Are you ready for another IT series with CEOs, founders, and CTOs of software development and testing agencies? This time we’ll talk about ProductDone, a software development company that specializes in Rapid MVP development.
ProductDone’s team has helped multiple startups across the world achieve successful results. Want to know whether New Zealand is a good place to do business? One of ProductDone’s co-founders shared his experience and some surprising facts about running an agency in New Zealand. Let’s get started!
In this conversation, Sam Kamani, CEO of ProductDone, together with Redwerk’s founder Konstantin Klyagin, talked about an agency model, management, cultural differences, hiring tech employees, different types of marketing, and online advertising. Sounds interesting? Read on to learn more!
Sam, when did you start ProductDone?
About 15-16 months ago.
So it’s a very young company, less than two years.
How many employees do you have at the moment?
About 8-9 employees. A small team.
What was the reason for starting?
I know how hard it is to build startups. I’ve done it myself and it was quite a success. So I thought I could do the same thing for others.
How would you describe the agency model?
It’s a bit different. We work as an entrepreneur’s co-founder or CTO.
But still it’s an agency.
What’s the most important in this kind of an agency model?
It’s not just about providing entrepreneurs with guidance and advice. Our clients don’t look for a typical agency. If you go to a typical one, they would look for perfection. They don’t want anything wonky. But for us, it’s building an MVP on a very limited budget.
I know a bunch of agencies that do MVPs as well. But this one is dedicated. Do you plan to launch any products within this company? Maybe some tools to help startupers?
Yes, we will. But we want to do it right. We want to find the problem and solve it.
I can give you an idea about the problem – lack of complete understanding of how the product should work or lack of experience working with requirements. If you can gather those requirements and put them in a box so that you clearly understand what exactly they want – that would be a great product.
Just work with the requirements together with UI designs and business logic. I’m sure there are such products, but maybe they can be implemented at a limited scale.
For example, I’m the client or the person using this product. I will be asked some questions and then, based on the answers, it will make the specification of what this product will have. Something like that.
But there are no specific products in mind yet, right?
No specific products. We get ideas all the time, but we keep focus on our primary objective and try not to get distracted. We also want to make sure that the need exists and that people will use this product. What I see all the time is that founders build something just because they have an idea, not because they really want to solve a problem.
Some don’t even bother to do market research. They start building something that already exists which they are not aware of. This happens all the time.
Market research is hard, because people can say all sorts of things just to be nice.
Feedback from friends and family will always be positive.
Or even from strangers because they want to be nice to you as well. No one wants to be mean. They don’t even know you.
Maybe it’s an idea for another agency or another company – people who tell you the truth about your idea.
You know how to get people to tell you the truth? Ask them for money. If it’s such a good idea, do you want to pay me $50 to sign up for a subscription?
With the money on the table. Not some time in the future.
Yes, right now. If they do that, then it’s a good idea. If they don’t, then you know the answer.
Alright. Speaking of cultural differences between India and New Zealand. How would you describe them? Did you get to work somewhere in India?
Very little. Just for six months. But I still go there every couple of years. I’ve worked in the US and Australia with different companies promoting products. You are staying there 1-2 months, and they are traveling with you. Silicon Valley and all that. Massive cultural differences.
I just want to know how New Zealand is different from the rest of the world. If you could describe that in a few points.
New Zealand is very small, 5 million people. A lot of business is done through word-of-mouth there. You have to know people.
But in a small community, maybe cold calling and texting also works, right?
Less. Most of the jobs never get advertised in New Zealand. They all go through people. Education is not as important as local experience. If someone comes with a PhD, it doesn’t matter. They would take someone who hasn’t completed school but has more experience than a master or PhD. Of course, things are different if you are a doctor.
There should also be a massive lack of human resources on the technical side.
There is a massive lack. It’s really hard to find people.
Then they’re gonna take everyone.
Still they first go through “hey, do you know someone who’s this kind of thing?”.
I’m happy that word-of-mouth in hiring has popped up because my next question is about your company. What was your first hire?
The first hire was from the parent company Orchid. We started moving employees from there to ProductDone. That was easy but then last week we also had one hiring through advertising. We did that word-of-mouth first but we didn’t find anyone.
What was the level of an employee?
Junior level. Just graduated from university.
I wonder what it takes to hire a senior or a mid-level software developer.
I don’t know. We hired all senior specialists from the parent company.
Do you have only software developers on the team?
Software developers and designers. But no sales and marketing.
Were the designers also moved from the parent company?
1-2 designers were moved and 1-2 we hired from outside. We kept all the extra CVs that we didn’t hire to use them as contractors. They’re cool for contract work, always part-time. We have a lot of overflow.
Who has taken care about HR and recruitment?
During the first two years, it makes sense to do it yourself. I don’t know if it makes sense to ask you about delegating your duties. Do you have to do that yet?
We delegate in between the founders. So if you’re good at writing content, you can do that. I can do some other stuff like LinkedIn. I speak at events and things like that all the time. I enjoy networking. That’s why I’m here.
That’s what I usually do. When someone is reaching out to me, I’m like “Yes, let’s meet, it must be cool”. I can learn something new and get valuable insights. So far you haven’t had any staff turnover, right? Just the same team you have started with.
Yes, the same team because it’s so new.
Otherwise, it would be too fast. So, the sales section. How do you normally start a project?
People contact us pretty much.
What happens after that?
We just sit down with them and discuss what they want to build. It is on a case-by-case basis. Every entrepreneur is different. Some don’t even have money.
How do you work with that?
We don’t. But as a human being, I just catch up with them and guide them like this is what you need to raise money. The easiest way and the first step is friends and family. In most cases, people won’t get angel funding or seed funding just based on an idea. Unless you’re really well-known, then money is no problem.
Is there an ecosystem in New Zealand for that?
There are many funding options in New Zealand, lots of seed. But there are maybe two places for B.C. funding. It’s really easy to launch a business in New Zealand. You can start a company in one or two hours. It doesn’t matter where you’re from.
Many countries are moving in this direction.
It has always been like this in New Zealand. No bureaucracy.
How difficult is it to stay afloat?
That’s the big question because any company needs two key things to survive. The first thing is the market and the second one is capital. For example, the shoes I’m wearing started in New Zealand, but they haven’t registered their company yet. They know they’ve got 5 million people and only 20,000 will buy their shoes. That’s it, the market is gone. That’s why they went straight to the US and China – the largest markets in the world.
New Zealand can be a good sandbox to test out an idea.
That’s exactly what it’s used for. A lot of large tech companies test their products here because it’s a developed country. It’s easy to set up and do a test case here. Many fintech products have been tested in New Zealand.
But it depends on the legislation, how permissive it is for fintech companies.
It is pretty good and easy. The fintech lobby has done really good steps to work with the government.
I have an observation about the fintech space here. Almost no place I have been to so far like a restaurant or bar accepts payWave. Every terminal is equipped with PayPass in Ukraine. You can just pay with your mobile phone.
Do you know why? Because the banks here charge 1.5% to the merchant.
Another point for the fintech industry. This is what you have to get rid of.
The thing is that New Zealand was one of the first countries to have EFTPOS terminals. Even 15 years ago, I carried no cash, whereas in all other places I’ve traveled to I had to carry cash. New Zealand was like a test case. Now everyone has EFTPOS machines.
There wasn’t that much of an incentive. And once again there is no market. It’s not a strong enough incentive for any big company to do anything. It’s good to test but then you have to move to a bigger market – the US and China. You need the volume.
The second thing is capital. There is not enough capital. There’s only like 300,000 or maximum 1 million at the seed stage. If you want VC funding, you have to be in the US, China or India.
Speaking of sales, do you get all your customers through word-of-mouth?
Well, we do adverts as well, but not a lot.
Yeah, that’s expensive. But we don’t do much.
How many leads do you get per week?
Maybe 6-7 organic and 3-4 from adverts. But that’s fine.
Why are you doing so well on organic? Have you done some SEO?
No, not much. We have just three blog articles. I go to speak at events, a bit of networking, and a bit of a website. We’ve got free tools and stuff that we did earlier. We’re going to take that down because we’re getting too many rubbish leads that waste time.
We have an assessment approach in our company. It’s standard and it’s called BANT – budget, authority, needs, and timeline. This is how you roll out the leads that are not relevant or don’t have the budget.
How long have you guys been in business?
15 years. I started this company in 2005.
Do you have other offices apart from Ukraine?
No, I have two offices in Ukraine. All of them, including the sales, are based in Ukraine.
It’s quite common for Indian companies to have a satellite office and sales people in the US.
I tried that a few times and didn’t work out. It was a waste of money. I think it set me back by 25 grand each time.
It’s not expensive though.
Well, if it doesn’t bring you any business – it’s expensive. With 25 grand, I can do a lot with my sales guys in Ukraine.
Yeah, 25 grand in adverts can do a lot.
In marketing and content marketing as well.
You’d get so much content out of that. A whole year of content.
This is how you get organic leads which are better because they’re warm. So your customers are from New Zealand? All of them, 100%?
No. We get customers from overseas all the time but a lot of them have been time-wasters because of distrust. In New Zealand, there’s trust. The customers can come, see our team, and everything.
So, the type of customers are startuppers with a budget or without who need an MVP built. How do you price your services?
It depends on what they want to build. It could be anything, you know.
Well, a typical app. There has to be a system. We charge per hour on the Time & Material basis. First we estimate the effort. But we estimate it as a range: from X to Y hours and based on that we also quote the budget for the project.
This is how we manage our customers’ expectations. But then we bill per hour. At the end of each month we export the hours from our internal tracker, multiply them by the hourly rate and then send it out.
We tried to do that, but individual entrepreneurs and founders have been burnt by a bad experience somewhere. They started to develop, then the project got out of hand and they ended up with an unbuilt product so that they had to start all over again.
Well, an alternative would be fixed quotes.
Yeah. We do a bit of fixed quotes, but we try to manage their expectations. So it does take a bit more of a hands-on. It’s like “Hey, look, we’ll have to remove all these features, but if you want all these back, it will cost you this money”.
So, you quote it first, on an hourly basis, and then you execute the project as a fixed-price quote.
Yeah, as a fixed quote. But then they can add more because they always do this scope creep, you know.
This is exactly why we dropped this practice entirely. We don’t do a fixed quote.
As we are still at an early stage, we’re playing around and trying different models to see what works.
What are the hourly rates in New Zealand?
From NZ$80 to NZ$200. The average would be around NZ$120-150.
We are still cheaper. Eastern Europe is still cheaper but not as cheap as it used to be. Nowadays, we charge 50 US dollars.
That would be around NZ$80. If you go to an independent contractor, they might charge you NZ$80. If you go to a really big agency, they’ll charge you about NZ$180, and if it’s a small agency about NZ$120. So, it’s still not so expensive. The USA can be more expensive, especially the Bay Area.
How often do you or your employees travel?
I used to travel more for my other businesses. We haven’t been traveling a lot because we’ve been so busy and focused on building the team. There’s still so much demand here. But we’ll travel later to attend some conferences.
What I’m trying to do is build my own brand, become known as an author so that I get invited as a speaker because that is more useful. When I go to a conference, I can only meet people one-on-one, but if I’m a speaker, I can meet everyone.
What do you normally speak about at the conferences? I’ve been pondering this, but I’ve never actually spoken.
You have to find what your niche is, you know. My niches are startups and MVPs. Your niche might be B2B and you know how you can increase the productivity in your company by using technology. And then you might suggest a B2B SaaS product or something like that.
We specialize in SaaS.
What’s the average range of a completed SaaS product? What would it cost a corporation?
That’s very difficult to estimate because SaaS products are so different. There’s a project that we’ve run for seven years. It still continues, but they took it in-house. I don’t even remember how many hours we spent or how much money they burnt with us during those 7 years.
But it’s a solid product, still in use and development. It’s called Page Freezer – website archiving tool. What’s cool about this product is that it takes every asset, picture, or page and timestamps it so that it can be used as evidence in court.
That’s very valuable.
Well, I think this one costs over half a million.
Do you get any smaller projects? We get only small ones.
Of course we do. We try not to take on projects that are 1-2 months. But they can be as short as 3-6 months. It’s fine. You can plan them out well. You can execute according to the schedule unless something unexpected happens or if you depend on a third party which doesn’t deliver.
So, just find your niche. If you are selling to corporates, look at a cross-section of your clients. What’s the main problem you’ve seen?
This is on my list this year.
We have to do the same, you know, find a niche. We can’t sell all things to all people, we have to narrow it down. The easiest place to start in New Zealand, the US and Australia is universities, because they all have some programs and they all invite external speakers. This is to get practice. Then look for meetups, go to your local ones, they are often looking for speakers.
Actually we host meetups. But those are mostly technical. They pick a tech subject from what they’re working on, they come and speak about it.
But there are meetups on any topic you can think of, including how to learn magic or art, business or management.
How do you magically find the niche for your company?
Haha, yes. How to magically find customers out of thin air. So, we need practice. That’s what I’m doing. I started a year ago and last year I got three paid speaking events and the remaining were free. I speak once a month to keep practicing.
That’s a very valuable insight. This is what I’m looking for. How do you manage utilization of your resources? Are all of your resources always on projects or is there any idle time?
Since we have been in the growth mode, we haven’t had idle time. We tried different software to manage resources, including Teamwork, Trello, and various CRM software systems. We’ve finally settled on Basecamp. Have you heard about it?
Of course. We used it mostly for document management of the projects. Since we bill per hour, we need to track our time. What we use internally is Jira and also Confluence for our knowledge base. They are both from Atlassian.
So, how often do you introduce new practices to your company?
We do it all the time because we’re still exploring and searching for the best way to fulfill our needs. And also our niche would change slightly because entrepreneurs, founders, and startups have different ideas and they could be in so many different fields. You know, they could be marketplaces, SaaS products, mobile apps, AR/VR, etc.
As we get more projects, we would know that most of our projects are just in this niche. So, we will narrow it down to one niche and ignore all the rest. Then we’ll have a reusable codebase and more resources in one niche.
By the end of this year, we would know that most of our clients are in this particular niche. Then we’ll be able to build products and MVPs much faster. Once we know where all the demand is, we can productize our solution.
All right. Speaking of processes, do you document projects and processes?
We are using Basecamp for documentation. Our co-founder is really good at that. He has been documenting everything that we are doing. Our goal is to make this company run without the co-founders, but on its own. So, we are trying to document everything.
Yeah, that’s important. How I describe it normally is that we want to avoid the bus factor. If the person who has all the knowledge gets hit by a bus, you lose the entire grip on the project. And this is something you want to avoid.
How about the internal processes? You also document them, right? Or you haven’t done it yet?
Yes, we do.
All right. So, you told me that you got your degree in marketing in New Zealand.
I did marketing in 2003. I finished and since then a lot has changed. But the core things remain the same. You need to build a brand. If people know your brand, they will trust you. People have to come across your brand nine times before they start trusting it. They have to see so many different places.
Is it a rule? 9 times.
Nearly 9 times, yes. If you see an ad on Facebook, you don’t know if it’s a scam or not. But if you’ve seen the same one on a billboard and TV, or heard about it on a radio or podcast, then you’ll think it must be a legitimate company, we can deal with them and work with them.
In New Zealand, a lot of people have had bad experiences in outsourcing, especially to India because of cultural differences. In Indian culture, you can’t say “no” to your boss.
Thank you. This is exactly what I know about it. That’s why I teach my staff to let our customers and also their boss know that there is a problem coming to avoid the death march. Everyone’s working towards a deadline that’s not going to be met. That’s called the death march.
Yeah, but it’s not only that. Not everyone knows every programming language or can build everything. If you don’t have the necessary skill in a particular area then it’s better to say no because you cannot do it. It is very hard to culturally say no and disappoint someone, but eventually it will end up in disappointment and a bigger problem.
People have been burnt by a bad experience. They ended up with half-built or improperly built apps that don’t work. Thus, they have low trust to start other projects.
Does it make sense to position yourself not as outsourcers, but rather an agency? It’s different wording.
We don’t say that but that’s what our clients think because they don’t know coding. If they go to someone and it doesn’t work out, they will go to someone else. That’s just how it is.
All right. So, you said about nine times that people interact with the brand. Do you use any online advertisements besides Google Ads? Maybe some retargeting on social networks?
We want to do a video, so the Kiwi company will do a proper video for us. Then we will do video marketing on Facebook and we will try that in Sydney and Australia as well. That’s the plan for February-March. People get testimonials from our clients and all that. We’re very happy.
This is what we’ve been collecting recently as well. We’ve been trying to get as many video reviews as possible because previously we had only text. Now when there is a real person speaking about their experiences working with us, it’s much more persuasive.
What else about marketing? What are the plans? The book is kick-ass marketing. How long did it take to write?
A month. It’s called “The 30 Day Startup”, so I had to do it in 30 days. But the second one will take me ages because it’s on a different business topic: when you should pivot and when you should keep persisting. That’s what my second book is about. I’m doing it just for myself, for fun. I’m enjoying it.
Have you read any other books on startups before you wrote this one?
I am quite inspired by reading “The Lean Startup” and “Zero to One”.
Those are popular books.
Plus, I like “The Innovator’s Dilemma” by Clayton Christensen and “Good to Great”. The list of my favorite books is quite long.
Did you feel like you were repeating some thoughts from those books?
Just a few. The first half of “The 30 Day Startup” consists of case studies of all the MVPs that were built in 30 days and the second half is about growth. I’ve got stories on all the companies that I worked for or the ones that I owned, how I grew them and what marketing I did. For a gaming startup, I did a lot of influencer marketing – Twitch and YouTube.
Have you thought about influencer marketing for your current venture?
I have, but it works much better for B2C than B2B. It’s better to spend money making videos with testimonials.
This is a great idea about a promo video with testimonials. I’m gonna write it down. Once you’ve collected some testimonials, you can make a video out of them, maybe with key phrases, one after another.
What about you guys? What’s your main marketing channel?
We’ve tried a lot. What worked out well is content marketing. You gotta publish articles regularly. What works well with current customers and the leads is social media. When you post something, your customers are happy that something is happening in your company – be it the kids in the office, a married couple, or the New Year’s party. They are happy to see that you are progressing as a company and going further.
We’ve also been doing a lot of search engine optimization. This is how we are getting pretty much the same amount of leads online as you do through the website. Now I’m trying to separate the marketing for my main brand Redwerk from my second brand for quality assurance services. We do manual and automated quality assurance testing. We are marketing that under another brand – QAwerk.
It works better than all things for all people, and the same brand doing both development and testing.
Obviously, we need to have tasting as an integral part of our operation for the development brand. But, apparently, there is a lot of demand for independent testing. What I’ve been contemplating recently is that we need to add another practice there – penetration testing.
Yeah. It is just going to get bigger and bigger.
Alright. Thank you very much for talking to me. I got some valuable insights that I’m gonna bring back home.
Thank you too.
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The interview was recorded before February 24, 2022 when Russia launched its brutal military invasion of Ukraine. The Ukrainian tech industry plays a pivotal role in supporting the country’s economy. By staying active and alive IT companies continue donating to help the Armed Forces of Ukraine and humanitarian charities.
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