“The Social Network” is a movie that makes every young developer’s heart flutter.
Mark Zuckerberg, a simple college student with a knack for software engineering, creates a wildly successful web app in his dorm room that allows him to forgo scholarly and career opportunities to pursue his passion full-time. Just a few years later, he becomes the world’s youngest billionaire.
Zuckerberg’s incredible story (or, at least the Hollywood depiction of it) suggests that ingenuity, talent, and a drive to excel are all it takes for a developer to find entrepreneurial success.
In reality, however, you need much more than development chops to create a product that successfully sells on the open market. Though it’s not as flashy as creating a popular social networking application, software developers can find much more job security and prosperity by building and selling services.
Products vs. Services
Developing products and selling services might seem like the same job, but they are completely separate businesses. Development simply focuses on creating great products, while service focuses on meeting the clients’ product needs.
In my experience, service is a much safer and smarter path.
I once worked for a product company that began taking on a few service contracts because it was good money. After dipping our toes in the arena, we realized it offered much more consistent and predictable revenue and posed much less risk in scaling. Our consulting work also generated more opportunities through word of mouth.
Over time, being a client services provider turned out to be a much more lucrative business model for us — so we officially made the switch.
The Perks of Being a Service Provider
As a developer, I know we all dream about creating the next unicorn product and finding Zuckerberg-esque levels of success. Unfortunately, this just isn’t a typical (or realistic) path to take.
Before dismissing the option of shifting toward services, consider these advantages:
1. Less Risk.
The road to a successful product launch is full of peril. Even if your money lasts and no other product beats yours to market, you still don’t know whether it will ever be a success. On the other hand, as a services organization, you can start operating in the black very quickly.
2. Lower Overhead.
A product company doesn’t just develop products; it must also handle tasks such as marketing, user acquisition, customer support, and distribution. All these aspects take time and money, and you might not have the customers to fund it. Conversely, a services firm merely requires forming a limited liability company and creating a social media post that says, “I can build your product.”
It won’t always be that simple as the company scales and grows, but at least you won’t have to worry about additional needs until after you have a client base.
3. Time is Money.
The quality of a product usually correlates with the time you put into it. In my background as a video game developer, I knew that if I worked an extra weekend to make the zombies' heads explode, my game's Metacritic score was more likely to eclipse 9.0.
Whether it’s a game or another type of product, it can always be improved little by little, especially if passionate people are working on it. And for service companies, that extra time amounts to extra money from the client. All time spent on a product is paid work, which means you can also afford to bring in help if you need it.
4. Assured Payment.
You can do the best market analysis, assemble the most talented team, and get the right investors — but still, 80 to 90 percent of startups fail, and you can never be sure how much revenue your product will generate. When the financials are always in flux, it’s hard for a business to grow.
Because service organizations operate off statements of work, the financials correspond directly to the work being done.
5. Project Variety.
I’ve found that even the most thrilling projects get dull after a while. Looking at the same code base and working in the same technologies for months can get old. It’s nice to try something new every once in a while.
Service-driven developers stay interested and relevant because of different user experiences, system architectures, and programming languages, and consultants in services organizations can expect to change projects every six to 18 months. Product teams, on the other hand, might never get a new product to work on.
You might not be developing the next Facebook, but don’t discount the value and excitement that comes from being a service organization. Selling services doesn’t just provide steady revenue and low risk; it also offers a diversity that keeps developers interested in their work.
Building a product is hard work, and by being service-driven, developers have a much better chance of seeing the fruits of their labor.