Building SaaS products for already established companies | Phil Alves - DevSquad
Phil: DevSquad is a consulting firm specializing in helping businesses build SaaS products. We usually work with second and third-time entrepreneurs as they’re trying to take a SaaS product to market. It’s usually a spinoff company of whatever company they already have, which is like where we typically are. Our customers are very busy because they’re running other businesses, and this SaaS is their third or fourth business. And they don’t want to go through the effort of hiring a development team because you will need developers, designers, testers, and dev ops to build a product. There’s a lot that’s involved. Our customers just want to bring the vision so we can bring product-building expertise.
Many times these founders don’t have a SaaS company. They have what you call a boring business. For example, we are building a product right now for a customer owning a hundred car washes across the country. And then he wants to build a product for other car washes like his. The SaaS that he’s using right now is not good enough because it’s built by people that are not industry experts. They don’t understand his business, so he understands it very well. He comes to us so he can help them build SaaS products. So he has a business, but he doesn’t have a SaaS. That’s actually the people that we work with.
Why should founders choose a development agency instead of building their team?
Phil: I think it depends. Do you have more time, or do you have more money? But I would say they should not choose the development agency most time. The reality is most development agencies don’t understand building a product, and they understand a project, and they’re going to go from A to B. The problem with building a new product, a SaaS, is that you don’t know exactly everything you want. You need a process that will be a little bit more flexible. Someone that will help you learn and that will help you act quickly. You are more likely actually to be able to do that, getting your own team.
But when you get your own team, you have to go with a team to get into high performing, which norming is storming, forming, and performing. I think I said them out of order, but it will take about six months to two years to get a development team to high performance. And you can save that time if you hire a company that actually can provide you without those people but actually understand building products. But we have so many horror stories of people coming to us because they hire agents who did a very bad job and held their code hostage. Unless you can hire a very high-end development company that’s very well known, that work with big brands as we work with ADP or other public companies.
I think you’re better off hiring your own development team and going through the process, and you’ll be less risky. But again, who is my customer as a person? They already have money. It’s a person that already has a business, and they have more time than they have money. They don’t want to waste six months to two years building their own team. And so they can afford an agent with a little bit more of a name, and they’re less likely to get screwed. I would say that 99% of agencies out there is a bad idea, and there are probably 10 agencies at the level of DevSsquad here in the United States that people wouldn’t get screwed, but it’s not cheap.
How are you different from other development agencies?
Phil: We really specialize in people-building products, not projects. You have to take things to market, and you have to understand what your users are doing. When building products, we put things in place, so you understand user behavior. We are helping our customers make smart bets. I like to say that building and software are about making bets. And you want to make sure that your bets are not too big. Sometimes people build the software for two years, and nobody uses it. We are going to make very small, smart bets in two weeks, stop and take those to market, and understand what’s going on.
Sometimes version one of a product might take three or four months, but you still have to think about how I can validate things along the way. And that’s that mentality of whether we’re building a product or not building a project. We have built over a hundred products for other customers out there and understand how to simplify and how people go to market quickly. And that’s what makes us.
I also have my own SaaS product, which makes me kind of like very similar to our own customers. Because our customers are someone that build a business, and now they’re building a second business, I’m doing the same thing myself, kind of like eating my own dog food. I run DevSquad, a hundred-people agency, but I also have DevStats, my own SaaS. That helps you track if your development team is getting to the high performing or not and helps you get the team there.
Now they started building their own SaaS
Phil: We started DevSqaud in 2014, and I started DevStats a year ago. DevStats is public, we just finished our last round of beta, and it’s going pretty well. We already have a few customers using it, and they really like the product. It’s going well, and we should be profitable in the next six months. The agency is very well established. It’s a hundred-person team where I have an excellent CTO and a very good VP of product. On the agency side, I am helping more with the strategy and have meetings with the team running the day-to-day fulfillment.
What I’m doing for DevStat is R&D for things that we can’t do at DevSquad. And I can tell my teams I tried that technology, and we don’t want to try it in our customer’s product, and this works, this doesn’t work. Building DevStats is part of my job at Dev Squad because I think about the strategy and how we will build better products for our customers, and my job is not fulfilling because we have a great team taking care of that.
What are the challenges that you faced working with so many software companies?
Phil: I think the biggest challenge is helping those companies realize, what is this malice bad that I can make? We often overcomplicate stuff, so simplifying and helping businesses find the quickest route to success is the biggest challenge. I feel like when you look at big companies out there with a lot of funding, and their best practice doesn’t work for a small business because a small business doesn’t have all the money they have, doesn’t have all the resources they have.
Sometimes part of the challenge is explaining to our customers, look, this approach that you write about won’t work for you because you don’t have millions of dollars, you don’t have hundreds of developers. We’re going to do this with four or six developers and sometimes helping people change their mentality and understand that what they hear the big companies doing, all the propaganda, doesn’t work for them.
What has been your biggest challenge personal challenge since founding the company?
Phil: I think we always have ups and down, and you have to realize to stay calm to the ups, so you don’t make a bunch of decisions just because things are going super well, and you have to stay calm to the down and make understand that things are going to get better. I think the challenge is not to be run by emotions but by data. I like to say that when emotions go high, intelligence goes down. As a founder, sometimes, we are like, oh my gosh, but we need to take a step back and not make a decision too quickly. Things are usually not half as bad as we think they are or not half as good as we think they are. We have to like really be taking a step back.
What has been your best growth tactic for gaining new clients?
Phil: It depends on the business. For DevSquad, it is a very established brand at this point. We got a lot of SEO traffic. We write on our blog and publish close to 10 posts every month, which brings a lot of organic traffic, and we have a lot of links that link to our sites. Our authority is very high, so we rank pretty much anything we write in our blog, so that helps. And then we do pay-per-click. We have a very big budget because that company does well. That budget is put into pay-per-click, it’s put into SEO, and that’s where most of our leads come from, they’re inbound.
For DevStats, a company starting right now, I’m trying not to lose so much money, as it’s not profitable yet. We use different strategies. Right now, we are using a cold email approach. And they’re testing our messaging, testing our real target, who they are. And that’s also working well for me. I don’t do cold emails for DevSquad at all because there are way too many agencies out there, and they tried that. In the agency space, we really have to differentiate with inbound marketing. And we are lucky because we got into the business so many years ago and have a very good marketing budget in the seven figures. That allows us to put a lot of money behind growing their business.
What is your vision for the future?
Phil: I’m not trying to grow a lot, I’m trying to build a profitable, sustainable business. I believe a lifestyle business is the best business to have because why do we work? We work to have a life in that we want to enjoy time with our friends, to enjoy experiences. My vision is to keep building sustainable businesses which are growing at a pace that can be profitable. And that’s kind of like how I will keep building DevSquad. DevSquad is already very, pretty big, and I don’t think DevSquad will get much bigger than it is in the next few years already at a hundred-people company.
And I like that size, and I still know everybody in the company. We will have customers waiting until they start work with us. We have customers that wait up to three months because you’re not trying to grow. You’re trying to deliver value for the customers that we onboard. And we’re going to be growing slowly. Because, again, my vision is not to go out and work 80 hours a week. I actually only work four days a week, I take every Friday off. I think the business works for me and not me for the business, and that’s my vision.
What is your story, Phil?
Phil: I’m originally from Brazil, actually. I learned how to code from a book. I bought a book, learned how to write PHP, and then took some connections. Then, I got my first project, and I built that for someone. And then, I used the money to pay rent in a co-working space because I wanted to be close to other people. I didn’t even have any work to do. I would just be coding for a project to keep learning and becoming a better developer. But, I met someone in the co-working space that wanted me to build a software to manage his business. It was like a direct sell business, and I built that software for him.
And I was actually learning how to code, and I was publishing stuff on my blog. I posted on my blog that I viewed his product, and by luck, that ranked on Google as number one. People started coming to me because they want like a similar software. First, I just sold licenses, so I just got a copy of the same thing and put it on other servers. After I got to like three or four, I realized that’s a nightmare because every time I found a bug here, I had to fix a bug everywhere else. And so I built my first SaaS product, and it was that product to help direct sales companies. That product grew quite a bit.
I was able to sell that product back in 2011. It wasn’t a huge seller, but it was a six-figure sale. I used that money to move to the United States. I got to the United States on a student visa because I had money not to work for a few years. That’s some of the requirements for the visa, and I went to college United States. I had a few jobs as a software developer, and then I started Dev Squad in 2014. Firstly, I started on the side, then I was doing on the side, and I had my job, and I’ll do stuff in the evening. I would do everything. And then, I start to hire freelancers to help me. And eventually, I quit my job and started my company.
What’s your best piece of advice for founders?
Phil: I think founders should not overcomplicate. We talked about that a little early today, but it’s so common that we are trying to do too much we have to figure out what thing I can build that will add value. Sometimes you need to build a tool before you build a platform. Before, I think it wasn’t cool before to be profitable, but now in the recession, it’s pretty cool again. I think founders should be thinking, what is the quickest way that I can make this profitable? And then build it from there so they can be more independent. That’s my advice.
What is your favorite software?
Phil: I really like Notion, I use Notion a lot. I think it is an amazing product. And you can use so many ways to make your life easier, and it’s so powerful and replaces so many tools, so it’s one of the products that I love apart from my own.
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