Transitioning From a Client Service Company to a Product Company: The Reintech Story

The founding, growth, and evolution of businesses are rarely linear and predictable, despite business owners' best intentions. The most successful businesses are the ones that managed to adapt to adverse situations and changing circumstances. Reintech has dealt with its fair share of mistakes and failures but has made it through to the other side stronger than ever. This article provides an inside look into the history of

Reintech

Starting Out: Software Services

In the beginning, we were a simple service business, providing software programming services to clients. There were occasional issues, of course, but they were all small-scale and easily solvable. We had no difficulties with clients, as most seemed to find us through recommendations. I was heavily engaged in the sales end of the business, and I found success there because I am both knowledgeable about technology and skilled in communication. I was the model "technical leader" to many of our clients; they believed what I told them because I understood the technical side of the business. In several situations, I would manage the first project for a new client myself, and this helped bolster my technical expertise as it related to their needs. Our clients were small and grew gradually, so we never felt concerned about a lack of clients or opportunities for work. 

The main problem we faced was growing our workforce. We initially tried offering courses to help bridge the experience gap between what fresh graduate developers knew and what they needed to know to be successful in the industry. These courses worked well, and this was in part due to the fact that young professionals generally underestimate their own capabilities. They frequently think that the work will be much harder than anything they've ever done before, but in terms of the technical demands (namely writing code), 80% of graduates could already do just about everything. All they lacked was experience, and they often needed direction in the form of management, but we had a strong management team to help them so everything worked out in that sense. 

Training took a long time (2-3 months) and a lot of effort. We also realized that many of our developers that we trained would move on to other opportunities within a year or two. Of course, we don't begrudge them this – it was, for many of them, their first job, and for most people their first job is not the only job they'll ever have. Fortunately, we had a number of developers that stayed with us longer, and for those we provided even more opportunities for growth. 

All the while, we had a desire to make our own products. We made the Studlava project, a platform for students seeking their first job, and it is still used today. 

It was during a big client meeting in New York City when I had the uncomfortable realization that I couldn't quite articulate what our business was. We were a small company at that point, with around 20 employees. We had several clients whom we provided software services for. Some projects we managed on our own, in-house, and for others we staffed their company with our developers. In some projects I still participated as a tech lead. This particular client in New York asked me if I could build them a big dev team in two months' time, and I had to tell him no. We also couldn't continue working on projects with fixed budgets, as we didn't have the sufficient competencies and experience to lead full-cycle product development projects, which included tasks like complex planning and risk management. As difficult as the refusal was, it served as an important turning point in our business and made us consider some important questions: what are we doing, what direction do we want to pursue, and can we scale it? 

The Birth of Reintech

We looked hard at the market and didn't like what we saw – the big players were getting bigger and smaller ones weren't growing. Continued growth and success looked unlikely on our current path.

When my business partner and I got together to think about the general direction we wanted for the business, we realized that we had three big advantages: we were profitable, we weren't particularly dependent on any one client, and we were committed to ourselves – the world was our oyster! It made sense to us that we should maximize our efforts in the area where we had the most success and could provide the most value. After a few strategic sessions, Reintech was born. 

The change was gradual, as we all had to understand and connect with the new idea before it became our reality. At first Reintech was just a few ideas about open finances, corporate culture, and the like. Much of the cultural discussion we had was on matters I've written on in the past; as a developer, I tried to create a strong engineering culture, which is the same thing I still write about today when I write about independent developers. 

Early on, we encountered a supply and demand problem we had never faced before. We thought initially that we needed more developers to be able to serve the clients that were sure to come. This did not prove to be true; when a lot of developers joined our platform, we didn't have enough customers and work to go around. This led me to another important realization – we didn't have a systematic method of acquiring new customers and promoting our business. If I were asked where our customers came from, I wouldn't have been able to answer. 

The Path to Product

Transforming an existing company is, in many ways, harder than starting a new one from the ground up. It's the process of realizing a vision while reconciling it with what's currently in place. Some parts of the vision never make it to fruition, and other parts that I thought would be valuable would prove otherwise. We determined that our most important objective was to clearly identify the value we bring as an organization to our clients. From the outside looking in, it seems almost absurd that answering the question "what are we doing" took many days. It was difficult to look at a business that is already operating and making a profit to put into words exactly what value we were providing, not just what service we were providing. 

Ultimately, we arrived at our current model – we created a recruiting platform product, built on transparency for both developers and clients, to continue supporting a strong engineering culture in the form of autonomous and mature developers.

Almost immediately, we began to streamline, throwing away everything superfluous, including our office. This was a difficult decision for us, as we were worried that everything would fall apart without an office. There was also an element of discomfort in opening our finances with existing clients, but in most cases it just resulted in a salary increase for the developers. The clients were informed about our new pricing model, which was that they were paying for just two things, the developer's salary and a commission for Reintech. Simple and honest. 

Our income declined initially under the new model. We had about 10 developers at this time, so Reintech received a commission of about $450 each. This six-month period was very difficult, so I worked part-time at Toptal. Despite this difficulty, good luck was on the horizon – one of our clients began to grow quickly, and we were able to begin self-financing. 

Expectations and Reality

Our goal was twofold: To offer developers among the highest rates on the market while working fully remotely (mind you, this was before remote work became much more common in the COVID-19 era). The rates we were able to offer our clients were competitive with market rates, but the salaries we were offering developers were above the third quartile. When the high salaries were $3,500 - $4,000, we were paying $4,500 - $5,000. Also, we have a calculator to convert the hourly rate to monthly salary with benefits.

When we took part in the PivoRak conference, we realized that developers didn't quite understand our model, thinking there had to be a "catch" of some sort. It was quite a drastic change of model for the market, and when we shared our rates, the developers didn't ask any questions!

Following this, we had to prepare to market our product. We couldn't just write code anymore, we had to make videos and other forms of outreach.

One of the very cool side benefits of the new business model was that my stress level dropped to nearly zero. My mind was clear, calm, and everything felt very straightforward. Meetings with both clients and developers no longer felt like a poker match, where bluffing is necessary and expected; now, they just felt like conversations with new friends, and that fueled me with more strength and motivation. Even though it was a tough path to change, this reassured me that we were on the right path for ourselves and our stakeholders. 

After we ran a single ad on YouTube, interest in working at Reintech seemed to explode overnight! We could have quickly welcomed a hundred outstanding developers onto our platform, but we wouldn't have had work for them all. The applicants were not only locals from Lviv, but from all over Ukraine. There were so many applications; our recruiters had 6-8 interviews per day for about a year. It worked well, and we had only spent a minuscule amount on advertising. 

Back then, I was shooting videos for promotion, and now I'm writing articles. The transformation of the business has changed my job completely, I went from programming to product development. Product development, as it relates to my work at Reintech, consists of content creation, education, and communication with customers. 

When I look back to the tasks we set out to accomplish at the beginning of the transformation, I am very pleased with our progress. Although COVID-19 impacted our overall numbers, I see enocouraging trends and positive signs. 

Our transformation was successful because of our adaptability. Especially given how tumultuous the past couple of years have been, my first advice to new company founders is that staying flexible is the key to staying in business! We are constantly faced with surprises, whether that be with customers, the pandemic, changes in the market, or anything else. All of this has forced us to constantly rethink, reinvent, and clarify our approaches in all areas: communication, technology, our services, and more. 

An atmosphere of honesty, transparency, and openness provide us with an inexhaustible source of energy. Our core idea of creating a platform for companies conducting a quick search for autonomous and mature developers remains unchanged, and the process of bringing it to life has been both a huge challenge and an incredible pleasure. 

First Published here