March 24, 2024
Big tech lessons for small agencies
Denys Skrypnyk is a Ukrainian entrepreneur and one of three managing partners at The Gradient, a product design agency from Lviv. While many studio owners were building their businesses with little reference, Denys made his pivot to a businessman from a corporate employee.
I met Den in Lviv back in the spring 2022. Back in that time, Kyiv was in the siege by russian troops. I was a regular guest at his office, so we had a great chat about business and design. I was impressed by Den and his partners’ vision and management courage. Following my idea, we decided to interview him about agency numbers and what lessons could the Big Tech give to a small studio.
To avoid an old-fashioned interview manner, we skipped the small talk and collected the most meaningful takeaways and insights.
About himself
I was working in Eleks — one of the leading Ukraine outsourcing firm, previously owned by my father. Back in a day, I was head of the design department. It was when customers only began to understand the value of design. We witnessed a moment when customers stopped viewing UI and UX as unnecessary disciplines and got a fundamental understanding of why design is important for software development and product success. Before that, we used to push the design service internally and externally, explaining why design matters. This was the best moment to launch a Product Design agency in Ukraine.
About the agency rates
When we started our agency in 2016, we thought we were really cool guys, so we tried to apply significantly higher commercial rates than we had at Eleks. That didn’t work out well — having a little portfolio and being a new kid on the block, and we failed to sell at$60–70/hour. It took us a couple of years before we could get the first client at that cost. Currently, we would not go below the $50–60 rate without a significant reason, such as a really interesting client or product or a year-long contract. Luckily, we gained some recognition until now, so there’s no barrier as it was at the beginning of our career. Of course, now we have other challenges, such as a russian invasion and an economic crisis in the USA and Europe, so we need to be flexible with the pricing to get new clients. As a result, the number of efforts to negotiate and close contracts has doubled.
About the pricing
Price shouldn’t be always in a first place
We’re trying to avoid the clients who put the price in the first place. That comes with a sacrifice: usually on the quality of the digital product. That is just the opposite of what we try to achieve. So if the client looks for a cheaper rate, it means plenty of compromises, and it leads to failure in the long run. If the client is looking for value and ways to solve business goals with our services — the price won’t be the main topic, and it is always discussable.
About the business model
We are huge fans of simple business models. Our billing is pretty simple, and we try to stick to it.
We sign our clients up for weekly sprints with at least two full-time team members at a flat agency rate with a fixed scope and timeline. The second option, for more complex projects, is a dedicated team focused on delivering the design and requirements with a monthly discounted flat rate. Both are good for different cases, depending on the product and client lifecycle stage.
This model makes it easier to plan resources and bill clients. No need to assign designers to different projects and look for the proper hourly utilization. The sprint model brings discipline to the client in a good way: they know there is a billing period and don’t want to be slow on feedback or bring too many edits. A dedicated team puts out the pressure so that the client can be focused on the long-term goals. Of course, both models work well only combined with effective design and communication processes.
About surprising numbers
I remember the time when we first managed to calculate our average project profitability, and it was around 60%. I was gazing at the numbers, asking myself: what the heck, is that real? Later on, we ate up the margin by some massive CAPEX, like investing in the new office, hiring more senior people, and building other non-delivery processes. Though I still remember, this was good evidence of a successful business model.
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About the big tech experience
Things are pretty well planned in a company with 1000+ employees. It’s a matter of efficiency, not some preference. And it brings a good discipline that agencies may lack. Of course, some things are not applicable to a small firm: like having a matrix management structure. But the overall workflow and basic management practices, like yearly/quarterly/monthly plannings, are a must, even if you run a small firm. We’ve applied the best from the big company practices to the small firm, and it worked well. Now we’re constantly reviewing our approach to each process, thinking about the trade-off between process complexity and efficiency at the current company lifecycle stage.
About key metrics
One word: Net revenue
Perhaps other agencies are focusing on other, more sophisticated metrics, like gross project margin, and average revenue per employee, but we have a simpler indicator — net revenue. Of course, we track a wide range of metrics to understand company health, plan vs. reality, etc. Our wages are good. Our commercial rates are good too. Since we run our projects in weekly sprints or months — our business model makes us consistently profitable for every project. The tricky thing is to have sales that nurture this model.
About the plans for the future
It’s quite hard to make plans nowadays, even for tomorrow. Obviously, war made some corrections to our tactics and financial plan, but our strategy remains the same — working with top brands and companies across the world, making products people will love. We are growing, hiring new people and building processes for the future growth even in these tough times.
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This Terms of Service Agreement ("Agreement") is a legally binding agreement between you ("User", "you" or "your") and Fintellect ("Fintellect", "we", "us" or "our") and governs your use of the Fintellect app, website and any related services (collectively, the "Service"). By using the Service, you agree to be bound by the terms and conditions of this Agreement. If you do not agree to the terms and conditions of this Agreement, you should not use the Service.
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You are responsible for any and all data, text, files, information, usernames, images, graphics, photos, profiles, audio and video clips, sounds, musical works, works of authorship, applications, links and other content or materials ("User Content") that you upload, post, publish or display (hereinafter, "post") on or through the Service. By posting User Content on or through the Service, you represent and warrant that you have the right to do so, and that such User Content, or its use by Fintellect as permitted herein, does not violate this Agreement, the rights of any third party or applicable law.
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Fintellect reserves the right at any time and from time to time to modify or discontinue, temporarily or permanently, the Service (or any part thereof) with or without notice. Prices of all Services, including but not limited to monthly subscription plan fees to the Service, are subject to change upon 30 days notice from us. Such notice may be provided at any time by posting the changes to the Fintellect Site (fintellect.pro) or the Service itself.
Intellectual Property:
The Service and its original content, features and functionality are and will remain the exclusive property of Fintellect and its licensors. The Service is protected by copyright, trademark, and other laws of both the European Union and foreign countries. Our trademarks and trade dress may not be used in connection with any product or service without the prior written consent of Fintellect.
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This Agreement shall be governed by and construed in accordance with the laws of the European Union, without giving effect to any principles of conflicts of law.
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Any dispute arising out of or relating to this Agreement or the Service shall be resolved through binding arbitration in accordance with the commercial arbitration rules of the European Union. Any such dispute shall be arbitrated on an individual basis, and shall not be consolidated in any arbitration with any claim or controversy of any other party. The arbitration shall be conducted in the European Union.
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Fintellect reserves the right, at its sole discretion, to modify or replace this Agreement at any time. If a revision is material we will try to provide at least 30 days' notice prior to any new terms taking effect. What constitutes a material change will be determined at our sole discretion.Contact Information:If you have any questions about this Agreement, please contact us at hello@fintellect.pro.
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a) process the personal data only on documented instructions from the Controller, including with regard to transfers of personal data to a third country or an international organization, unless required to do so by Union or Member State law;
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e) at the choice of the controller, delete or return all the personal data to the controller after the end of the provision of services relating to processing, and delete existing copies unless Union or Member State law requires storage of the personal data;
f) make available to the controller all information necessary to demonstrate compliance with the obligations laid down in this Article and allow for and contribute to audits, including inspections, conducted by the controller or another auditor mandated by the controller.
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The Processors shall not engage another processor without prior specific or general written authorisation of the controller. Where the processors engage another processor for carrying out specific processing activities on behalf of the controller, the same data protection obligations as set out in the DPA shall be imposed on that other processor by way of a contract or other legal act under Union or Member State law, in particular providing sufficient guarantees to implement appropriate technical and organizational measures in such a manner that the processing will meet the requirements of this Regulation.
Data breaches:
The Processors shall promptly notify the controller if it becomes aware of a personal data breach. The notification shall describe the nature of the personal data breach including, where possible, the categories and approximate number of data subjects concerned and the personal data records concerned. The Processor shall promptly take all necessary steps to contain and mitigate the personal data breach, and shall provide the Controller with all information necessary to comply with its own notification obligations under the applicable data protection laws.
Technical and organizational measures:
The Processors shall implement appropriate technical and organizational measures to protect the personal data against unauthorized or unlawful processing and against accidental loss, destruction or damage. The Processors shall regularly review and assess the effectiveness of the technical and organizational measures implemented. Nordigen’s information security management system is ISO 27001 certified, meaning there are specific processes in place to add an extra layer of information security.
Audit rights:
The Controller shall have the right to conduct audits, including inspections, to ensure compliance with this DPA. The Controller shall provide the Processor with reasonable prior notice of any such audit, and the Processor shall cooperate fully with the Controller in connection with any such audit.
Return or destruction of personal data:
Upon termination of this DPA, the Processors shall, at the choice of the Controller, either return or securely destroy all personal data in their possession or control.
Governing law:
This DPA shall be governed by and construed in accordance with the laws of the European Union, without giving effect to any principles of conflicts of law.
Term and termination:
This DPA shall remain in effect until terminated by either party upon written notice to the other party.
This Data Processing Agreement ("DPA") is entered into on the date of acceptance by the User, by and between Fintellect ("Controller") and Nordigen and Google ("Processors").
Description of the personal data:
The Processors will process on behalf of the Controller personal data provided by the User as part of the account registration process, including name, last name, email, phone and country, as well as any additional personal data that may be required for the use of PSD2 and social authentication services.
Data protection obligations of the processors:
The Processors shall:
a) process the personal data only on documented instructions from the Controller, including with regard to transfers of personal data to a third country or an international organization, unless required to do so by Union or Member State law;
b) ensure that persons authorized to process the personal data have committed themselves to confidentiality or are under an appropriate statutory obligation of confidentiality;
c) implement appropriate technical and organizational measures to ensure a level of security appropriate to the risk, including as appropriate, the pseudonymization and encryption of personal data;
d) taking into account the state of the art, the costs of implementation and the nature, scope, context and purposes of processing as well as the risk of varying likelihood and severity for the rights and freedoms of natural persons, implement appropriate technical and organizational measures to ensure that, by default, only personal data which are necessary for each specific purpose of the processing are processed.
e) at the choice of the controller, delete or return all the personal data to the controller after the end of the provision of services relating to processing, and delete existing copies unless Union or Member State law requires storage of the personal data;
f) make available to the controller all information necessary to demonstrate compliance with the obligations laid down in this Article and allow for and contribute to audits, including inspections, conducted by the controller or another auditor mandated by the controller.
Sub-processing:
The Processors shall not engage another processor without prior specific or general written authorisation of the controller. Where the processors engage another processor for carrying out specific processing activities on behalf of the controller, the same data protection obligations as set out in the DPA shall be imposed on that other processor by way of a contract or other legal act under Union or Member State law, in particular providing sufficient guarantees to implement appropriate technical and organizational measures in such a manner that the processing will meet the requirements of this Regulation.
Data breaches:
The Processors shall promptly notify the controller if it becomes aware of a personal data breach. The notification shall describe the nature of the personal data breach including, where possible, the categories and approximate number of data subjects concerned and the personal data records concerned. The Processor shall promptly take all necessary steps to contain and mitigate the personal data breach, and shall provide the Controller with all information necessary to comply with its own notification obligations under the applicable data protection laws.
Technical and organizational measures:
The Processors shall implement appropriate technical and organizational measures to protect the personal data against unauthorized or unlawful processing and against accidental loss, destruction or damage. The Processors shall regularly review and assess the effectiveness of the technical and organizational measures implemented. Nordigen’s information security management system is ISO 27001 certified, meaning there are specific processes in place to add an extra layer of information security.
Audit rights:
The Controller shall have the right to conduct audits, including inspections, to ensure compliance with this DPA. The Controller shall provide the Processor with reasonable prior notice of any such audit, and the Processor shall cooperate fully with the Controller in connection with any such audit.
Return or destruction of personal data:
Upon termination of this DPA, the Processors shall, at the choice of the Controller, either return or securely destroy all personal data in their possession or control.
Governing law:
This DPA shall be governed by and construed in accordance with the laws of the European Union, without giving effect to any principles of conflicts of law.
Term and termination:
This DPA shall remain in effect until terminated by either party upon written notice to the other party.
Privacy & data protection
Data Collection:
Fintellect collects only the personal data needed for user registration, including name, last name, email, phone, and password. Other data collected is non-personal and corporate in nature.
Consent:
Fintellect obtains consent for the collection and processing of personal data through user confirmation in the app interface. No personal data is collected, only anonymized logs of app performance are collected.
Data Use:
Fintellect uses personal data only for the purpose of user authentication.
Data Storage and Security:
Fintellect stores personal data in a secure database that is detached from other front-end and back-end applications. The company data is stored in different instances in order to diversify the risk.
User Rights:
Fintellect allows users to correct their personal data via user or company settings, or by contacting us at hello@fintellect.pro
Third-Party Processors:
Fintellect uses third-party processors that are GDPR compliant.
Clear and concise privacy policy:
Fintellect's privacy policy is written in a clear and concise manner to be easily understandable for users.
Digital signature validation:
Fintellect uses digital signature validation for all API requests between the front-end and back-end applications.
Fintellect collects only the personal data needed for user registration, including name, last name, email, phone, and password. Other data collected is non-personal and corporate in nature.
Consent:
Fintellect obtains consent for the collection and processing of personal data through user confirmation in the app interface. No personal data is collected, only anonymized logs of app performance are collected.
Data Use:
Fintellect uses personal data only for the purpose of user authentication.
Data Storage and Security:
Fintellect stores personal data in a secure database that is detached from other front-end and back-end applications. The company data is stored in different instances in order to diversify the risk.
User Rights:
Fintellect allows users to correct their personal data via user or company settings, or by contacting us at hello@fintellect.pro
Third-Party Processors:
Fintellect uses third-party processors that are GDPR compliant.
Clear and concise privacy policy:
Fintellect's privacy policy is written in a clear and concise manner to be easily understandable for users.
Digital signature validation:
Fintellect uses digital signature validation for all API requests between the front-end and back-end applications.
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