Bipolar Management: How I Survive Running a SaaS & Dev Shop
Can you imagine coming to work with split identities every day?
I sure can.
To accomplish my tasks as a development agency manager AND SaaS manager, I have to.
Why?
Well, managing clients and managing products are two very different kettles of fish.
I’ve learned this the hard way when we, Spektrum, launched our first in-house product, Snipcart, back in 2013.
Today, with years of bipolar management under my belt, I feel ready to share helpful insights. Consider this post a rough guide for any manager walking in similar shoes — or seriously considering doing so!
I’ll first describe both management profiles, then try to draw takeaways on how they interact with managing a dev shop & a SaaS.
If you’re interested in learning more about Snipcart, Spektrum, or our origin story, read this interview on Indie Hackers.
Management profiles
First thing to keep in mind is that each field requires different personalities and skill sets. Your strengths as a dev shop manager can easily turn to weaknesses in a product context, and vice versa.
Personally, I know I could never work 100% of the time on the same project. I’m way too ADHD. With Spektrum, I can jump from a client in real estate to one in the insect protein business in the same day.
To me, that’s part of the beauty of bootstrapping products inside a development shop. I can participate daily in growing a long-term, motivating endeavor (Snipcart) without losing my exposure to many exciting client projects.
Now, here’s a quick overview of typical management profiles:
Dev shop manager
- Shorter attention span.
- Motivated by multiple concurrent projects.
- Expertise more horizontal than vertical.
- Strong interpersonal skills.
SaaS manager
- Enjoys deep-dives in specific fields.
- Motivated by polishing & growing a single project.
- Expertise more vertical than horizontal.
- Long-term, holistic vision.
Knowing where you find yourself on that spectrum is essential. Not only you, in fact, but also the people you hire. Similar personality traits will apply to your team; people are usually more suited for one or the other. More on that later.
Operations
One thing I learned in the last few years: you need different approaches for every layer of management.
Business perspective, sales, growth, marketing & customer relationships all differ. Here’s where my inner dev shop and SaaS managers diverge in key areas.
Marketing & sales
Client work
What you’re selling here is expertise, intellectual properties… and trust.
Agency clients can’t compare prices and expertise from competing services as easily as SaaS users. That’s why interpersonal skills are so crucial. Each client acquisition is hard work —good ol’ meetings, relationship building, and hand-shaking.
There’s no way around it. Customers want to know they can trust you with their projects. It’s as true with a dev shop as it is when picking an accountant, a bank or a doctor.
→ Proximity and customer relationships are paramount.
Product
Customers care less about the people behind the product. You need to build a strong brand, a compelling story, and social creds.
Potential clients will compare. It’s easy to put two competing products side-by-side and find the one best matching your needs. Your product needs to be reliable and offer a competitive features-price ratio.
Price is way more flexible here, as you aim for high numbers of sales.
One thing’s for sure: you won’t spend a lot of time with clients on the golf course. Product acquisition channels differ from a dev shop’s. You don’t need to spend much time and effort acquiring one user. Which opens the door to automation, streamlining, and scaling acquisition-wise.
→ Price, features, and branding come first.
With Snipcart, most of our acquisition happens through blog content and SEO efforts. Since we mostly target developers, these were the best ways for us to engage them.
Once your SaaS and dev shop have grown, the average customer value in each model is also poles apart.
Customer support & value
Client work
Once you’ve got new clients on board, your relationship building job is far from over. It’s a long-term effort, and, depending on the project, you may have to deal with a single customer on a daily basis.
You have to maintain these good relationships because the average customer value (ACV) is significant.
→ One customer can make a massive impact on business.
Product
A product customer base is way more resilient. A single customer can’t affect the whole business as much.
While important, the ACV price tag here is less critical. What you’re looking for is recurrence, and, as I said, a high-volume of sales.
The relationship with each client is sporadic. Sure, you’ll probably have a considerable support charge at some point, but rarely will you have to deal with the same client for a long period.
→ One customer can’t make or break your business.
Here’s our own example to illustrate this :
**Spektrum**ACV: 100K $
20 to 30 clients / year
The smallest project takes min. a year to complete.**Snipcart**ACV: 36 $
Over 550 acquisitions/month
Thousands of active customers
Growth
Client work
Here, doubling your profits means doubling your billed hours. Which in turn probably means hiring twice as many employees. And once your structure gets bigger, so do your costs.
Why’s that? Eventually, you’ll need to create management roles to keep your team structured. These don’t have a direct impact on revenue. This means that when scaling your business, you decrease your profit margin.
→ Growth is linear, until you scale.
Product
Once again, volume is key, but you need to keep your cost per acquisition as low as possible to sustain growth. The good news is, once you scale, your margins get bigger.
That’s because your costs don’t necessarily increase once profits start coming in. You’ll probably hire more as you sell more, but the sales/workforce relation isn’t linear.
At that point, doubling your sales doubles your profits.
→ Growth is non-linear.
Business perspective
Client work
You don’t need a whole lot of investments to launch your business. Got a particular skill, a computer, and an Internet connection? You’re good to go. You’re selling grey matter, talk about a cheap resource.
This seems very attractive as it’s cashflow impressive on a shorter term. You get paid the first minute you get to work; your business is profitable after an hour billed. There’s a catch though. Money will only keep coming in as long as you repeat the work & find new client projects.
→ Quick profitability. Increasing scaling costs.
Product
You may not see any profit for a while. Startup investments to come up with a product are significant — you may have to tighten your belt for a bit! It’s important to keep looking ahead and to think long-term.
Using a lean approach will help you go to market faster and generate cash flow.
Silver lining: lack of resources is the mother of innovation. Snipcart was able to sustain growth because it didn’t have the resources. We had to find our niche, be creative and compete on other fields than incumbent big players.
→ Initial barrier to profitability. Decreasing scaling costs.
Technical requirements
People you hire for both types of businesses are fundamentally different. It didn’t take long for us at Spektrum to realize some of our developers were better suited for one over the other.
Client work
You’ll need developers able to evolve with different technologies and switch between them. They’ll also have to operate in various fields and understand how they work quickly. Flexible devs you might call general experts.
They’ll work with a smaller range of clients, but will spend a lot more time with each of them and build close relationships (soft skills needed!). Our Spektrum developers can’t shy away from the ever-ringing phone. As for the manager, interpersonal skills are of the utmost importance here.
Pragmatism, efficiency and a focus on results are all qualities to look for in developers in a dev shop. The goal is to offer the best value for every minute billed.
→ Devs are generalists.
Product
You’ll need to make sure the people you hire have the passion for becoming experts in your field.
Mastering the intricacies of their SaaS industry will allow developers to write better code and craft a better product. Some software variables’ importance will vary across different domains: security, performance, accessibility, compliance, usability, etc.
It’s also impossible to measure the rentability of dev work for one client, so every new feature needs to be top notch and valuable for the whole actual/potential user base.
Depending on the SaaS, some developers might also have to handle customer support. Make sure their soft skills are on point if they have to!
→ Devs are specialists.
Sidenote: hiring for our dev shop with the explicit possibility to switch to SaaS worked wonders for us.
It’s important to know these distinct profiles while hiring new developers. We’ve always been very transparent about it in our business. We’ve hired devs for Spektrum that we know could never work for Snipcart and vice versa.
Takeaways
The following maxims guide every decision I make in my bipolar, everyday work.
So dev shop owners, before you start (or keep) developing SaaS products, I suggest keeping these in mind:
→ Know your strengths. Agency strength can be product weakness — compensate accordingly.
→ Keep a long-term perspective when it comes to money.
Launching a product might get in the way of buying the Tesla you’ve been craving, but ask yourself:
“Do I really need to make that much money right now?”
→ Make sure your dev shop has enough profits to sustain the funding of new products.
Your agency margins have to be great, or else you’ll lack money! Oh, and patience is a must. :)
→ Open yourself to value synergy and encourage it.
For us, it was the transfer of knowledge from one team to the other. Both do very different things, and this sharing of expertise became highly valuable.
→ Start a business, not a side project — dedicate enough resources.
If you don’t treat your SaaS idea seriously, you’ll never turn it into a serious business. This might mean letting go of billable hours in the short term. But your SaaS might end up outshining your dev shop!
Above all, don’t shy away from risks. Jump into new projects. Shake up your company dynamics.
Both yourself and your team will grow as a result, whatever the outcome.
