Most CEE startup founders start their entrepreneurial journey by building an agency, like Omnisend, which began as a digital marketing agency, or MailerLite, which started as a web design studio in 2005 and pivoted in 2010 to productize email marketing. It’s a simpler way to generate revenue, learn the market, and build connections before shifting focus to a product.
For 12 years, we ran service businesses as well, 3 companies with more than 100 people across 5 countries. Then we started building Toolza, a financial management platform. The transition turned out to be trickier than we expected. So we decided to collect our learnings to help other first-time product founders avoid potential pitfalls. Because running an agency and building a product are two very different things.
Wait for the right signal
Not every agency can and even should become a product company. The right timing is clear when you encounter a problem expensive enough that solving it could become a business in itself.
We knew it was time when we faced our own operational challenge: we needed custom financial workflows for our ERP system. We didn’t have that expertise in-house at that time, so we reached out to another agency for a quote. The estimate was $100,000. That number stopped us in our tracks, and we started wondering how many other businesses were facing the same expensive pain.
That realization became our signal to start the customer development process. We discovered that other businesses had spent two or three times more building similar systems, while existing solutions on the market were either too expensive or too complex. It became clear: we weren’t just solving our own problem – we could build a financial management tool that solved a widespread, costly pain point.
Your signal might be different. Pay attention to repetitive pains that keep draining time and money. When you’re solving the same costly issue for the tenth client, that’s probably your cue.
And, by the way, we rejected that $100,000 proposal and spent a year building our custom workflows (which was another signal).
The part nobody warns you about
Moving from a “client-first” agency to a product-first company requires the deepest cultural and personal change. In services, you win by being a hero, saying “yes” to every client request, working late hours, and customizing solutions until the client is happy. In product companies, you win by saying “no” and prioritizing.
We had to unlearn being the service hero. Our job shifted from solving a client’s immediate crisis to solving the industry’s shared, fundamental pain. We embraced the idea that the industry is the client – not John from Company X or Sarah from Company Y.
This helped us move past the pressure of trying to build a single perfect solution for one company and focus instead on crafting a product that works for a wide range of similar businesses.
Listen hard, but don’t hard-code
The transition phase is toughest when you still have demanding service clients generating cash flow while building a product. This is where many companies fail, getting stuck in a loop of constant client customization. We almost did too.
The approach that helped us was to generalize, not hard-code. We listened hard to clients: what hurt them, what confused them, and what slowed them down. We’d solve that pain first, then generalize it into a module, template, or integration so that the next 10 customers get it out of the box.
Shift your focus from being customer-centric to being outcome-centric. Say “yes” only if the request can scale. Translate client feedback into fundamental primitives (settings, templates, API endpoints). This way, you keep solving real problems while sticking to a clear, scalable product vision.
The timing mistake that can cost you months
There are many pitfalls on the road from being an outsourcing agency to becoming a product company, and we fell into a few of the biggest ones.
We started developing the core product and conducting customer development calls in parallel. The feedback loop was too fast, constantly changing our roadmap almost every week. Instead, try to make your processes isolated and iterative. Complete a thorough round of customer development, finalize your V1 vision and roadmap, then start coding.
Once interviews are done, analyze what you’ve learned, find the common themes in requests, assess their priority against the core vision, and learn to say “no” to anything that doesn’t fit the architectural future. If you try to meet too many unique requests, you can lose your main focus.
Your old reputation will follow you
For a long time, our previous clients and the market continued to see us as a service company. That sort of perception can slow down sales and customer feedback, simply because it takes time for people to move you from one box to another in their minds.
It took almost a year and a half of consistent communication to shift that image. You’ll need to repeat your message – in every call, deck, and channel – that you’re now building a product, not just offering services anymore.
What founders should actually do
If you’re running a successful agency today and dream of a SaaS product, don’t wait for a venture capitalist to validate you. You’ve already been validated not by one but by a few dozen of your paying clients.
Start by creating a clear picture of the efficient world you’re building. Share that vision openly with your network and conduct customer development sessions to see how it resonates with their fundamental concerns.
If your vision solves a critical, recurring problem and makes a standard process significantly more efficient, you already have your product idea. Taking action is the only thing that remains. The money and the clients will follow if you offer a solution that solves their problems more efficiently than any custom development.
