[Live Training] 9 Strategies to Build Recurring Revenue in your Digital Agency

Arif Gangji of Neon Rain Interactive Talks App Development, Product vs Service, and Hiring Great Talent

Founder and President of Denver-based Neon Rain Interactive, Arif Gangji, sits down with me to discuss his agency, growth, and his unique way of finding talent.

After Arif Gangji moved away from his hacking days in high school, he started Neon Rain, in 2002, as a company that would be recognized for its talent and focused developers. After showing us around their rooftop patio with panoramic views of Denver to the Flatirons, we sat down and dived into what Arif and Neon Rain are all about.

You can find more information about Arif Gangji and Neon Rain by visiting their blog and website, and following them on Twitter, Facebook, and LinkedIn.

Video Transcript

Brent: I’m Brent Weaver, and you’re watching uGurus, the most watched web series to become a more profitable and in-demand web professional. Today I’m here at Neon Rain with Arif Gangji and we’re talking about web, apps and what his company’s up to, so welcome to the program.

Arif: Thank you, thanks for having me.

Brent: So tell us a little bit about Neon Rain.

Arif: Sure. So I started Neon Rain in 2002 and we’ve kind of grown in services and team members throughout that process. We started building web applications for franchise companies and large organizations and just custom web-based applications, essentially; from that came, websites. They have an application, they want a website. We started designing websites, building websites, mainly Word Press way back in the day, now we do Drupal and other things; from that point on we added SEO as a service and now we’re actually building a ton of mobile apps, Android and iPhone apps; that market is growing pretty quickly.

Brent: So what’s the current makeup of the team, how many team members do you guys have, what kind of disciplines do you have in house?

Arif: So our team members kind of fluctuate as far as number, anywhere from ten up to twenty depending on who we have doing what; the disciplines, we used to break everything up into different groups; so we had our app team that did web applications and mobile apps and then we also had our web team that did design and development, and then we had our SEO team as well. We’ve recently combined our web and app team, and so now we have one development team and they take care of mobile apps, web apps, design, and development. Obviously, people who are good at those work on that project, right? But we’ve kind of pulled it all together under one account management team, project manager and QA and combined those instead of duplicating resources.

Brent: And what was the driver there, just that you guys were duplicating resources or was there some kind of pain that you guys found?

Arif: In order to, we had two different processes; and so our discovery process for web and design was very different than our apps and mobile apps; and as we started working on larger projects in our website, we would find that there’s actually some similarities; when we got to a point where both teams were really doing very similar things as far as processes, like using repositories, and needed the same requirements as far as QA and project management and that sort of thing; it just seemed natural to combine the two and utilize those resources across teams instead of trying to have redundancies.

Brent: Who’s your ideal customer?

Arif: It depends on in what area, so for example, SEO; for SEO we look for clients who are looking to grow, they understand the value of marketing, they understand the value of internet; we don’t have to convince them that,
“Hey, people are actually looking for you on the internet.” they know that already. They’re spending money on pay-per-click or something else; they just don’t have what they need on their current website and they need to refocus it and make sure it’s actually doing what it needs to do. So revenue-wise, we have a lot of people starting out really all the way up to companies with revenues of 30,000,000 plus. So the spectrum is there as far as the type of client there on the web side, they are very similar, it’s people looking to grow as well; they understand the power of the web. We do a lot of custom design and some template work, so custom design, designing from the ground up, really looking at what the user wants; what the customer wants; what they’re trying to portray; what their messaging is that they’re missing and working on design from the ground up there. Again, revenue-wise, companies really anywhere from half a million up to hundreds of millions plus, because we have larger companies, we’ve worked with a little project for them. Web app team, we have people, we joke around that we have clients that are somebody sitting in their mother’s basement with their credit card and that’s actually true. All the way out to Fortune 1000 companies that need something built, so the gambit’s really out there; it really depends on what they have to work with budget-wise; do they actually have a vision, are they organized? That’s really what is more important in that regard versus actual company size.

Brent: So with a lot of different potential customers, you’ve got a lot of different potential services you can offer for app development websites; how do you approach that? It seems like “custom” is the word that comes to mind. Is every project just its own unique snowflake and you guys are having to do a lot of discovery to figure out what that is or do you guys have any kind of cookie-cutter process?

Arif: Sure. So our process is actually very cookie-cutter, where the projects are very custom and that’s really how we have to do it, because the projects are custom; we had to create a process that would give us a very similar result, because they’re all so different; so you mentioned custom, the other word I would mention is “transparent”. One thing we try to do with our clients is be very transparent; even with our SEO, they knew exactly what we’re doing, what links we’re building, we don’t hide any of that from them. If certain rankings are going up, certain shrinks are going down, we show it to them. On the app development, they actually see a budget spreadsheet every week; they can see where they are in budget and what their decisions are doing to the budget; whether they’re in budget or they’re adding new features and increasing that, so the processes themselves are really what help keep things in line. So for example, our process would be where somebody comes to us and they want an app developed; we would start with an initial conversation called the information gathering, figure out who they are and what they want, right? And then we come up with a ballpark number, some recommended budget; now if I recommend a budget that fits their budget, what they’re trying to accomplish, then we can move onto the discovery phase; what they do is they pay a small fee for discovery and we sit down in a room for hours, broken out over a couple of days or weeks, depending and go through all the different pieces of the project. What they end up with at the end is a list of, “Here’s all the features that you want, here’s all the different options of how you can accomplish them, based on our conversations here, here’s the budget for each one.” Now you have the total budget, let’s see what fits and what doesn’t fit or what’s phase one look like? And we can proceed from there; and then we also use agile methodologies, so every week we’re doing demo and feedback calls with the clients to show them what we’ve done in the last week, get feedback on what we’ve done and then proceed forward from there; but during that process, we’re also showing them the budget and everything else to make sure that they’re in line with what we’re doing and vice versa.

Brent: How do you find that clients work within the agile process? Is that something you have to teach your customer, how to work with you guys on projects? Or are they just kind of responding to whatever you guys lead them down?

Arif: You know, what we actually explain the agile process it makes sense to them, because they think they connect with it as common sense in some regard. We can talk about our experience and say, “OK, we’ve done waterfall” which is trying to plan everything out and saying, “Alright, eight months from now, on this Thursday at three p.m., so-and-so’s going to work on this part of the project.” I mean, you change one thing and that schedule is blown, right? It’s going to change, and they understand that, even if they’ve never developed a product or project before and we say,
“OK, listen. You need flexibility; we also need to make sure that you’re not going to change the scope drastically, so here’s what we’re going to do, every week we’re going to talk about what we’ve done and where you want to take this; if you want to make a change, great; we’ll tell you how it’s going to affect the budget and give you that flexibility to do so.” We’ll also draw a line in the sand and say, “OK, here’s what needs to happen for launch, these are the non-negotiable; these have to happen and we’ll always focus on those to make sure those get done so that those can launch, and everything else might come after launch; maybe it will come before launch, it’s really up to you to decide.” And that seems to resonate with them and make sense.

Brent: One thing that I’m kind of picking up is that you mentioned that you guys do a little bit of budget planning, but you, very importantly, charge for discovery, which I’m a big advocate of; and then you come up with what sounds like a more definitive budget, so do you guys operate on a time and materials basis, or is it fixed price at the end of the day for your customers?

Arif: It’s a combination. So there’s certain things that we’ve done ahead of time, especially in Ecommerce, where we can re-utilize modules we’ve developed in the past; those are essentially fixed-price, because we know what time goes into it; we can get it done faster, because we’ve already developed it, but they’re still paying for the value in it; there are certain pieces that are very custom. Nobody’s built this before or there’s 40 different ways of doing it, but we have to interact with some API out there; is it going to work, is it not? Is it going to take two hours, is it going to take 200 hours? We don’t know and therefore we’ll give our best estimate, and then that might be based on hours; and you know, we’ll work with the clients. We might cap it and say, “Alright, let’s spend five hours looking into this thing.” and at that point, we’ll come back to you and tell you what we’ve found and what we think it’s really going to take to accomplish this and let you decide.

Brent: Did you guys ever start just doing fixed-price and kind of learn your lessons from getting burned too many times and move to a more flexible method?

Arif: Yes, absolutely. So initially, yeah, fixed price; especially when the scope isn’t defined very well and when you’re dealing with third parties, because you never know what they’re going to throw at you, right? And so if you fix the price and you don’t count for the variables, you’re going to lose money on the project and you’re going to end up with an unhappy customer; on the flip-side, if you’re only charging by the hour, they question, “OK, well, are you working fast enough?” How do I know that you’re actually working those hours as well? And so we kind of make it a mix of value and then hourly to be fair to both parties.

Brent: For sure; when it comes to actually getting customers, you know, I noticed on your website you guys have what appears to be a couple of kind of celebrity relationships, Dave Ramsey and Mr. Food was another one; do you guys do a lot of PR outreach to get new customers?

Arif: Actually no, we don’t do a lot of outreach; more than 80% of our clients are referral, so it’s really grown by referral, which is interesting, because it’s hard to dial up and down because of that; but at the same time it’s great, because that means people like what we’re doing and both of those testimonials were unsolicited, which was also great.

Brent: I mean, referrals are probably one of the most expensive in terms of marketing budget to actually get, but at the same time you have to do a really good job on the projects.

Arif: Right, and there’s also a social capital that you’re spending, right?
You might not be spending dollars towards some sort of advertising campaign, but you are supporting your community; you are networking; you’re doing other things in order to let the community know that “Hey, you’re a quality person.” And that you actually care about people and people around you, and I think that matters a lot, because a lot of the referrals that we get really come from helping other people in what’s important to them.

Brent: Is there anything especially unique that you do to drive referrals?
I mean, people talk about putting something at the tail end of their invoice like, “Hey, mention us to a friend.” Or doing formal, affiliate-
type agreements where somebody’s getting a cut of something.

Arif: Right. We’ve tried the affiliate agreement, didn’t work. We tried putting little stickers on our invoices that said, “We love referrals.”
Didn’t do anything, I mean really, it’s been taking care of our clients; it is when a client’s company turns one, we send them a bottle of wine; it is sending them a Starbucks gift card just to say “Thank you.” Even our vendors, people that we work with or bring in on projects, we’ll send them a card to say “Thank you” or put a Starbucks gift card with the check to pay them; mainly because we want them to feel valued and if our clients feel valued, they want to introduce their friends to us as well.

Brent: So kind of going out of your way to show appreciation to your customers beyond just the project work?

Arif: Absolutely.

Brent: What else do you do with Neon Rain in terms of your team? You said you kind of fluctuate in team size, how do you go out there and find talent? Do you have any secrets of the trade you’re willing to share on that front?

Arif: I don’t think we find talent fast enough sometimes; like right now we’re booked quite a ways and we need to find people who are looking. Our hiring process actually came from Dave Ramsey’s process in some regard; initially we would put an ad out there; we would get a couple of hundred applicants where we’d waste a lot of time, because they don’t really know what we’re looking for and obviously it’s the character issue, too, we want to make sure it’s going to be a good fit for our team. We protect our team quite a bit, so we actually evolved our process and now what we do is put an ad out there, and we’ll network and get the word out that we’re looking for people; lead them to an assessment and the assessment sometimes is two hours. It’s like an online assessment asking various questions to see if they know what they’re talking about technically. It’s funny, because sometimes in the assessment, people will swear at us. They’re like, “You know, this is crap. You can’t expect somebody to do this.” Well, obviously not going to get hired because they can’t make it through it, right? We’ve had people Google answers and put them in there because we can copy and paste their answer and see somebody else posted that. So we actually know how long it takes to get through the assessment and if somebody takes too long or not enough time we can actually tell. They get through the assessment, read through the answers; we know that they know their stuff. That’s all it is, you know, we just want to make sure you know your stuff; then comes the real interviews where we talk on the phone, figure out if it’s a good fit to have you come in and actually interview. Talk in person, bring in other team members and get to know the candidate; we might even give them assignments. This is one area you’re kind of lacking, go try this, go learn this, come back and tell us what you found and they’ll do it. We go through that process and at the very end we do a dinner and so my wife and I will go out to dinner with a candidate and their significant or themselves, and you get to know a lot about a person during that dinner that they would never mention in an interview.

Brent: Have you gone to dinner with a candidate after all of that and had to say no?

Arif: Yes.

Brent: Wow.

Arif: Yeah and it was interesting, in particular, the one I was thinking about, my wife and I have a system, so if she sees something that’s alarming, she’ll squeeze my leg under the table; and that night, within the first ten minutes, my leg hurt; everything coming out of their mouth was negative about everybody that they’d ever interacted with. They didn’t treat the wait staff very well; that’s important to me, I want to make sure when I come into the office, I say “Hi” to the person mopping the floor, because they’re doing something valuable as well; so getting to know that person outside of the work environment is important; if that person is not going to treat the wait staff very well, how are they going to treat our customers? Not very well!

Brent: If I ever go out to dinner with you and your wife, I’m going to be like, “Hands on the table.” Keep an eye on that just to see if there’s any negative energy on me going on there.

Arif: No, not at all.

Brent: I think that’s fantastic, I think a lot of people get so excitable around hiring new people and just want to find a candidate that fits and throw him into the ringer and see if he or she’s a good fit. I think that’s great that you guys are spending what sounds like a lot of time on the front side.

Arif: It is, and the other piece of that is we tell people that we want it to be a good fit for both sides and so we tell them a lot about us; we tell them where we’ve been; we tell them what our struggles are; we tell them where we’re doing really well and where we need help; we’ll tell them where we’re lacking, just because we don’t want to get somebody in and have them be surprised, right? It has to be a good fit for both parties, otherwise it’s not fair and we want to make sure that they’re just as excited to be here as we are excited to have them.

Brent: For sure. I also noticed on your website, you were recently recognized for 40 under 40. How did that come out? I think a lot of people, we try to teach people how to do PR, outreach and get recognized; I’m curious how you guys actually tactically got something like that.

Arif: So let me take a step back; before the 40 under 40, by the den represents journal; we won the Small Business Person of the Year award by the Denver or the metro north chamber. I think getting the 40 under 40 was also based on having some other awards, I’m assuming, so getting the Small Business Person of the Year award was really getting involved in the chamber. We figured out that going to leads group was not a good way for us to be involved in the chamber; we were just getting junk leads that we didn’t really have much that we were sending out to people; we were really looking for quality relationships; we’re going to refer people to people if we think they’re doing a good job and vice versa; so we decided to help the chamber themselves and we started working with the chamber for free essentially, helping them with their redesign, their marketing and pouring value into them so that they can then pour more value into their members. I think, because of that we won the Small Business Person of the Year award and then we went online and essentially applied; I can’t remember if we applied for the 40 under 40 or if somebody else nominated us, but having other awards in the past obviously helped with that as well.

Brent: Have you found that that’s been an effective way for you guys to get introduced to new people, new contacts, and new clients?

Arif: You know it doesn’t drive a lot of business, but getting to know other people it does help with that; I’ve met a lot of people that have also been on the 40 under 40 list and they’re great contacts to have, so that’s been very valuable and business comes out of those networking relationships we do get; it’s off and on, but we were also ranked in the top five, ten firms in Denver by the Denver Business Journal as well; that’s another thing you just go apply for, you put in various information and they’ll pick whoever; some companies will actually go to that list and contact the first five or ten, that’s one way of getting in front of people as well.

Brent: Sure. So I want to switch gears a little bit and focus on you a little bit; obviously you’ve had this business since 2002, seems like it’s continued to grow, continued to be successful. What do you think are qualities that you have that have gotten you where you are today?

Arif: So I think there’s two qualities I have and then I’m going to tell you why I think we really grew; so the first two qualities I have, number one, I work my butt off; I don’t have an off switch; I’m always thinking about new ideas, trying to do something for a client; Hard work, there’s no replacement for that. Sometimes I drive people crazy because I email them at one in the morning, but that’s just my personality of always being on.

Brent: Do you call at one in the morning too?

Arif: No, I do not.

Brent: I’m asleep when emails are on, I might not get an email at one in the morning, but if you call me, that’s different.

Arif: Exactly, and I’m not expecting a reply at one in the morning, but when you wake up you’ll see it; so that’s the first piece is hard work, number two is treating other people like I want to be treated; I want to make sure that we’re providing value to people, not expecting anything back from them, but usually something comes back; but I’m not expecting it, I’m not going to help somebody just to get something back, whether it’s volunteering my time; like tomorrow we’re doing a CASA luncheon and I’m on the marketing committee for their luncheon and they help neglected children in Adams County. How could you not want to help children in the foster care system? You want to, right? So we give our time go do stuff like that; just helping others and will something come out of that? Who knows? But at least we did something of value. Alright, so that’s me. Now, I think we’ve grown because of our team. One thing that I tell them is that I don’t know all the answers, I don’t know? I can try to figure stuff out, but they are also bright and we’ve hired them because they’re smart and creative and they can help figure out problems or answers to problems as well, and they have. The combination of the teams was actually the idea of people on our teams. They realized that they had some overlap and it might actually be very beneficial to combine the teams, and it was; and so we let them run with it, but having the people on our team that number one, are smart and are creative; and then I think me stepping out of the way and letting them run with some of their ideas has really helped us grow.

Brent: Within your business, what are you best at? What one skill or ability do you typically contribute to projects?

Arif: Me, personally? For me would be vision and creativity, so I’ll come up with new ideas on where to take a project where they haven’t thought of that before; maybe combining different ideas from various different ideas from various different industries. For example, I was reading a book on process manufacturing, and they were manufacturing steel components; and it clicked to me that it was very similar to software development; so we actually utilized some of the processes from manufacturing in our software development and started looking at our software differently, and that really helped quite a bit.

Brent: Neon Rain was founded in 2002, so what, 11 years in business?

Arif: Right, yeah.

Brent: What have you found out over that period of time that you think other web professionals should know?

Arif: That’s hard. This industry is hard; everything you do is subjective, right? Whatever you’re building is going to be judged by somebody else’s subjectivity. So you have to be prepared for that. There’s always a good solution, there’s always an answer, there’s always going to take good place. But you know, we do a lot of mentoring with people. Some of the web spaces are just starting out; they want to know how to create an agency or how to do something and they’re going to make a lot of mistakes just like we have and grow from them, learn from them and change things so that you get better and better and better; but that’s one thing that they need to know, it’s definitely hard but it’s definitely worth it.

Brent: That’s such an interesting answer, because I feel like the barrier to entry into web, into app development is so low.

Arif: Right.

Brent: It’s almost like there’s so many “Build your first app in eight hours” type of courses out there. For you to say it’s hard, that’s interesting, because there is such a low barrier to entry; but do you find that there’s a lot of people getting in on the very beginning level, and there’s not a lot of people out there that are really doing it right?

Arif: Two things; number one: if you’re looking at a developer on an individual level, there’s a big difference between somebody just starting out and somebody who knows who’s a senior developer or an information architect; that’s a whole different level and you have to get to that level, it takes a lot of experience. If you’re talking about going from a one man shop or a freelancer to creating an agency; now you’re talking about other pieces, like marketing sales, project management, management of team members and all these other pieces that somebody, here’s an example; had drinks with a guy who’s a freelancer, and he’s like, “How do I get to creating a firm of 30, 40 people?” That’s a whole different beast than what you’re doing right now; you want to create websites or you want to develop apps or whatever you want to do, but you have to figure out HR; you have to figure out book keeping and payroll; there’s all these other things that you’re going to have to figure out in order to get to that stage and just know that’s going to come, so you may not be able to focus on web when you get to that point and just be OK with that.

Brent: I find that kind of user story interesting; Freelancer wants the 30 or 40 person company and I think, in our content here at uGurus, we talk about that a lot.; about how it’s the business acumen over the technical stuff that if you want to go on that growth pattern that you really have to get into; do you find yourself doing much actual technical work anymore or are you doing all of the business management stuff?

Arif: Hardly any technical and that’s actually good, because I can hire people that are smarter to do the technical stuff and they do a great job of it; so the amount of technical stuff that I do anymore is very, very small.

Brent: So if I was a freelancer and I want to build the 40 person agency; when you’re in that mentoring session, what are the things besides HR or whatever that you’re telling that person that they need to start studying up on now?

Arif: I just want them to read a lot, truthfully; you know if they don’t like to read, which I didn’t previously try to do a challenge; I did one with our kids where we came up with a challenge of reading a certain number of books in a year and my goal was 25 or 24 books, and I didn’t hit it, but I hit 20; and I’m like, “That’s still 20 books in a year that I wouldn’t have read otherwise, right?” So business books just read, because you’ll learn a lot from other people. The eMyth [SP] talks about being the person working in the business or the person on the business and that’s what we’re talking about. You’re no longer the technician or the mechanic who’s working on the projects, now you’re actually helping bring in business and making the system run.

Brent: When it comes to web trends, technical stuff, what are you following right now? What is Neon Rain following in terms of trends that you guys are looking at that might be of value to your business or value to your customers businesses?

Arif: So we try to keep our eyes on various other things, not just technologies, but also processes, marketing and combining those. For example, mobile development is huge right now. Not just mobile apps, but also responsive design. So everything we’re doing is responsive at this point. Even integrating our marketing knowledge of affiliate networks and advertising into our mobile apps. Because somebody wants to build an app and they have no idea how to monetize it, we can bring in some of our marketing experience and other knowledge we have to help them come up with a solution. So it’s really getting to know all the different pieces, even SEO, a lot of social components. It’s not just doing on page and link building, there’s social; there’s always other pieces you have to be aware of and know how to manage in order to be successful.

Brent: What are you trying to build with Neon Rain? What’s the future look like for the company?

Arif: So the future for our company, we have kind of a two prong approach. Before the shoot we talked about products. We’re a service company where we actually help build the future and build the dreams for our clients. We essentially try to build prosperity for them. They have to do their piece but we’ll take care of the technical portion. In addition to that, we want to build products. And we have been building some products. In order to get those products out there and get user base creating tools that are valuable for people. So the vision of our company, number one, on a short term scale, is really taking care of our clients. On a day to day basis we want to take care of them and treat them like we want to be treated, right? Go out a little bit from that, we’re helping them develop applications so that they can grow their businesses and companies and create value for them, dollars. And then past that, we’re also developing apps, products and tools for ourselves that we can go out there and market as well in order to create additional revenue. So what’s the answer to what we’re trying to build, where are we trying to go? We see the end line, how we get there kind of diverts sometimes. But what we try to accomplish for this time is to be the experts, and be the development agency that you come to, to get something done correctly the first time.

Brent: Where can our viewers find out more information on Neon Rain, where can they follow you at?

Arif: Sure, so neonrain.com, our website. Arif Gan, A-r-i-f G-a-n on Twitter, and then on Facebook; it’s facebook.com/neonraininteractive. So you can follow us there as well.

Brent: And are you guys currently doing any kind of industry blogging, are you trying to get your name out there at any level? Is that all just on the Neon Rain website?

Arif: You know we do some industry blogging; we’re doing quite a bit of technical blogging coming up as well. We partner up with a lot of other firms, so that’s what’s interesting; we actually work with a lot of other development firms and SEO agencies in Denver and around the US, because we have our programmers. With those connections we’ve actually started doing a lot more work for clients together, collaborating on projects. Whether it be blogging or info graphics, whatever it might be bringing those together. So we’re out there all over the place, not intentionally in certain places versus others but just really wherever we can be of best use.

Brent: For sure. We’ll definitely link out to all your different properties, we really appreciate you taking the time to join us here with uGurus, and hopefully we’ll have you back sometime soon.

Arif: Thanks for having me.

Brent: Alright, well stay tuned for more great content from ugurus.com.

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