Konstantin Klyagin
On Starting A Software Development Agency Specialized In SaaS Products
Redwerk
from Kyiv, Ukraine
started June 2005
1
Founders
70
Employees
725K
alexa rank
1.26K
followers
846
followers
market size
$581B
avg revenue (monthly)
$149K
starting costs
$20.8K
gross margin
83%
time to build
12 months
growth channels
SEO
business model
Advertising
best tools
Slack, Node.js, YouTube
time investment
Full time
pros & cons
37 Pros & Cons
tips
10 Tips
Discover what tools Konstantin reccommends to grow your business!
social media
other
Discover what books Konstantin reccommends to grow your business!
Become A Software Developer

Hello! Who are you and what business did you start?

Hi, I'm Konstantin Klyagin and I'm the founder of Redwerk and QAwerk.

Redwerk is a software development agency specializing in SaaS products. We work both with startups and scaleups like Evolv, Gooroo, and Quandooand big names like Siemens, Universal Music, and Hosting.com. One of our most recent partnerships was with Mass Movement, for whom we delivered an entire kit of enterprise-grade solutions to maximize efficiency and reduce operational costs. With such a technical upgrade, Mass Movement attracted the interest of industry giants and was soon acquired by J.B. Hunt Transport Inc., the leader in transportation and logistics services across North America.

I started Redwerk some 16 years ago. Our R&D offices are located in Eastern Europe, which makes it convenient for us to work with clients from all over the globe - from Texas and New York to Berlin, Lisbon, and Rome.

Ukraine’s geographical position allows us to cooperate with European clients in real-time, while the time zone difference with the USA is perfect for nightly builds. On top of that, we can still jump on an urgent Zoom call because of the range of overlapping hours - 7 p.m. in Kyiv is 9 a.m. in San Francisco.

Along with software development, we have done a lot of testing and quality assurance, which helped us package it as a separate offering and launch a new brand - QAwerk - dedicated exclusively to testing and QA. The focus is still on SaaS, but we also do game testing, helping mobile, desktop, and browser game publishers polish functionality, track down performance issues, check compatibility and compliance. As an independent company, QAwerk has been on the market since 2015.

Over the years of managing two IT companies, I’ve gathered some entrepreneurial knowledge, and I wanted to put it to good use in other spheres. This is how I became an investor and co-founder of one more venture - Subzero - an industrial refrigeration company here in Ukraine. You may wonder what software development and testing have in common with refrigerators and cooling equipment. Well, nothing, except for one major thing. It's a business, with quite similar rules to follow. With 8-years of managing all client accounts on my own and continuous self-education in marketing and sales, I know where I'm heading.

on-starting-a-software-development-agency-specialized-in-saas-products

What's your backstory and how did you come up with the idea?

My tech journey started at the age of 6. It's probably something you'll hear a lot from senior software developers or founders with a tech background, but that's just how it goes. I couldn't take my eyes off the computer the first time I saw it. At 8, I was already coding and wrote my first program in Basic.

At 14, I released my first serious piece of work - Tornado - a BBS software that allowed communicating via dial-up telephone networks. In those pre-internet times, it was quite a popular solution with thousands of users beyond the borders of Ukraine. I remember how I would get down to my emails, carefully studying different feature requests and responding to Tornado users, hoping to implement some of their suggestions one day.

At 17, I got my first job offer as a C++ developer at NIX Solutions. I knew the founder personally because we both hung out at local gatherings of tech enthusiasts. I attended these tech community meetups long before they became a mainstream thing. I combined my employment with studies because my philosophy is to get things done, and I did want to get my degree.

I've tried out different roles throughout my professional life - from a software engineer and architect to a team lead and technical writer. However, the real career boost happened when I worked as a project manager for an outsourcing company. I was responsible for the success of the entire delivery team, so I planned software development stages, oversaw my teammates' progress, and communicated with clients the globe over. The latter was probably the most fulfilling part for me at that moment.

I lived and worked abroad for a long time - 3 years in Romania and 12 years in Germany. The last company I worked for as a software developer was a Berlin-based startup offering mapping and location services for mobile, which was soon acquired by Nokia.

The idea to start my own company crawled into my mind at the early dawn of my career. While working for different agencies, I paid attention to things I liked and disliked, and I knew that one day I'd be able to come to a place where only the good stuff happens, a place of my own.

For sure, my agency would have no bullshit culture, no meetings that take forever, leaving no time actually to code, and no complex hierarchy crushing employees' engagement and initiativeness. As for the positive aspects, I also noted a couple of things that made me want to stay - a cool office design, recreational spaces with table tennis and PlayStation, tasty, wholesome lunches delivered right to the office, unboring team buildings, and a family-like atmosphere.

At Redwerk and QAwerk, I implemented all of the positives and went further with charity and green initiatives, monthly Dev Meetups, and accolades for outstanding performance.

Take us through the process of designing, prototyping, and manufacturing your first product.

Our first product was developed for Merrimac, a US-based company manufacturing a variety of components for satellites, military and commercial air transport, medical diagnostic instruments, etc. We built for them an enterprise-level solution for streamlining their inner workflows. An interesting fact is that this very company produced hardware for NASA Mars rovers.

What we've noticed is that offline events indeed work much better than online ones - whether for networking or sealing new deals.

Our second big project was for Green Valley, a leading provider of e-government solutions in the Netherlands and Belgium. We delivered several important modules, such as the UI to record councilors’ attendance, voting functionality, a workflow composer, a reporting tool, among other features. The software we developed for Green Valley was later used by 50% of city council clerks across the Netherlands.

Describe the process of launching the business.

As I mentioned above, I’ve always dreamt of a software development agency of my own. However, the real work towards this goal was done when I was still working at Nokia. At that time, I was contacted by a business owner seeking professional IT services, and I thought it was an excellent opportunity to start with. Together with a friend of mine, we started forming a small team for a couple of side projects.

Eventually, I quit Nokia to focus entirely on strengthening and growing my business. In 2009, we had many projects, but all of them were from the same client. We had great relations with this client, but I would have to close my agency if things went sour. I was tired of walking on the razor’s edge, so I decided to act. I strongly believed and still do in the power of word-of-mouth. Therefore, I messaged everyone I knew about the services we provide, flew to New York and caught up with all my IT buddies over there to spread the word further, sent countless cold outreach messages via LinkedIn, conducted about 100 pitch meetings, and flew back to Berlin where I lived at that time.

I did not stop there and made some more business trips across Western Europe. Was the effort worth the struggle? Absolutely. In 2010, apart from our loyal American partner, we won a client from Portugal, a client from the Netherlands, and one more big client from the USA.

As for the legal aspects of the launch, the company had been registered in Germany for quite some time. I lived there for a while, so it was super convenient for me. On the flip side, the cost of maintaining a Germany-based company is relatively high, so eventually, I started searching for alternatives and discovered Estonia with its awesome e-residency program and minimum bureaucracy - everything is digitalized.

Since launch, what has worked to attract and retain customers?

We grow organically, and about 70% of new clients come to us through referrals. Most of our prospects reveal that they’ve already heard good things about us from friends or common acquaintances, and that was the decisive factor in choosing us as their potential tech partner.

Various kinds of tech conferences, expos, and summits are also great channels of potential leads. Over the years, we've attended a bunch of them: AppsWorld in London, Slush in Helsinki, Bits & Pretzels in Munich, CES in Las Vegas, Web Summit in Lisbon, Collision in Toronto, and the list goes on.

What we've noticed is that offline events indeed work much better than online ones - whether for networking or sealing new deals. For example, at 2019 Collision, we forged a partnership with OpenTeams, a startup marketplace matching open-source users with open-source providers, whereas at online events we couldn’t boast similar results.

For eight years straight, I had been managing all of my client's accounts on my own. However, when I hired the first project manager, I realized that was one of the wisest decisions I've ever made. I finally could focus on devising a growth strategy for my business while a dedicated professional took care of planning, communication, deadlines, and other project-related essentials. Delegating part of account management duties to project managers also allowed me to provide a much more personalized service to each client.

Another huge business booster was the investment in HR, Sales, and Marketing Departments. These three combined can do absolute wonders. Yes, it takes time to find the right people who'll share the same vision and work ethic as you do. However, with real professionals on board, it's much easier to try out new strategies and campaigns.

What differentiates us from other testing agencies is that we try to make the world a better place by reducing the number of bugs in software. Although it may sound a bit pretentious, that's exactly what we do. We talk more about the reasons behind our Bug Crawl initiative and how it all started on TechCrunch.

So far, we've tested almost 200 apps, helping promising startups and scale-ups eliminate critical issues early on. Our Bug Crawl portfolio includes various SaaS platforms for work productivity, next-level marketing, and customer support. As for mobile apps, we've tested numerous photo editors and story-makers (one of which has grown to a billion-user platform with our support), fitness apps, mental health apps, messengers, social discovery apps, e-commerce, and insurance solutions, among others.

How do we retain customers? Well, there are a couple of things that work for us pretty well.

First off, since we provide managed services, we can attend to almost every need our customers may have. Apart from software developers, we have UI/UX designers, QA engineers, DevOps engineers, SEO experts, which means our clients don't have to go through the trouble of searching for another agency to create mockups, update test suites, or improve their SEO rankings.

Lastly, you don’t have to work long hours to be successful. You need to learn how to work efficiently, what tasks can be delegated, and what tasks should go straight to the garbage bin.

Secondly, we position ourselves as trusted advisors and partners rather than mere service providers from the very beginning.

Lastly, we do our job well, stay fully engaged in every project we take and consult our clients on how we can drive additional value for them. Witnessing our professionalism and daily commitment, clients turn to us for other services. This is exactly how Justin Alexander, one of our most loyal clients, extended our area of responsibility from software development and maintenance to SEO. Having recognized our expertise, Evolv, for example, entrusted us not only with software development but also with manual testing, and then with test automation.

How are you doing today and what does the future look like?

Today Redwerk is a brand with well-established expertise, while QAwerk is steadily scaling. We operate on a global market, and so far, we’ve covered the following geographies: North America, Western, and Eastern Europe, Australia, New Zealand, and Africa.

We started with e-government solutions and extended our services to other verticals, such as e-learning, e-commerce, media & entertainment, business process automation, data mining, and game development.

As for QAwerk, we’ve mastered all types of manual testing - from functional and performance testing to API, security, and cloud testing. Recently, we’ve added automated testing as a new service and hope to grow in this direction.

Our portfolio is quite multifaceted: some clients, like Fanmetrix, M3 Glass, and Borjomi, come to us only for cool designs, some, like Cakemail, need assistance exclusively with frontend modules, whereas others, like Quandoo, Searchturbo, and BengalFox, turn to us for solutions built from the ground up.

Since most of the tech stack we use is open source, we also started cooperating with open source sponsors who seek to enhance certain features of the open-source products they use. The guaranteed way to donate and at the same time satisfy your feature requests is to contribute to open source through an agency. Here we talk why.

We have 2 R&D offices in Ukraine - in Kyiv (because that’s the biggest IT hub) and in Zaporizhia (because that’s where my first team was located). I’m proud that we’ve grown to 70 professionals, mostly software developers and QA engineers, with PMs, BAs, UI/UX designers, DevOps experts, Marketing, Sales, and HR making up about 30% of our team. What’s even cooler is that we’ve reached our diversity goals, which means we have 40% of women on board.

In the future, we are looking to expand our services further and solidify our expertise in DevOps, Blockchain, and Machine Learning. Regarding QAwerk, our course of action is to continue developing in the security testing domain, pen testing in particular.

For the next few years, I’m also going to keep investing in other businesses.

on-starting-a-software-development-agency-specialized-in-saas-products

Through starting the business, have you learned anything particularly helpful or advantageous?

Yeah, I have. I’ll share a story that cost me, several talented employees. As a service agency, we are customer-centered by default. When we were only starting, we believed that what clients said was the law for us to abide by. Little did we know how soon we’ll have to change our stance on that.

We had a client who would change his mind on the product requirements every second minute, get emotional all the time, want everything done yesterday, and force us to overwork. While we complied with all of their whims, we lost a couple of highly skillful team members who no longer wanted to work under such conditions. That’s when I realized I had to take care not only of my clients but also the people who stand behind the great products we deliver. I decided that I won’t let a toxic client exhaust my team ever again and that we as an agency also get to choose what clients to work with.

Another business lesson I learned - never underestimates a small project. I know some agencies won’t even bother to do a discovery call if the project is too small. I hold the opposite opinion. Actually, that’s how we gained one of our most loyal clients at QAwerk - Unfold. They contacted us to receive a free bug report as part of our Bug Crawl campaign, and when they saw the severity of the bugs we discovered, Unfold decided to hire us for on-demand QA. Having witnessed our dedication to the project’s success, they started working with us long-term. With our continuous support, Unfold managed to grow into a billion-user storytelling platform and was soon acquired by Squarespace.

Lastly, you don’t have to work long hours to be successful. You need to learn how to work efficiently, what tasks can be delegated, and what tasks should go straight to the garbage bin.

What platform/tools do you use for your business?

Personally, I don’t use too many tools. My go-to's now are Google Calendar for planning meetings and Notes for documenting my thoughts and minor errands. As a team lead of internal projects, I use a typical project management toolkit - Jira, Confluence, Airtable, Slack, Skype, Zoom, you name it.

To maintain our brand image and speak to a broader audience of potential clients, we need a solid digital presence. Therefore, we make sure to promote our blog articles and create platform-specific content for LinkedIn, Instagram, Facebook, Quora, and Reddit.

For example, the content on my personal LinkedIn page brings some traffic with separate posts reaching over 50K views.

on-starting-a-software-development-agency-specialized-in-saas-products

What have been the most influential books, podcasts, or other resources?

Reading has always been my second strongest passion (traveling is the first), and the whole pandemic situation has helped me catch up on it a bit. As of recent favorites, I genuinely enjoyed the following:

George Orwell’s 1984 is one of my favorite classics, and as for contemporary writers, I’ve lately been reading a lot of Mario Vargas Llosa.

I’ve also developed an interest in applied psychology. In this domain, Cialdini’s* *Influence: The Psychology of Persuasion is a must-read.

Overall, I’m more of a practitioner rather than a theorist; therefore, I prefer learning things by doing them and observing the result right away. Otherwise, it’s very easy to find yourself in an information overload, constantly hunting for new resources without a clear understanding of how those insights can be applied to a real-life setting.

Advice for other entrepreneurs who want to get started or are just starting?

If you're contemplating starting your own business, start now. You'll never be 100% ready. There will always be doubts, fears, unfavorable circumstances, but what the eyes fear, the hands do.

That said, I wouldn't advise doing something just for the big bucks. The chances such a venture turns out well are critically slim. Take the time to find out what really makes you tick. Do your job well every single day, lead by example, and one day you'll be surprised by how far you've climbed.

As 2020 has taught us, it is a thankless job to plan. Be ready for an emergency: do your math right and make sure you have some sort of a rainy day fund.

Are you looking to hire for certain positions right now?

We are hoping to grow our team to 100 professionals by the end of 2021. At the moment, we are looking for the following experts to work full-time:

  • Middle iOS developer
  • Middle Python developer
  • Middle QA engineer
  • QA automation engineer
  • Sales manager
  • Project manager
  • PR manager
  • Senior marketing specialist

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

-  
Konstantin Klyagin,   Founder of Redwerk
Pat Walls,  Founder of Starter Story

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