Dealing with "the big client" as customer-funded business

Firmhouse is primarily a customer-funded business. We come from an agency background and have transitioned into a hybrid of being a service and product-driven company over the course of the past few years. Pretty much the dream for a lot of freelancers/agencies out there.

With being customer-funded, I mean that we use the money that we get from our customers to re-invest in the company and grow our team and product. This might sound obvious, but this is slightly different from a product-led or bootstrapped company. And it's definitely different from a VC-funded company.

Product-led and bootstrapped usually means that you decide what to build, and then you go out to sell it. And doing that bootstrapped means you grow your product-led business "on the side" next to your regular business of being an agency, freelancer, or doing something completely different.

Customer-funded also means having to combine a strategic long-term vision with a healthy and pragmatic short-term of "following the market". In practice, following the market means you need to "build what our customers ask for". Sometimes, what customers want is perfectly aligned with your vision and roadmap. But other times, you need to build something or do something that you wouldn't do as product-led company. But to close the deal, you do it anyways.

I think this is perfectly healthy. We're in this to make money. So if your product or business is not suitable to grow product-led from the start, you need to figure out something else. And then following your customers around and making them pay for your services, is a perfectly valid way to run a business. I would even say building a business doesn't get more real than that.

The "negative" side of being customer-funded could be that larger clients pay you a premium to get certain stuff done. And that you're betting on only a small subset of larger customers, compared to many smaller ones. You prioritize larger clients over other efforts. So you can keep the lights on and pay people their salaries. For Firmhouse this usually means developing certain features as closed-beta for one or a small subset of customers, or doing operational maintenance or operational tasks for a customer under an SLA.

The focus on larger clients might impact how you build your product and also means you're under more pressure to ship certain things in a certain way and on a certain timeline. From a product standpoint, this definitely creates more technical and UX debt than you might ideally want. You may make certain shortcuts to ship a feature sooner, but not really make it suitable for other customers to use.

There's definitely a challenge as founders and leaders to keep a balance between servicing larger customers, and guarding the quality of your product from a technical perspective. But also from the perspective of staying true to yourself, your vision, and not changing priorities too much.

At Firmhouse on the macro level, I've never felt the focus on some larger clients have taken is into a direction that we didn't want to go in. I feel that we've been seizing some awesome opportunities, by jumping on the "large client" train. This made us for what we are now: which is a healthy business, with a great team, onboarding awesome clients that have real impact and scale in the market.

The flipside is that on the micro level, we sometimes took longer to build features that were expected by our mid-sized customers. So we need to build some improvements that we've pushed into the future for a few times now. We also have some catching up to do in terms of documentation and releasing some of those feature flags we've accumulated over time.

It's never an ideal situation if you need to make customers wait for what they need because you need to focus on others. But I think we did a very good job at striking quite a good balance.

We have a healthy business, and getting more product-led as time moves forward. Large priorities have never suddenly changed, and we were also able to course-correct on a micro level quite fast. The fact that we have a healthy business with several larger customers on long-term commitments is also a guarantee to our mid-sized customers that we'll stay in business and will continue to grow an awesome software platform for them.

Looking forward to continuing on this path! Doing what is needed to make large customers happy. While also making use of tipping point momentum to continue product-led for all of our customers.