing a co-founder in March hurt. Initially I was furious. I felt betrayed. The company was going through a tough time. And this person who had been in the trenches with me for years was going to leave? Now?!
Over time the anger faded, and I was able to look more clearly at the situation. I had been taking him for granted. He didn't tell me he was thinking about leaving, but it had been months since I had checked in on a deeper level.
I've always wanted to be the leader of this company. Part of that means being the one to go the extra mile, and check in. You can't wait for your team to come to you. You need to remind them regularly that they're appreciated.
We've brought on three new team members over the year. I've worked hard to make them all feel included. We conduct 1-on-1s every month with all our full-time employees (I use Claire Lew's guides for 1-on-1s). Even though we're small, they've already proved to be incredibly helpful.
Positioning is the most underrated skill in company building
I so undervalued positioning before this year.
I got dinner one night in 2017 with a mentor. He told me we needed to define our niche and pointed to a company he'd worked with. He said, "I went to them because they're great at UX. That's what they do."
I was dumbfounded. We're obsessed with UX, and here was our mentor, and he didn't understand that. Then I finally realized. We had to tell him. We have to repeatedly remind everyone what we do, and who we do it for. It's not their responsibility; it's ours.
Positioning isn't talked about enough in startups. Invest in it now. Figure out who you serve, what you do for them, and the language they use to describe themselves.
Find a good bookkeeper and CPA on day 1 and stick with them.
We tried to save money for years by managing our books ourselves. We worked with a cheap accountant. After all, our taxes aren't complicated. Right? Not worth it.
Straightening out our finances was a massive pain in 2018. It's something that still causes me a lot of stress. We've finally gotten decent at bookkeeping, and have the help of a financial advisor to keep us in line. But don't wait until you're 5 years in like us.
Goals and focus for 2019
I'm incredibly excited for the year to come. We learned so much over the past year, and have such a talented team around us. I can't help but feel like momentum is on our side. I am keeping a cautious eye on the economy, but at the same time trying to focus on what we can control.
In 2019 our focus is on improving the health of our business. We want to increase profitability without shrinking our team (or working ourselves to death). That last part is key. 2018 was a great year, but a tough one. While hard work is immensely satisfying, burnout is not.
I haven't talked about this much publicly, but our long-term goal is not to be a massive agency or to pivot back into SaaS. Either of those could happen. But no, our long-term goal is for Krit to be the greatest place in the world to work. A place where everyone can feel safe and accepted. Where people are pushed to do their best work and encouraged to explore their creativity. We want Krit to empower our customers and our community. We want to make our team members rich in more ways than one.
And personally? I never want to get a real job. 🙃