From the title itself some of you might have guesses the question. Yes it is an ever green dilemma of entrepreneurs especially in our field. Of course I am not an exception here.
I run an IT service company along with my 3 friends for last seven years. We are doing pretty good as of now and future seems bright. We are around 50 people right now.
We are going through this great dilemma right now. What should be our future?
Should we remain a service company or should we move gradually towards a product based company?
Main reason is, we do not want to increase the number of people by a huge margin. We don't think we are cut out for a number game business and in IT services, that is how you grow. Right now we are growing in terms of quality we provide and we charge more than our competitors. But that will also hit a limit someday.
Other reason is, satisfaction. I don't think we all are highly satisfied with our work as we do it for other people. Want to scratch our own itch now!
We did launch few web based products in 2007 and got not so great success. One of our web based service is doing ok right now. One we closed down after 6 months and 1 is not doing so great right now. So we do have some experience in launching and maintaining web based services.
At this moment, revenue is quite ok from our services business. We do not have lot of extra cash to burn but we can make do with it. We do Web based apps, iPhone apps, iPad apps etc for clients.
So now my questions to you guys are:
We have read recent article on Techcrunch about it so have some ideas on that. We would like to hear more from you guys.
Looking forward to your replies and interesting conversations.
Update: This article provides good points for the transition I am talking about.
I agree with you the Service vs Product dilema is really eternal. While service ensures $$ right from first day, a product can ensure huge scale that a service business can never ever think of. The good part with your business is you already have people on board and you have worked on projects in your market. Though your product experience has not been awesome, I would still suggest to keep trying it and try to spinoff one from your existing jobs. A few pointers
How should we go about it?
How much investment should be there in creating a product?
Hope I added value to the decision process. All the best.
You already have an amazing foundation for improving on what you are already doing. I don't think it's worth pivoting very hard at such a point, and if you DO want to get into a service business so badly, do it the way 37signals did it. They remained a service business while working on Basecamp until basecamp way way bigger than the service part of the company.
Mark Suster from Both Sides of the Table recently posted a good post on it http://www.bothsidesofthetable.com/2011/04/25/what-should-you-do-with-your-crappy-little-services-business/ And adding my 2 cents... It is easier for a service company to systematize and streamline most of their processes and become almost product-like scalable than it is to just make the switch. Can you provide some more info on what exact services do you provide, so i don't have to be so vague in my answer and actually give you some actionable stuff? :)
Hope this helped