Farata Systems: Doing your own business for 5 years. Useful experience, failures and successes
Five years ago, three experienced programmers created a new company and named it Farata Systems . Fa was taken from the surname Fain , Ra from Rasputnis , and Ta from Tartakovsky . Five years is a significant stage for any business, and in this article I will tell our story.
When people create a startup, they often have a significant idea, sometimes a business plan and an “ exit strategy ” (as a rule, to be acquired by a large company for the N-th sum of money). But, was Farata a startup initially? Here is a quote from Wikipedia:
The phrase "start-up company" is often associated with rapidly growing, high-tech companies. Investors, as a rule, are most attracted to these companies by the ratio of risk and return and extensibility. Startup startup costs are lower, risks are higher, but the potential return on investment is higher. Successful start-ups tend to be more expandable than a well-established business, in the sense that, potentially, they can grow faster with limited investments in the budget, labor force and territory. Startups support several unique ways of financing. Ventures and Business Angels can help start-ups start their business by exchanging cash for an equivalent number of shares.
')
We did not have any investors. We were profitable from day one, working as paid consultants for corporate clients. We did not have a business plan. We had our own software product, but it brought a very small profit. We did not have the money to hire a professional sales manager who could sell our skills to potential customers. We had no exit strategy. We did not even have a speech for the elevator to quickly explain what we are doing. So what did we have, and why did we create this company?
We had a good nose. This was the time when Adobe acquired Macromedia and released a product to develop Rich Internet Applications (RIA). The product name was Flex, and despite the fact that its first version was created earlier, Adobe made some smart marketing moves to make Flex available. We decided to bet on this product. We started by creating technical articles and blog posts about Flex; in early 2006 there was no information on this topic at all, or there was very little. After that, we wrote a book about how to tie together Flex and Java in the development of enterprise applications.
Each of us had paid hours (and hourly rates were quite high), but we also started hiring new people and selling their services to customers. You ask how you can sell the services of a consultant to any company without a sales department? We did it with PR. The constant publication of high-quality technical materials and speeches at various meetings (from 5 people in the local user group , to a wide audience at major conferences) did their job - we began to receive requests for assistance in developing corporate RIA applications. Speaking in the language of programmers, we implemented the Design Inversion of Control pattern, or as they say in Hollywood : “Do not call us, we will call you yourself.”
But, the publication of advanced technical materials was a double-edged sword. On the one hand, clients knew that experts from Farata could successfully solve difficult tasks, on the other hand, competing consulting companies placed their low-cost consultants for "perpetual" corporate projects.
At first, we started receiving requests for help only on non-trivial situations, for example: “our company is going to release an online game in a month, but when more than two people play it, users will feel serious slowdowns in their work”,
“Our corporate application works well, but, sometimes some users lose their messages”
“You don’t need to sell us Flex, we know that it’s good for the user interface, but can you improve the reliability of the application and customize the interaction protocols so that the application meets our needs?”,
“We chose Flex to avoid page reloading, but our pilot project takes more than 40 seconds just to load the start page.”
We helped everyone, but the growth was small. Applying several consultants for projects in large companies was a good thing, but this did not open up tremendous prospects for growth.
And at some point we started to participate in project development tenders. If a large company was going to start a new project, they invited several small development companies to participate in the tender. We were ready to sign information disclosure documents in order to receive an application for project development. As experienced architects, we were able to accurately assess all the efforts necessary to successfully complete the project under consideration. We could foresee problems and warn a potential client about them. But, the players in the tenders were inexperienced - we were telling the truth.
Once, we estimated the project at 250 thousand dollars, at the same time, our competitors offered to do work for 50 thousand dollars. Now we know that they used such a strategy in order to stick their foot in the closing door and win the tender. Six months after the tender, we received a call from the project manager of the company, complaining that $ 50 thousand had turned into $ 500 thousand, and the project was in a dead end. Curious, but we have not learned anything since that incident. We believe that if the cost of the project is $ 250 thousand, then this amount should be named. But now, we propose to reduce the amount of work with a shortage of funds.
Returning to our promotion, I would like to talk about the role of technical training for our development. Two of us are Adobe-certified trainers, and all this time we have been training for corporate clients. Adobe has been developing great courses that we have used many times. But, we also found a niche unoccupied by anyone. We have become the only company that has offered advanced programs for the development of Rich Internet Applications in a bundle of Flex + Java.
Over the past two years, we have conducted low-cost public technical seminars in New York, Boston, Toronto, London, Moscow and Brussels. The seminars did not make us rich, although they were profitable, but they gave us a chance to spend several days among the development team, demonstrating our technical skills. You will not be able to fence nonsense for two days in a room filled with professional developers. Have you ever had a technical interview that lasted for two whole days? Not? We do it regularly.
These are public trainings, like interviews for us, and usually we get one or two calls from our former students, with the words: “Guys, we need help with our project.” This happens even a year after our meeting, but, better late than never.
Once, we won a large project (no, we did not lie in the application for it). How was it possible to distribute the efforts of three experienced consultants? We could not be in three different places at the same time. We needed to hire new people to get more profit and do more work. We could offer our consultants an hourly rate agreed with our client by subtracting the amount to the profitability of our company.
Between 2006 and 2008, the rates of consultants in the RIA field of development significantly decreased. It became difficult to receive payment even for expert-level services, and we switched to a mixed-rate model. If someone needed a senior developer with Flex / Java skills, we offered this resource (I hate this word, but the industry understands it well), which consisted of 10% of my time (or one of my partners) in the US and 90% of developer time from Eastern Europe.
This model works well for us. It gives peace of mind to our customers who know that their project is in good technical hands while staying within budget. This outsourcing model works because we (on the counterweight to large companies) carefully select each developer we hire overseas. Today, 25-30 people work on Farata projects.
We realized that for a small company, selling software tools for developers, literally, is impossible. People want to see the tool free, and they get it from us. We have opened the source code for a considerable number of tools that come under the name of the Clear Toolkit package, which has become another tool for the promotion of our company.
On the other hand, we created a subsidiary startup Surance Bay , which specializes in developing software for the insurance industry. Today, Farata serves as an investor (!) Of this startup, which began to make a profit in record time, but this may already be a topic for a separate article.
Two years ago, a top manager of a large company decided to create his own company. I was familiar with this man, and he came to me with a request to give advice on how to start a small business. Although, he had no experience in running a small business, his experience with big business was obvious. He began with a business plan and a variety of calculations. He asked me: “Where are you guys planning to be in five years?” How big are you going to be? What profit do you plan to get? What is your exit strategy? ". He was a very experienced manager, and quickly realized that I was not ready to answer all his questions. Finally, he said: “So you guys created a company to build a good life for yourself? „
He was right. Without knowing it, we wanted to build a good life for ourselves and do what we like. In five years, I can say that we have reached the goal. We still have no exit strategy, because we do not plan to leave. We enjoy our life, develop cool products, help our large and small clients achieve their goals, we write books, train and learn, participate in conferences, educate children, travel.
What more could we want?
The author of the original article: Jacob Fayn, programmer, expert and consultant on Java and Adobe Flex technologies. Trainer, author and co-author of several books. Known in the circles of Flex and Java developers in different countries of the world. Known to a wide range of listeners on the Russian-language podcasts about the United States and the project of IT-themes of the Radio Bermuda Triangle .
Dmitry_Zhariy says:
Read this text in English!
Try to read the text of this article in English for the sake of improving your skills and goodness.
The following link leads to a bilingual (mixed, English and Russian) version of this article. Read the text in English and use the Russian translation below, if suddenly you lose the meaning of the English text.
[EN / RU] Farata Systems: Running the company for 5 years. The lessons learned.
When people create a startup, they often have a significant idea, sometimes a business plan and an “ exit strategy ” (as a rule, to be acquired by a large company for the N-th sum of money). But, was Farata a startup initially? Here is a quote from Wikipedia:
The phrase "start-up company" is often associated with rapidly growing, high-tech companies. Investors, as a rule, are most attracted to these companies by the ratio of risk and return and extensibility. Startup startup costs are lower, risks are higher, but the potential return on investment is higher. Successful start-ups tend to be more expandable than a well-established business, in the sense that, potentially, they can grow faster with limited investments in the budget, labor force and territory. Startups support several unique ways of financing. Ventures and Business Angels can help start-ups start their business by exchanging cash for an equivalent number of shares.
')
We did not have any investors. We were profitable from day one, working as paid consultants for corporate clients. We did not have a business plan. We had our own software product, but it brought a very small profit. We did not have the money to hire a professional sales manager who could sell our skills to potential customers. We had no exit strategy. We did not even have a speech for the elevator to quickly explain what we are doing. So what did we have, and why did we create this company?
We had a good nose. This was the time when Adobe acquired Macromedia and released a product to develop Rich Internet Applications (RIA). The product name was Flex, and despite the fact that its first version was created earlier, Adobe made some smart marketing moves to make Flex available. We decided to bet on this product. We started by creating technical articles and blog posts about Flex; in early 2006 there was no information on this topic at all, or there was very little. After that, we wrote a book about how to tie together Flex and Java in the development of enterprise applications.
Each of us had paid hours (and hourly rates were quite high), but we also started hiring new people and selling their services to customers. You ask how you can sell the services of a consultant to any company without a sales department? We did it with PR. The constant publication of high-quality technical materials and speeches at various meetings (from 5 people in the local user group , to a wide audience at major conferences) did their job - we began to receive requests for assistance in developing corporate RIA applications. Speaking in the language of programmers, we implemented the Design Inversion of Control pattern, or as they say in Hollywood : “Do not call us, we will call you yourself.”
But, the publication of advanced technical materials was a double-edged sword. On the one hand, clients knew that experts from Farata could successfully solve difficult tasks, on the other hand, competing consulting companies placed their low-cost consultants for "perpetual" corporate projects.
At first, we started receiving requests for help only on non-trivial situations, for example: “our company is going to release an online game in a month, but when more than two people play it, users will feel serious slowdowns in their work”,
“Our corporate application works well, but, sometimes some users lose their messages”
“You don’t need to sell us Flex, we know that it’s good for the user interface, but can you improve the reliability of the application and customize the interaction protocols so that the application meets our needs?”,
“We chose Flex to avoid page reloading, but our pilot project takes more than 40 seconds just to load the start page.”
We helped everyone, but the growth was small. Applying several consultants for projects in large companies was a good thing, but this did not open up tremendous prospects for growth.
And at some point we started to participate in project development tenders. If a large company was going to start a new project, they invited several small development companies to participate in the tender. We were ready to sign information disclosure documents in order to receive an application for project development. As experienced architects, we were able to accurately assess all the efforts necessary to successfully complete the project under consideration. We could foresee problems and warn a potential client about them. But, the players in the tenders were inexperienced - we were telling the truth.
Once, we estimated the project at 250 thousand dollars, at the same time, our competitors offered to do work for 50 thousand dollars. Now we know that they used such a strategy in order to stick their foot in the closing door and win the tender. Six months after the tender, we received a call from the project manager of the company, complaining that $ 50 thousand had turned into $ 500 thousand, and the project was in a dead end. Curious, but we have not learned anything since that incident. We believe that if the cost of the project is $ 250 thousand, then this amount should be named. But now, we propose to reduce the amount of work with a shortage of funds.
Returning to our promotion, I would like to talk about the role of technical training for our development. Two of us are Adobe-certified trainers, and all this time we have been training for corporate clients. Adobe has been developing great courses that we have used many times. But, we also found a niche unoccupied by anyone. We have become the only company that has offered advanced programs for the development of Rich Internet Applications in a bundle of Flex + Java.
Over the past two years, we have conducted low-cost public technical seminars in New York, Boston, Toronto, London, Moscow and Brussels. The seminars did not make us rich, although they were profitable, but they gave us a chance to spend several days among the development team, demonstrating our technical skills. You will not be able to fence nonsense for two days in a room filled with professional developers. Have you ever had a technical interview that lasted for two whole days? Not? We do it regularly.
These are public trainings, like interviews for us, and usually we get one or two calls from our former students, with the words: “Guys, we need help with our project.” This happens even a year after our meeting, but, better late than never.
Once, we won a large project (no, we did not lie in the application for it). How was it possible to distribute the efforts of three experienced consultants? We could not be in three different places at the same time. We needed to hire new people to get more profit and do more work. We could offer our consultants an hourly rate agreed with our client by subtracting the amount to the profitability of our company.
Between 2006 and 2008, the rates of consultants in the RIA field of development significantly decreased. It became difficult to receive payment even for expert-level services, and we switched to a mixed-rate model. If someone needed a senior developer with Flex / Java skills, we offered this resource (I hate this word, but the industry understands it well), which consisted of 10% of my time (or one of my partners) in the US and 90% of developer time from Eastern Europe.
This model works well for us. It gives peace of mind to our customers who know that their project is in good technical hands while staying within budget. This outsourcing model works because we (on the counterweight to large companies) carefully select each developer we hire overseas. Today, 25-30 people work on Farata projects.
We realized that for a small company, selling software tools for developers, literally, is impossible. People want to see the tool free, and they get it from us. We have opened the source code for a considerable number of tools that come under the name of the Clear Toolkit package, which has become another tool for the promotion of our company.
On the other hand, we created a subsidiary startup Surance Bay , which specializes in developing software for the insurance industry. Today, Farata serves as an investor (!) Of this startup, which began to make a profit in record time, but this may already be a topic for a separate article.
Two years ago, a top manager of a large company decided to create his own company. I was familiar with this man, and he came to me with a request to give advice on how to start a small business. Although, he had no experience in running a small business, his experience with big business was obvious. He began with a business plan and a variety of calculations. He asked me: “Where are you guys planning to be in five years?” How big are you going to be? What profit do you plan to get? What is your exit strategy? ". He was a very experienced manager, and quickly realized that I was not ready to answer all his questions. Finally, he said: “So you guys created a company to build a good life for yourself? „
He was right. Without knowing it, we wanted to build a good life for ourselves and do what we like. In five years, I can say that we have reached the goal. We still have no exit strategy, because we do not plan to leave. We enjoy our life, develop cool products, help our large and small clients achieve their goals, we write books, train and learn, participate in conferences, educate children, travel.
What more could we want?
The author of the original article: Jacob Fayn, programmer, expert and consultant on Java and Adobe Flex technologies. Trainer, author and co-author of several books. Known in the circles of Flex and Java developers in different countries of the world. Known to a wide range of listeners on the Russian-language podcasts about the United States and the project of IT-themes of the Radio Bermuda Triangle .Dmitry_Zhariy says:
Read this text in English!
Try to read the text of this article in English for the sake of improving your skills and goodness.The following link leads to a bilingual (mixed, English and Russian) version of this article. Read the text in English and use the Russian translation below, if suddenly you lose the meaning of the English text.
[EN / RU] Farata Systems: Running the company for 5 years. The lessons learned.
Source: https://habr.com/ru/post/115374/
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