Hey Farhan,

Thanks for this question, it’s a good one!

Like most things in business and tech, “it depends”. 🤣

Digital Agency vs Product

Building and running an agency, especially at the start, requires one to have a strong set of people or “soft” skills. You’re the product. You’re selling yourself and your tech skills. Often to non-technical folks who aren’t gong to be impressed with some of the things your tech friends might be. “First of my friends to switch to uv” or “Spoke at KubeCon” aren’t the sorts of things that necessarily going to resonate in the same ways.

However, it’s FAR easier to bootstrap a digital agency than most any sort of product. You can focus on the marketing entirely until your clients eat up all your time. And you’re making revenue almost immediately.

But it is MUCH harder to scale an agency. You can work 2000, maybe even 3000 hours a year if you kill yourself. At some point you have to bring in help in the form of employees and sub-contractors. Managing this is an entirely different set of skills and puts a new strain on your cash flow.

With a product, it’s not unheard of for solo founders to build and run very large SaaS products entirely on their own and scale staff mostly to buy back their own time.

The issue is bootstrapping a product is HARD and takes a long time. Your chances of having a land rush of customers your first year is about the same as winning the lottery. However, it is probably easier to work on a product as a side hussle while holding down a full time job. And assuming it’s in a different industry/area than your day job likely more palatable to your employer.

Impact of AI

AI is certainly changing up all aspects of tech and it’s going to radically change digital agencies.

We’re still figuring this out as we go, but I think we’re going to see less hourly billing work. Agencies are going to need to transition to fixed bid work to keep their level of staff and profit around the same levels.

This is a win for both parties honestly. Clients get the certainty of paying a set amount and agencies get to deliver these wins more easily with a healthy profit margin. Read up on value based pricing and it can often be even more profitable for an agency without ripping off any customers.

AI also is lowering the bar considerably for agencies to add the “polish” web or app development that previously would often be out of scope. We’re already adding in slick UI interactions in our client projects in an hour that would have previously taken a couple of days to get just right. And that is only going to accelerate.

Hope this helps you make your decision Farhan!