In this post, I’m telling the story of how I decided to walk away from a profitable small company that I started. After making £1M in revenue, I made some of my closest friends redundant, let clients go and wound up operations altogether.
Setting the scene
The company we’re talking about is Zoetrope Labs. I started it immediately after finishing university in June 2013. For the first ~18 months or so, the company raised about £120K and spent nearly all of that on developing a 360° e-commerce photography system - more on that another time. The “3D-photography-as-a-service” did not stick at all. We were very low on morale, and even lower on cash. At that point, we had less than 1 month of money left.
I’m not entirely sure why, but I was not ready to give up at that point. We needed to generate some cash - and promptly!
By mid-2015, my co-founder (Rich) and I had landed our first major contract for “IoT Consulting” (this was the latest buzzword at the time, and happened to be an excellent match for our skillsets). That was worth something like £80K over 9 months.
Things continued along those lines - a couple more contracts worth £20K+, then the big one - a major IoT product development project worth £170K over 1 year. The team slowly built up over this time, until there were 7 of us in late 2016.
Here’s where it gets tricky. For the first 2 years or so of consulting work, I was far more concerned with keeping the money flowing, getting better at sales, and not screwing up the delivery of our projects. Eventually, as these things became more regular and my mind less clouded, there was room to remember what I actually set out to do - build a scalable product based company!
Don’t get me wrong, there’s a great sense of reward in delivering hardware and software to customers and them being able to run their businesses with your work. It’s just that after a while, you start to wish you were building for yourself, where you can see the ROI rather than someone else.
Consulting felt crazy difficult for a long time, then suddenly, it was like being in a hamster wheel. Predictable, tiring. There was always the constant churn of projects, constant curve-balls (e.g. employee moving away, cancelled projects) but it’s just normal stuff.
What we tried to do to overcome those
Like many consulting business owners, I wanted the business to be less dependent on projects, build recurring revenue, and increase scalability (i.e. revenue per developer). The aims of this were really freedom from the pressure of consulting and also the freedom to create something the way I wanted it to be, at least with comparison to consulting where the clients (understandably) exert quite some control on occasion.
Using some time between other projects, as well as moonlighting, we experimented with several ideas to see where something could go. I’ll go into more detail on these another time, but briefly, the product experiments were:
- ZConnect - This was a complete IoT platform, which we’d developed in part for a large client who wanted a bespoke platform, and then extended for other uses.
- Overlock (site just for reference) - This was a product which we desperately needed when we were working in the IoT space.
- Tavern, which was an “Engineering as marketing” project as first. We considered making a functional API monitoring solution around this. This was Mike Boulton’s pet project, and still is today - shout out to Boulton!
Of the 3, Overlock was the one we really did with force and intention, including making an MVP in 2 months (based on ZConnect), visiting an IoT fair and having about 30/40 follow up conversations with potential customers from that, including some giant companies like Bosch. Through that process, we found that everyone wanted a product like Overlock, but everyone’s needs did not overlap enough that we could productize without a significant consulting phase for each customer. That works for SAP and Salesforce, but it’s not really what I was after for my company.
How it ultimately didn’t work out
We spent about £100K on the downtime needed for those projects and the associated marketing spend to explore the idea with potential customers. Not a problematic amount to spend, but it did highlight how quickly money can go into these things.
The business was healthy, and we were just at the start of 3 reasonably big consulting projects which were based around ZConnect.
Then Rich and I decided to pull the plug.
At that point, we had worked really hard for about 5 years. I was exhausted. Rich was exhausted. But most of all, we did not have a business of a large enough size that we could hire people to take the load off. I’d learned a great deal and based on the experience we’d had I knew that with the current course of action, we were never going to have the time or the energy to make a product and achieve market fit.
Rich and I went for a walk, sat on some steps in one of my favourite parts of Bristol and made the decision that we were stuck in a rut. We made a decision on the spot.
Making the decision to shut down was not as hard as you’d probably imagine. We had discussed the same topic about 6 months earlier - triggered us to put a lot of effort into what one last big push to make something scalable with Overlock. Following this, we went back to the office and finished the day as if it were any other day. Probably in denial about what had just happened.
The next day was far less comfortable - I had to let the team know my decision. I’d be lying if I said I didn’t shed a tear. The team were massively supportive of the decision. I knew that none of them would have any trouble moving on and sure enough, they were all in new jobs in no time.
It took about 6 weeks to finish our projects, hand everything over and sell assets. There were some tough conversations with clients, though however pissed off or disappointed they were, I still knew that it was far better to be doing that than continuing to work with them when my heart wasn’t in it any more.
Overall I spent 3.5 years in the tech consulting business, turned over very nearly £1M and was able to pay back the loans which formed most of the original investment.
1 year on
I went straight on to python contracting the Monday after handing over the keys to the Zoetrope Labs office with no break. Rich had a Holiday and then did the same thing.
Regardless of still working - I was relieved to be working 40 hours a week rather than 50+ and with comparatively low responsibility. The first Holiday where I wasn’t worried about what was going on at Zoetrope was also fantastic.
I took a few months just to take it easy, go to the gym more, spend more time with my wife and take care of myself a bit more. I didn’t have much of an urge to make things for a little while. Over this time the “batteries recharged”.
From September 2018 onwards, I started working on Stalemate with Rich. One day that may be a side project that pays a bit. I’m just getting started on another side project with some other collaborators, which is really exciting.
My longer-term goal is to get to the stage that all of my income comes from one or two of my own companies, which will give me the freedom and sense of achievement I’m looking for. The plan is:
- Build and ship a side project once every 6 months or so
- Some of these should be solo, some with co-founders
- When I hit a revenue target, I will reduce the amount of time I spend contracting (e.g. by taking breaks between contracts)
- When I hit another revenue target, I may stop contracting entirely to focus on growing revenue
The rough principles of the kinds of business I want to make are:
- Automated, self-serve, online products (using an API to send a letter, or laser cut would still be no hardware on my side, so that would be okay).
- It should let me focus on the overlap of what I’m best at and what I enjoy.
- Fairy minimal capital requirements - No more than £5K needed to bootstrap
- Companies I can run from anywhere - I may want or need to spend extended periods in India (where my wife was born).
- The businesses will be Company-of-one style - not “go big or go home” startups.
- I’m not there yet, but in addition to the few constraints I mentioned, I’m picking up on some idea filters that Derrick Reimer talks about here - Thanks, Derrick!
The journey I’m just starting on is going to be a little different to a “normal indie hacker” approach. I’m planning to keep working full time and keep paying my mortgage while I bootstrap. Having released Stalemate with this approach already, I feel that it is possible.
I feel more than ever that I did the right thing - I’m healthier, happier and making a lot more progress towards my goal of having a product. I was in a comfortable rut. Not any more.