The first agency interview is with a digital agency from Turku, Southern Finland. Aucor is a boutique WordPress agency working mostly for Finnish customers mainly based in the Helsinki area. The CEO of Aucor, Janne Jääskeläinen, promised I could reveal some statistics on the agency’s financials and also about their internal workflow. We also discussed the rise of WordPress from a simple blog system that now even challenges Drupal.
At present, Aucor employs seven people and last year clocked revenues of slightly less than €500,000. The core of Aucor’s operation continues to be quality and the creation of customised websites, which is why the classification of Aucor as a grown-up boutique digital agency seems the most appropriate. In many ways Aucor is between a small boutique agency and a more established digital agency—not quite the choice for bigger brands yet, but often too expensive for small projects. A challenging position, indeed.
What are Aucor’s typical projects and clients like?
“Aucor mainly produces basic websites for companies and associations. A surprising number of e-commerce sites have materialised lately, but they do not form a big percentage of business. We don’t do actual software development.
The major part of our business is websites for small and midsize companies. In general, we’re talking about projects of a little upwards of €20,000.
Big companies usually feel Aucor is slightly too small, and sometimes our location in Turku seems to irritate clients from the capital area. Really big clients usually feel it is safer to buy from the likes of Tieto or Exove—which it probably is.
We avoid competitive bids from the public administration, because we have bad experiences from them. Also, public bids usually cause so much more work that even if we win the bid, the margins are quite slim.
We also make a lot of sites for associations and clubs, even though they don’t bring in big money. These projects, however, usually feel good to do.
The share of associations and the public sector in our revenue is only some 25 per cent, so most of our work is for the private sector.”
How much money changes hands in your projects?
“The average billing per client for the past two years is less than €10,000. Of those ten thousand, around 30 per cent is maintenance. (I dug into the numbers before the interview.)
However, the most typical projects in recent times have been between €10,000 and €15,000. Quite recently, we have offered even many projects between €20,000 and €40,000. The size of customer projects has been steadily rising throughout Aucor’s history.
Our hourly rate at the moment is €95 and daily rate €750 plus VAT. The monthly fees for maintenance agreements start from €240.
We practically always sell our projects at a fixed price. Monthly retainer-type arrangements are sold only to long-term clients, and they usually serve the needs of both parties very well.
We have been a profitable and growing company ever since the beginning. Last year, we grew a little more than usual, which resulted in the first annual loss, about €18,000. When the scopes of the projects grow, so do revenues, and for the current year, we are expecting to exceed €500,000.”
How is your agency’s work divided between the different functions, in other words, what are your clients paying you for?
“Some 60 per cent of our revenue come from project work, 30 per cent from small-scale development, and the rest from maintenance. Of our billed hours, 50 per cent go to website creation, 30 per cent to design and planning, 10 per cent to project management and 10 per cent to maintenance.”
Which is more important to you, WordPress or Drupal?
“WordPress. For a number of reasons. Being the CEO, the most important reason for me is that WordPress projects are significantly more profitable than Drupal work. It is also easier for a small agency to be a credible WordPress expert than a Drupal house.
We have also had quite a number of challenges with Drupal. Drupal work is expensive and high-risk, at least for an agency as small as we are. Drupal developers cost more, and yet, there is a higher risk of unexpected technological challenges. With Drupal, the risk to shoot yourself in the foot through unlucky technological choices is higher. Also, theming in Drupal is more tightly integrated into coding; WordPress theming is clearer and more lightweight.
Generally speaking, clients also think that the content management interface of WordPress is easier to use than Drupal’s interfaces.”
What do you like most about WordPress?
“You can quickly set up a basic website. That the entirety is dependent on plugins is both a plus and a minus. The whole setup is not easily manageable, because the world of plugins is partly really substandard. WordPress, however, is much better than Drupal in this respect. Many of WordPress’s plugins are highly advanced, for example those for search engine optimisation (such as Yoast SEO) and language versioning (WPML, Polylang). Another example is forms management, where Gravity Forms is excellent.”
What are WordPress’s challenges?
“A large part of the challenges we have had are connected with language versioning, in fact both in WordPress and in Drupal. One of WordPress’s challenges is also its reputation, because it is not yet widely considered as credible as Drupal.”
Who are your competitors?
“In the business for associations and smaller cases, it’s often smaller outfits, and many times even “a man and a Macintosh” type of setups. For larger projects, Sofokus, KWD Digital, H1 and Exove are names we come across often. In concept creation, we usually compete with advertising agencies.”
What kind of highlights or major milestones are there in Aucor’s history?
“Founding Aucor in the first place was a big jump into the unknown for me personally. It all started from my own irritation and desire for quality. I realised I will either set up my own business or pursue a whole other career. The first jobs came from my previous employer, and gradually old clients from years ago started to get in touch. From there on, growth has been pretty constant.
Because of my own background, visual design was in a remarkably more prominent role in the beginning. Over the years, we have moved more towards bigger, more complex total deliveries, at which stage maintenance naturally entered the stage as well.
The best idea in years was to hire a project manager. It has freed up a lot of the developers’ and my own time. Clients also appreciate it that communication is now better.
We also shifted to using Google’s Cloud Platform a while ago. This has raised the hosting level of our websites on a whole new level, and I think that as cloud hosting solutions are becoming more common, it will generally mean a revolution in the possibilities of small digital agencies to compete with bigger actors. And an agency our size should not be fiddling with its own server stacks anyway.”
What kind of challenges have there been in Aucor’s history?
“Aucor has grown organically without any debt. This has somewhat limited our growth, but on the other hand, organic growth has been easier to control. Every summer is a dead period, which is challenging for the cash flow.
A few big bidding competitions proved to be dangerous, when you first invest a lot and then lose.
Personally, a high threshold was to let go of my own perception of quality. You establish a company because you want to do things your own way. Then with an increasing number of employees, you’re faced with accepting other views of what is “right”. This hasn’t been easy.
For the last three years, however, I haven’t touched Photoshop in client projects, so I have learned something. This is the classic pitfall of an expert entrepreneur everyone founding their own company will face at some point. If they want to grow.
Being a manager, the balancing act between freedom and micromanagement has been a headache. However many people you hire that are better than you are, it’s not always easy to stay in the sidelines.
Growing in the area of human resource management may well have been the hardest part. Managing experts is a demanding job, even in a small company. Also, the practicalities of employment legislation has required a lot of new learning. Working with experts has improved along with our growth when a common culture has emerged. Company culture helps new employees in better adopting the ways we work.”
Finally, why do clients buy from Aucor?
“Quality and ease. My claim is that our 90% is many other companies’ 100%. Being easy to work with and speaking outright are things many clients appreciate.”
Office photos (August 2014, interview day):