How AppStud wants to rethink the ESN model

by bold-lichterman

The ESN (Digital Service Company) model needs to evolve. The decomplexification of digital audience acquisition levers, the multiplication of development and digital communication agencies, and the growth of remote and offshore work, has resulted in a loss in value of their proposition.

These tend to have an increasingly less differentiated offer, drowned in the mass while having incomes (fees) always lower, but always too expensive for their customers. We wanted to change this with Appstud, specialized in the design, development and media coverage of innovative mobile applications for the general public.

We have created a new model of Agency or ESN (call it whatever you like), which aligns with the objectives of its clients and employees.

The path to change

It didn’t happen right away, nor without difficulty, and we are always improving! We started like everyone else: a customer asked us to make a product, we told him Amen and sold a classic package (commitment of price, time and result). We made a large specification that left no room for doubt and delivered the product once produced. Several months could go by without an exchange with the client. Then we would sell him days to create an audience. It never worked and we always lost our customers after a few months. Blame it on an inadequate product for users.

The electroshock came in 2017

We had signed a project that was too important for us. The contract covered a given and non-evolving scope. The client wanted to modify the project along the way, we underestimated the time needed to connect to the existing one, and we had to work with another team whose schedule we did not manage.

As a result, we were wasting a lot of time and money, the teams were demotivated, and I had 4 starts! We have accumulated everything to miss it! The product is now a success, but we have come very close to the correctional. I remember that we were already talking about the liquidation of the company.

We had 3 or 4 months of cash left to keep us going. The failure was simple and glaring: we had not been able to satisfy a customer, jeopardized the company, and caused employee departures. Total misalignment.

We brought the team together to find a solution. The answer came by leaving the basis of customer and employee relations. The answer came simply: “What if we really aligned our objectives with the challenges of the customer and employees.” That this is not just a commercial argument, but that we live this mission on a daily basis? ”

Succeed in putting both customers and employees at the center of the growth strategy

It looks simple and obvious like that. In truth, it took us 2 years to come up with something really good.

Already, we started from a blank sheet of paper by noting roughly “The customer”: What does he want? How do we respond to them? Answer: He wants a good product at an affordable price that generates profitability quickly. “The employee”: What does he want? How do we respond to them? He wants to have a good salary, interesting projects in a stimulating environment, and see the impact of his choices on the projects he endorses.

We then set up a methodology to allow our client to quickly test his idea in his market. From the first week of collaboration, we create a prototype and go out to meet its audience. If the results are conclusive, we develop the product. Otherwise, we rethink it.

To avoid wasting time, we only focus on projects for which we have already developed solutions that we specifically adapt to the needs of our customers. This allows us to have a product available and well developed in less than 3 months. Then this customer will need to make their product visible and engage their users.

Thus, we then provide it with a team made up of communicators and data analysts who have followed the evolution of the product. They will therefore know how to experiment with acquisition channels, monitor user retention metrics and suggest areas for product improvement in relation to the data collected and technical feasibility. At the same time, we help them put together their financing files – at each stage of the project – in order to be able to have the necessary funds to avoid a drop in velocity.

Finally, we help our client to be as independent as possible on his product. When it starts to generate traction, we recruit its future team. We have a better understanding of the product than he does, so we know much better than a traditional recruitment agency, what profile is necessary to ensure its sustainability.

Secondly, you have to maintain a stable and committed team. This stability leads to profitability because the turnover generates very high hidden costs. A competent team is one thing, but it must adhere to the culture of the company, to the projects, and the members must personally find their account. We have worked a lot on the recruitment process to identify the best soft and hard skills and above all to keep them over time.

Monday mornings we present last week’s projects and determine which ones we will respond to. Each employee is committed throughout the life of the product. We give them the choice to work from where they want. Finally, a point of clarification, and not the least, it seemed important to us that a substantial part of their remuneration be indexed to the performance of the company. Thus, the company’s profits are shared 50-50 between shareholders and employees.

In short, our job is to provide our customers with a stable team based on a methodology that generates value by using our software solutions.

An economic model inspired by telephone subscriptions without commitment and royalties

We consider that a digital project does not have a finite perimeter. In this, he must live, evolve, pivot, follow the plan or even stop. For our economic model, we were inspired by non-binding telephone subscriptions and royalties. Rather than asking our client for their budget for the completion of a project, we rather ask them for their monthly budget to create value. So in the product creation phase, our responsibility is to deliver the maximum technical and functional value to it without exceeding this monthly budget.

Once the product is online, we reason on the principle of royalties. Together, we define a clear and measurable success metric (for example, the number of users who return to the product), and associate a price with it. We then implement all the means to achieve this objective because our remuneration depends on it. Thus, we share with our customers the risks of failure, but also of success.

Have an expert vertical approach rather than a horizontal and generalist approach

It also means that we don’t take any project. We only endorse projects for which our clients want to create a product that will target the general public. Then, it is imperative that we master the field of activity: image processing, e-commerce or the creation of service marketplaces are our areas of predilection, because we have ready-to-use solutions: Glens, Oppla and Lynkt in particular.

Each profession is specific, and the duplication of a traditional digital profession will give rise to strong subtleties that were certainly not envisaged at the start. For example, a traditional neighborhood grocer will have a strong barrier to entry due to its geographic location; its customers are captive. Bring the offer from this same grocer on a mobile application, and dogmas are turned upside down. The problem of this grocer is not the same as that of a dating app for example, and no agency can master all the subtleties of all trades. I strongly believe in an expert vertical approach rather than a horizontal and generalist approach. This involves making choices, and not addressing just any customer. For their own good 🙂

Finally, a more subjective element, there must be a feeling between our teams and those of the client. They will spend moments of euphoria, doubt, questioning together, so this marriage must be naturally desired so that trust can be created.

Discover the practical and video advice of Sébastien Séblin, president of AppStud, accompanied by Vincent Moquet, founder of CMonJardinier, on “how to launch your service marketplace”.

A propos d'AppStud
The Toulouse AppStud team.

Founded in 2013, AppStud is a studio hyperspecialized in the design and development of innovative mobile applications. The agency is labeled French Tech, Young Innovative Company and winner of the Entreprendre Network.

Since its creation in 2013, it has completed more than 120 mobile projects, of which ten have been awarded (notably by Apple and Google). The studio creates better thought-out products for end users by leveraging an innovative production methodology inspired by Lean Start-Up and Agile, and adapted to their needs. By positioning the user’s points of frustration at the heart of its activity, it designs devices with high attraction and retention value for its customers.

AppStud is based in Paris and also has offices in Toulouse, London, Minsk and Montreal.