Our open source 2018 Profit & Loss
Last year was a big weird fun crazy year for us. It was our 4th year in existence (and our 3rd year with employees). We had a lot of wins, built tons of great stuff, and ultimately developed a strong foundation for the studio now and into the future.
However, we experienced a lot of unforeseen growing pains that made their effect known in our Profit & Loss statement, and we’re still fighting some of those back at the time of writing. More on that below!
Historical Posts:
😇 2018 — Growth & Firsts!
- Broke $1million USD ($1.13mil) gross revenue within a single year
- Doubled our team size (6 to 12 EOY, now back to 9 at the time of writing, and currently hiring)
- Went to Amsterdam & New Mexico (with Human NYC!)
- Committed to paying for at least one of our healthcare plans in full, and released our Medicare For All sweatshirt to celebrate! (still available)
- 🔥Doubled our profit share pool ($26k to $51k)
- Started a podcast humans+computers with Human NYC
- Introduced the Sanctuary Sabbatical (more on this soon)
- Built a ton of great stuff with great people (but this isn’t a work post ;)
Note: Net Income on our profit & loss statements is after profit share, and therefore not indicative of our effectiveness at face value.
You can find our Profit & Loss Statements on Github, too:
🤯 Growing Pains & Mistakes
How to not Cannibalize your Business
In 2018, we were offered a couple contracts that were so big and involved that to take them on would mean dedicating the entire 6 person team to them. In practice, we’d need to become the internal dev team to those products, and turn down all new work for a period of 6–9 months.
This wasn’t an option for us: to turn down work for 6–9 months would mean suicide for our studio. We live and breathe by word of mouth, and for the word to turn to: “Sanctuary is busy indefinitely”, we’d be cutting ties to our network that we’ve spent years building.
So — in order to take on these giant projects, we decided to double the team (from 6 to 12) to keep the doors open to new business. This was a tough decision, but the bigger projects were far too interesting to turn down!
Turns out Doubling your Team is Hard
When our studio was 6, it was fairly easy for me to manage while also being a core contributor to a couple of projects, and slowly mentoring the folks we had in the room. Working from that fact, it didn’t seem that crazy to bring on an extra handful of people. I was wrong.
I had underestimated how much shared convention, dogma and process we had instilled in our people over the previous 2–3 years, and bringing on 6 new heads (instead of the occasional ~1) meant that all of those developers had to be up-skilled into the sanctucompu way of doing things at the same damn time. When this happens one-off, it’s pretty easy to manage, but when it happens to half of your team, it creates an enormous drain on the senior members, dragging the efficiency of everyone down dramatically.
In addition, I had also rostered myself on as a full-time contributor to one of these big projects (largely because I underestimated that efficiency hit), so in this time of training, and when I was needed most, I had to push forward with a full-time week on that project, too.
It nearly broke me, and I’m still dealing with the repercussions of that decision (and will be until Q3 — Q4 this year).
In addition, I would say that 3–4 month period (roughly September to December) caused such an efficiency hit that Sanctuary likely forfeited upward of $120k+ in potential profit.
However, that tough period was worth it. As soon as the new year hit, it was clear that all of the developers who joined during that period had been largely brought up to speed, and we’re now pulling a profit margin that is easily 2x — 3x larger than other time in our existence! 🤯
📈 Sanctuary over Time
Gross Revenue Growth
Because our profit is shared at the end of the year, we instead like to use gross revenue as a crude metric to help measure the general growth in velocity of incoming business for the studio.
2015 ($127k) — 2016 ($420k): 3.3x Growth
2016 ($420k) — 2017 ($813k): 1.93x Growth
2017 ($813k) — 2018 ($1131k): 1.39x Growth
On average, Sanctuary Computer’s Gross Revenue has grown at a rate of 2.2x per year.
Profit Share Pool Growth
What actually matters: our ability to generate profit, and share it amongst our team. Growth is dependent on a lot of variables. Read more over here.
2017 ($26,673) — 2018 ($50,996): 1.91x Growth
🌟 2019 North Star: Firing Yourself & Glowing UP
I’ve always said that I don’t want to grow the studio past 12 people.
It would be easy to create a traditional agency style business that employs project managers and pumps out shitty eCommerce websites until we grow fat and tired — but that’s not our game.
We’re here to continue building artful software & thoughtful work like no other product shop does. To keep doing so, we need to continue hosting an intimate, nurturing environment where we can think calmly and reason about our projects in a way that produces the highest possible quality, in an affordable manner.
A traditional churn-and-burn agency style business does not make for such an environment. For this reason, this year we’re planning to keep the team at roughly it’s current size (we’ll likely hire 1–2 people, bringing the team size back to around 11), and instead continuing to focus on building our ability to ship higher quality work quicker (through shared conventions & careful micro decisions — not rushing).
In addition, and after these current projects subside (roughly Q3 2019), I’ll be firing myself as a core contributor to our projects, and moving into a real CTO role for the first time. My goal will be to spend the majority of my day pairing and mentoring the raw talent we have in the room, rather than neglecting that responsibility and instead trying to push out as much work as I can. This will ultimately help us far more in our goal of creating incredible work than my individual contributions do — and will mean I’ll have extra time for growing the business, and creating new revenue streams to balance our studio on the longer term.
Let’s keep chatting!
Wanna talk more?
Please reach out at hello@sanctuary.computer — we’re friendly and open and would love to chat in greater detail on some of the specifics here.
Ultimately, we believe that large, full service agencies are becoming less appealing to clients out there, and instead, we’re hoping to encourage a world where nimble, specialist companies work together to carefully create intimate & unique work for clients, at realistic prices.
So get in touch! We’re always down for a margarita @ forgtmenot.
