Louis and Jank discuss how the whole project came about, the pitfalls and experiences of changing from a client project based business to a cloud app service and how you can think about approaching the same move.
Louis: Hello and welcome to the SitePoint Podcast. This week on the show I’m glad to have with me for an interview Jan Lukacs who is the general manager of a company called Paymo which is sort of an online time tracking and invoicing service. Hi, Jan.
Jan: Hi Louis.
Louis: How are you going?
Jan: Thanks for having me. I’m great thank you.
Louis: Good, it’s great to have you on. You were recommended to us by Joel Falconer who’s been doing some blogging for the various SitePoint sites, thought it’d be cool to have you on and talk a bit about your product and your experiences freelancing and working with a lot of freelancers with Paymo.
Jan: Yeah, I’ll be happy to share any things I’ve learned from our experience.
Louis: That’s great. So, before we dive into any of that do you want to talk a bit about your website, about your product, which is called Paymo and it’s at paymo.biz, is that right?
Louis: Do you want to just tell us a bit about it and tell us what gave you the idea to start it and how it’s been going.
Jan: Sure. So, basically Paymo is a time tracking service, an online app, that allows you to manage your team’s time and your own time, it’s also for freelancers with businesses too. At the core it’s a time tracking service but we built a bunch of tools around it like project management and invoicing, so it really helps you manage your business online, especially if you’re working on projects where you need to know how long a task takes and things like this.
Louis: Right. So how long have you been running this site?
Jan: We started in 2008 and for a year we kept the service for free, so we didn’t have any commercial product so to speak, and in 2009 we redesigned the whole app after we got a lot of feedback from our users, basically that’s the point where it was a product that we started to sell.
Louis: Right. So right now is there still a free option on the service, though?
Jan: Yeah, of course. From the beginning this was our philosophy. In our careers a lot of tools that we used were open source or free and they helped us a lot, so when we decided to create a premium version of the product we knew that we had to give away for free the core services of the app, so we will always have a free version of our service.
Louis: Right. So you mentioned when you were working previous to this before doing Paymo you were just a standard sort of work-for-hire web shop, right?
Jan: Yeah. We were a web development agency working on projects for other companies and individuals.
Louis: And so is Paymo something you built for use internally and then realized that you had a product that you could sell, or was it something where you knew at the end of the day it was going to be a product that you would try and mass market?
Jan: No, we built it for ourselves because at that point we looked at the solutions that were available and none of them fit our needs, so we started working in our free time in creating it and then we saw that actually other people might use it too, and in 2008 we created a website and just gave away the service for free, and really it was something totally new to us, we hadn’t had any experience in creating products or services, so the feedback was great and we decided to change our model and focus on the product.
Louis: Right, so at present are you not doing anymore client work?
Jan: We separated our company so we created a new company for Paymo, the old team is right now focusing only on Paymo, and part of the old team is focusing on the web development agency, so they are totally separate at the moment.
Louis: Right. You were mentioning earlier that you said when you were thinking about starting, or thinking about building a product for time tracking, you mentioned that none of the products out there suited your needs. What’s interesting to me in this case is that it’s not a totally new market, like a lot of times you hear about these agencies that go out and branch out in product and they’re making something that doesn’t exist, but in this case there were definitely a few other time tracking and invoicing and project management solutions on the Internet. What was it that made you feel that you needed a different product or a new product?
Jan: The main thing was that we used a couple of services and none of the people on the team were actually using it, and the main reason behind this was that they ran in the browser and inputting time into the system was time consuming and you had to look at all these tables, it was very complicated. So then we figured that if we want to make some money from this business we really need to know how much we’re spending on projects, so this was always a problem for us, we were always getting paid less than we actually worked for, and the solution was to create a desktop widget, an app that would run on your desktop that interacted with the online system. So this is something that at the moment we started working on Paymo didn’t exist.
Jan: This was one of the main reasons that we created Paymo. We wanted to make it much more easier to add time into the system.
Louis: Yeah. When you say a desktop widget, did you build this cross platform from the get-go?
Jan: Yeah. We had people using Macs and PCs on the team, so this was also a huge problem because there were solutions out there that we could use but none of them worked cross platform.
Jan: This was again a thing that we needed and we built it.
Louis: Right. Right now so you have desktop widgets for Mac and Windows?
Jan: Yeah, exactly.
Louis: And Linux or not?
Jan: It’s not very straightforward but you can run it on Linux too.
Louis: Right. Did you guys have in-house the kind of expertise to work in desktop platforms or were you all web guys and had to go out and learn these new technologies?
Jan: One of our colleagues was really an expert on desktop so it wasn’t a big deal for us, that helped, certainly helped a lot, and we also had experience building large websites so this came in handy because a system like this really requires all kinds of skills that you usually don’t get when working on smaller projects, so these things certainly helped us.
Louis: Right. Just to geek out for a second here, what kind of technologies did you use for the desktop widgets and for the website itself, the backend?
Jan: For the backend we use PHP and MySQL, and for the desktop we use C++ or Visual C++ in the case of Windows. And on the Mac, but here is the cool thing, the core widget is actually just a web page but it’s wrapped by a desktop app, so this makes it easy for us to maintain it and run it also on the Mac or on Windows and on Linux too.
Louis: Yeah, that’s cool. So, one of the things that’s interesting for me, and I imagine that it’s going to be interesting for a lot of listeners as well, is that transition from a company that was primarily focused on servicing client projects to a company that was focused on delivering a pay-to-play product to the wider Internet. I’ve spoken with people before who say that’s something you should be careful when you’re thinking about doing because it’s hard to do two things at once in the same team. So how did you guys approach it and what were the challenges that you faced in that migration from dealing with clients to working on building this product?
Jan: Yeah, well, the transition is pretty hard because they are totally separate businesses, and things that apply in one type of business don’t apply at all in the other one, so we really made a bunch of mistakes that we weren’t even aware of at the moment when we started building a product, and everything took way longer than it should have been if you look at it from this point of view. But it also allowed us to — having a primary business allowed us to create this product without going to investors, without taking out loans.
Louis: Yeah, right.
Jan: So the money the web agency made we used that money to create the product. However, in the first years we didn’t focus as much on the product as we should have been, and this really made the business develop much slower and more organically than you could do if you would have sort of a business advisor from the start and a lot of money to spend on marketing and things like this. But in the end for us it worked out pretty well.
Louis: Right. If anyone listening or is involved with or is running a web agency and sort of has an idea for a product that they think they could develop and sell but they don’t necessarily think they have time to do it alongside their client work, what’s the top piece of advice you’d give to someone in that position?
Jan: Top advice, that’s hard (laughter). I think they should really, really analyze the market and see what the opportunities are, and try really to go into as much detail as they can about the new business that they are trying to start because it’s really, really hard, there’s tons of competition in every niche, so going after a niche is no longer good advice because every small niche is filled with tons of competitors, and you really need to see if you have the skills and the money to create a new business.
Jan: Because otherwise it will be at least one or two years of work down the drain, that’s got to hurt if you don’t make it.
Louis: What’s interesting, though, is your case sort of almost serves to disprove that because I can hardly think of a niche of sort of online service based product for web designers and web developers that there’s more competition in than sort of these time tracking product management apps, and I think the reason for that is that web designers and developers want to build apps that they would use.
Jan: Yeah, absolutely.
Louis: And that’s the main kind of online tool that you’d want to use as a web designer, developer. But despite this you guys managed to come into the market fairly late and still build up a fairly successful business.
Jan: Actually when we came out it wasn’t that late, so at the moment we came out with the free app, the first version, there were only a couple of other online time tracking tools in 2008 that were pretty good. But in that year when I said we made a lot of mistakes, from 2008 to 2009 if we would have really, really focused on the product we would probably have gotten a lot of market share in that period, and at the same time a lot of our competitors sprang up because they also saw the opportunity in this market.
Jan: So my advice right now if you would start another time tracking app —
Louis: Is don’t! (Laughs) Don’t do it.
Jan: Don’t do it. And I’m not saying that’s to avoid other people getting into this but it’s really crowded at the moment.
Jan: So I would be looking at services or niches that have two, three, four competitors but not 20 or 40 or 50 or whatever, because it makes really, really hard to start a business like that unless you do something totally, totally awesome then (laughter).
Louis: I guess there’s always a way of differentiating. So how did you guys go about marketing your app in the beginning, was it just sort of organic, you talked to your friends and they talked to their friends and you weren’t really focusing on marketing or did you guys put in some effort to try and get the app in front of people?
Jan: In the first couple of months I had no idea how to market something like this because I was coming from services and for me it was totally new. So right when we started the app when the free version came out we didn’t really have any marketing dollars, so it was a lot of effort to try to get the product seen by people who are interested in this sort of thing, so we contacted a lot of bloggers, followed Tweets that were talking about time tracking and that sort of thing, and we really tried to get an opinion from people after using our system, so getting feedback from our initial users was crucial, and we listened to that.
Louis: Sorry, I’m just going to interrupt you for a second. In that initial phase how many users did you have on the system if you don’t mind me asking?
Jan: Probably a couple of thousand in the first year. Yeah, it’s really, really hard to get people to use your system when you’re absolutely new on the market, and I really appreciate the trust the initial users gave our system, and as a piece of advice if you’re trying to start a web app or a service it’s very important to try to find people that fit the early adopter profile, so to speak, because they are willing to accept bogs, downtime, stuff like that, just to try the service because they like it. So it’s very important to go and try to find these people and get them to use your service by any means you can do it.
Louis: Yeah. And it must have been particularly interesting; a lot of these kinds of services and startups are based in either the U.S. or Australia or Canada. Where are you guys based out of?
Jan: We’re based in Romania in Europe so that makes it a bit harder for us, but we’re doing the best we can.
Louis: Yeah. So when it came time to design your app and you’re developing an app in English for an English speaking audience, what was your strategy going about getting the copywriting and getting all the interface done in a way that was clear and understandable for an English speaking audience?
Jan: We really did all the work ourselves. I assume that having worked for a number of years with companies based in the U.S. and also in Australia made us understand that market quite well and we didn’t have any major problems in this regard.
Louis: That’s really impressive because I mean I’m looking at the interface and the copywriting is really good and sort of speaks really clearly to me, and so I have to say a big congratulations to whoever is doing the copywriting because for someone who doesn’t have English as a first language I’m really impressed.
Jan: Thank you, thank you.
Louis: Right. So I wanted to come back a little bit, you guys had been working as a freelance web development and design team for some time, and you said you were working with international clients as well?
Louis: How long had you been working as a freelance business or as a project based business before you decided to start Paymo?
Jan: We’ve worked for approximately five years.
Louis: Right. You’re obviously successful in that business; was there a moment when you were starting Paymo where you thought we might be spending time and money on something that might now work out when we already have a successful business?
Jan: It was a decision that we had to make. After we saw the attraction for the free app that we launched it was really a point where we have to decide what we’ll do next, do we focus on the product or on the web development agency, it wasn’t an easy decision. Of course the app at that moment wasn’t making any money so it was a risk, but we really wanted to try something new and the context allowed us to continue our old business without getting too involved in it, and I had the pleasure of working with a couple of guys that were able to pick up the business and focus on that, and we managed to separate the company into two companies and it worked out quite well, at least until now.
Louis: (Laughs) no, that’s a great success story. Speaking of which until now, do you want to throw out some stats, like you guys have been doing pretty well, I see some stats here on the home page, but have things been going well for you?
Jan: Yeah, we’ve been growing the business and the vast majority of our clients are happy with the service and continue to be subscribed to it so that makes us very happy, and it allows us to build new stuff and expand, and we really want to create something that people actually don’t fear to use because, let’s face it, time tracking is something that people don’t like (laughter), but we’re trying to make it as pleasant as possible and in the end it really pays more, this is what Paymo is about; it gets you paid more because once you have a clear view of how you spend your time or your team spends their time you’re able to make decisions based on that and you will get more profitable. And this is not something — I’m saying this is what we hear daily from our users.
Louis: Yeah, absolutely, I imagine. And for a lot of people just getting into doing client work it’s easy to sort of — the small request, right, the little 15 minute sort of, “oh, can you just go and update this file,” —
Jan: That kills you.
Louis: — you do one of those a day and all of a sudden you’re actually working for less than you’d be making at Burger King.
Jan: Yeah, we’ve made that mistake. In the first three years when we started our business we had a lot of clients that were just like that, and I’m sure every freelancer, small company, knows this. And at a point you have to decide and you have to fire some of your clients, there’s no other way around it otherwise they’ll keep you dragging down forever and it’s not good for you and maybe not good for them either in the end.
Louis: So in your case there’s a couple of things I want to mention, one is you said you’re working on new stuff, can you give us any hints of what we can look forward to, if anyone’s using Paymo the new features coming out they can look forward to or are you thinking about new products?
Jan: Yeah, we want to make some pretty radical changes in our next version. At the moment I cannot really talk about them, but I assure you that they will be something pretty cool.
Louis: That’s what they all say, man, every time I ask that question.
Jan: Yeah (laughs).
Louis: I’m going to keep trying; one day someone is going to be like, yes, as a matter of fact I can tell you that the next version will include this feature and this feature.
Jan: When we’ll be closer to our vision I’m sure I’ll be able to talk about it, but I’ll be really honest here, a lot of stuff that we did was copied very fast by others, and honestly in this business everyone is copying everyone, so this is the truth about it, but there are a couple of key features that differentiate the product and that’s where you sometimes have to keep a secret.
Louis: Yeah. One of the things I find interesting, so we were mentioning you guys have a free plan and you said you plan on keeping that an option.
Jan: Yeah, forever, yeah.
Louis: See, this is really interesting to me because I remember — so what happened is I first looked into this about three years ago when I was doing some freelance work, and I hadn’t looked into any of the time tracking or project management web apps for quite some time, so I let it slide for two or three years. And then recently just last week my girlfriend was going to start doing some freelance administration work and she asked me, “Oh, what do you use for invoicing?” And I said, “Oh, just go use this thing,” and she looked it up and was like, “It’s $20.00 a month,” and I’m like “Oh, no, no, there’s a free plan,” and she’s like, “No, there isn’t.” And a lot of these services have sort of discontinued their free plans as the market has become more mature.
Louis: But you’re willing to make a commitment that that’s never going to happen with Paymo.
Jan: Yeah, absolutely. Everyone is — if you look at the bigger players, not only in this niche but in online services, everyone says hide your free plan somewhere, whatever you need to calculate your conversions, the free plan will set you off-balance; I really don’t believe in this and we want to give the core services for free to our users because we know they aren’t making a lot of money and some of them can’t afford it. So, the concept here is really simple, we give you the free stuff and we hope that it will help you enough to become a customer, that’s basically it.
Louis: That’s a great attitude and I have a lot of respect for that, so I’m cheering for you guys, I hope this works out because this is something that I like to see when I come to a site and still see that free plan and say, look, if I just want to try it out, if I’m just starting a business absolutely I agree, I’m not going to shell out twenty bucks for a service, I’ll just put it in Excel really is what’s going to happen, or I’ll put it in a Google document.
Jan: And there’s also another advantage that even if you from the start you want the premium plan we really make it easy for you to decide, you can use the free plan and it’s only limited to the number of users you can use, so if you’re a company with 50 users and you want time tracking system you can sign up for an account with us and use the limited free version for a month or two, see if it works out, see what the people in the company think about it, because this is crucial with these types of apps, and once everyone agrees that they like it you can just upgrade your account.
Louis: Really good. Was there anything else you wanted to mention before we go?
Jan: Well, I would be very happy if your listeners would check out our service, and I also do customer service so if anyone has any kind of questions about Paymo I’d be more than happy to help them out and answer their questions. And if anyone out there is thinking of starting their business my advice is that, yeah, do it but please make sure you analyze the market and think about that decision because it can be life changing.
Louis: Yeah, absolutely. And in your case I’m happy to see that it’s been life changing for the better and that you’re in a better place where you’re working on something that you enjoy now.
Louis: It’s great to see these kind of success stories and, again, I said like I really like the look of the app, I hadn’t heard of it before Joel brought it up, but it’s definitely something I would recommend because I do like the design and there’s a free plan, right, so it’s easy to recommend to people if they want to check it out. So the website is paymo.biz, that’s p-a-y-m-o dot b-i-z and if anyone wants to follow you on Twitter do they follow you at the Paymo or do they follow you on your account?
Jan: Yeah, both. If they follow our main Twitter account they’ll get all the updates and latest news and promotions that we’re running, and if someone wants to follow me I talk about a lot of things on Twitter if you’re curious.
Louis: What’s your account?
Jan: Jan, j-a-n underscore Lukacs (@jan_lukacs), but if you look at our website on our team page you can follow me directly from there.
Louis: Absolutely. And I’ll put a link in the show notes as well.
Jan: Okay, thank you.
Louis: Thanks so much for coming on the show and talking with me about this stuff, Jan; it’s been an absolute pleasure.
Jan: Thanks, Louis.
Louis: Especially given the listeners won’t know this but we’re recording sort of on a whim, we were trying to sort out a time because it’s a little difficult to match time zones in Europe and Australia, and I was just coming home from a day off and happened to see your email and like, oh, I’m in the office now let’s do this.
Jan: Yeah, it’s awesome that we managed to do it now.
Louis: Great timing. Alright, thanks again, Jan, and all the best in the future, look forward to seeing what’s in the future for Paymo and maybe have you back some time.
Jan: Of course, thank you.
Louis: Alright, thank you.
Jan: And thanks for having me, bye, bye.
Louis: Have a good day, bye. And thanks for listening to this week’s episode of the SitePoint Podcast. I’d love to hear what you thought about today’s show, so if you have any thoughts or suggestions just go to Sitepoint.com/podcast and you can leave a comment on today’s episode, you can also get any of our previous episodes to download or subscribe to get the show automatically. You can follow SitePoint on Twitter @sitepointdotcom, that’s sitepoint d-o-t-c-o-m, and you can follow me on Twitter @rssaddict. The show this week was produced by Karn Broad and I’m Louis Simoneau, thanks for listening and bye for now.
Louis joined SitePoint in 2009 as a technical editor, and has since moved over into a web developer role at Flippa. He enjoys hip-hop, spicy food, and all things geeky.
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