Pixelgrade Transparency Report #10

You think you already know how it feels to hit rock bottom when reality scoops you up and shows you that there’s more to experience. The last six months were crucial for Pixelgrade, and we are beyond grateful for how we managed to navigate all the dilemmas and fears, and for where we are today. The beauty lies in how resourceful we manage to be. When we get it right it is feeling that’s hard to beat.

Quick navigation in this article:


Overview

The road was not only intense but also full of discoveries on a personal and business level. During a lunch to celebrate eight years of activity, George asked us what kind of drink would we associate with the journey we had lately. With a few flavors, everyone mentioned țuica, a national drink with plenty of degrees (over 50°), which feels sharp in your throat, punches you in the stomach, gives you headaches, but it also warms your face and hands. 

It’s a proper perspective of the last six months. Actually, to be honest, of the entire year. It kicked our butts at every corner, but it also brought us closer together. In the end, to celebrate implies to gather your dear ones around the same table. Cheers to us!

Get yourself a coffee or a hot cup of tea, and enjoy one of the most emotional transparency reports we wrote so far. ☕️

Let’s start with a quick summary of what we’ve been up to these past six months.

Product, support, and marketing

  • A new theme released — Rosa 2, the sequel of our best selling WordPress theme, reimagined for the new Gutenberg editor. Read more about the process here.
  • Officially launched a new pluginNova Blocks, a collection of design-driven Gutenberg blocks, committed to making your site shine like a newborn star.
  • Over 60 themes and plugins updates following our plan of consolidating all our products and making sure they run flawlessly
  • A new free theme released on WordPress.org that already amounted over 1,000 active installations
  • A companion plugin, Pixelgrade Assistant, to improve the onboarding and support experience of our free customers
  • A flawless integration of Customify (Style Manager) with all our free themes
  • A more relaxed approach on writing on our blog with 23 new articles (some about our products including customer interviews, some opinion pieces on the WordPress community, others part of a rewriting exercise with SEO in mind, and the rest with educational content) 
  • An in-depth review system on our shop to promote transparency and facilitate building trust with those who are interested in our work
  • A performance-optimization marathon to make sure our shop runs as fast as a Ferrari and offers the best experience possible
  • An insightful SEO analysis on our shop and plenty of interactions as a result (from the unique selling proposition — WordPress themes for an easy start — to other areas)
  • A successful Black Friday & Cyber Monday campaign with $11K net revenue, yaaay!
  • A series of consolidated and meaningful relationships with our affiliates and partners.

Team and culture

  • We kept our transparency promise towards our team and openly shared the financial struggle we’ve been facing; as always, we did it with care and kindness, in alignment with our values 
  • Due to this new reality and the new marketing strategy we put in place, we had to part ways with three comrades: Maria, graphic designer, Ioana, content writer, and Cosmin, backend developer
  • We continued our leadership chats, even though under different formats and sizes, to try to stay afloat 
  • We stayed close and active in the local community by attending all kinds of meetups and events
  • We gave our best to keep costs under control, without intervening in the overall mojo of the team, but we did get rid of some tools that we used sparingly.

Fun facts

  • 🌌 George went to a family constellation workshop and discovered more about past events than he was aware of.
  • 🎤 Oana was brave enough to return to the university she graduated and give a talk about the power of storytelling, woohoo!
  • 🤓 Vlad started to write on his personal blog all kinds of inspiring and provoking articles; give them a go, you will thank us later
  • 🍼Alin is a father for the second time and moved into a new home; enjoy it fully and best of luck with those sleepless nights
  • 🥁Răzvan started to play drums and he is pretty excited about it; we can’t wait to see him on the stage, yaaay!
  • ✈️ Andrei signed out for a couple of days to visit some friends; he enjoyed Strasbourg and plans to move there already, ha, ha!
  • ️🎮 Mădălin became a FIFA trader and he’s doing a good job with his investments; no surprise for us, he’s a pro!
  • 🏔 Alex is savoring remote work from Maramureș, a stunning Romanian region, where his mother lives. 

Revenue

Our revenue these past 6 months followed the old saying: “It’s going to get worse before it gets better.” Despite our hopes before summertime, as you may recall from our previous Transparency Report #9, life had other plans. We simply had trouble getting to grips with how stubborn this reality actually was.

When it comes to actual numbers, the last 6 months looked like this:
$29,182 total monthly average revenue (+7% up from $27,190)
$13,735 monthly revenue from Pixelgrade.com shop (+48% up from $9,258)
$10,811 monthly revenue from WordPress.com (+94% up from $5,571)
$4,466 monthly revenue from Envato (–63% down from $12,110)

Envato’s income continued its slow, excruciatingly predictable decent, becoming our smallest source of revenue. We have little hopes for it going forward. That is why we try to convince as many potential customers to buy from our shop instead. Some do, some still prefer to purchase from Envato.

We don’t discriminate between the two groups. They are all our customers, and we give them their due care and respect.

WordPress.com’s revenue thankfully remained stable during the summer months and started to increase come autumn. We currently have little leverage there to influence things one way or another. This is our second-largest source of revenue.

The place we invest most resources, our Pixelgrade.com shop had grown, but not always in line with our hopes and needs. Only recently we managed to meaningfully increase its revenue to a comfortable place. Hopefully, we can maintain this trajectory in the future.


Expenses

The reality just described above meant that our revenue simply couldn’t keep up with our expenses. We are not a wasteful bunch, but times of plenty have a habit of sneaking small expenses everywhere — expenses that add up when you take a few steps back. By mid to end of July, we knew something had to change if we were going to survive this.

George took the reigns and forced our entire leadership team to get to grips with the harsh reality and start asking questions to identify areas of expenses exceeding our current capabilities. We quickly realized that this is going to take cuts all around. Any single area could not help us stay afloat. We were also mindful of the danger of overdoing it and hampering all our future growth prospects.

The three main areas we identified were tooling, marketing, and, sadly, salaries. Tooling was the easiest one since it’s very much about cold facts. We organized a document with all our expenses with licenses, servers, apps, services, however large or small, and analyzed the benefits and wiggle room we had with each. The nice-to-haves were the first to go away, but there were few we could identify. For the rest, we reduced waste in terms of packages and consolidated servers and tools.

The second area was marketing expenses (or investments) where we decided, half-heartedly, to not have a budget and instead focus on what we could better do with our existing systems and products — a harder, slower, agonizing at times but maybe more sustainable way to grow. More on this, later on.

The third area of our expenses, the largest one by far, is salaries. It is many orders of magnitude harder to make cuts here, at least for us, because people earn their paycheck, rely on it, make plans with it, people glue with each other, create relationships of all kinds.

People are not to be treated as a number in a spreadsheet. Yet, that is exactly what we had in front of us. After much thought, we decided to reduce our team by three people. After a few months, time had shown us we made the right call for everyone, even for the ones we had to part ways with.

So, our average monthly expenses hovered around $26,500 (-6% from $28,100), broken down into:
→ 73% of salaries
→ 20% maintenance (rent, software, accounting fees, suppliers)
→ 7% occasional expenses (conferences, marketing, hardware)

Starting with October, our revenue to expenses ratio reached much more sustainable levels and we have reasons to be mildly hopeful of the months ahead. We will definitely be more cautious with hiring new people, but we will let time have the final say.


🥋 An ambitious plan to strengthen all our products

Back in August, it became clear that it was no longer business as usual. Things will have to change because the wave we were fortunate enough to catch and ride on has run its course. Pixelgrade, as a product company, would have to rethink its fundamentals and seek new ways forward. We didn’t know those ways, but we were confident that, with some breathing room, we could find them.

To gain this crucial breathing room, our current products should be less demanding in terms of development and ongoing support. We’ve wholeheartedly enrolled in a time-limited push, half sprint, half marathon, to stabilize all our themes, plugins, and shop. We gave ourselves three months to pull it off — a stretch by any standards.

We missed the deadline and, to some extent, we are still going. Not for lack of trying, but due to ideas that popped up along the way. Our new theme, Rosa 2, was not part of that plan. So it wasn’t a bunch of new functionality added to our shop.

Midway through, we silently decided to divert from the original plan because the initial assumptions had changed.

Much to our credit, we managed to update all of our themes and plugins (both premium and free), upgraded our shop in meaningful ways, released a new theme based on a new paradigm and pushed the boundaries of what could be done with the new Gutenberg editor through our Nova Blocks plugin.

Throughout this intense, but exhausting process, we identified ways forward through which we could build upon our legacy, ways we simply didn’t have the patience to see a few months back. We will rethink our fundamentals but will do so incrementally, without losing sight of the unique advantages we have today. We learned to see our past in a different light.


🛠 A 3-months marketing plan to test assumptions and move forward

At the beginning of August, we, the marketing and sales team, started to seriously think about the fact that the way we are doing marketing is not sustainable anymore, for multiple reasons. On the one hand, our cashflow went sideways, to say the least. We were swimming in murky waters with little to no control — it was draining, even terrifying at times. On the other hand, we were all over the place due to the variety of things and projects that we juggled with. 

Mix these two areas and the mindfuck was soon to come, hitting us face-first.

It was the moment when we started to have panic attacks, white nights, no appetite for a lot of stuff (food, people, going out).

We honestly, but seriously self-questioned about how to maintain our mental health. How to keep things manageable without losing our minds and souls. 

We needed a way that, however things would pan out, we remained healthy and functional. It was the first time when we hit the ground so hard that our self-esteem was almost nonexistent. The same was with energy and positive vibes. They were all gone.

That was the moment when we had to go back to the drawing table and make a pragmatic analysis about how we can do less, but with impact (both motivational and efficient in terms of revenue). At that moment, we were four in the marketing department, and as we all know, marketing activities require a lot of resources, money included. Not only in terms of salaries per se but also by investing in various channels.

We, Oana, Andrei, and George, came up with a plan to regroup in terms of people, narrow and give the best chances to our efforts, and establish guidelines on how to navigate the next three months. The main areas that we covered, starting with September, were:

  • Affiliate program — better connections with people we like to work with, people that have an authentic approach in promoting our work and are open to meaningful dialogue.
  • Free themes — continue to add themes (Rosa Lite is up and kicking, with Rosa 2 Lite in the queue), but also grow a system to get in touch with our free users and have the chance to provide meaningful content to them; we believe this is the way to gaining their trust and earning their money down the road
  • Themes Bundle — we tried to directly sell this package to agencies, but with no luck whatsoever; we will not experiment again in this area (too much time, too little to learn)
  • Strategic partnerships — we reached some reliable deals with partners we believe we can associate with, based on the quality of their work and shared values 
  • SEO — an in-depth audit across our website to improve rankings, but, most importantly, to make sure we don’t mislead potential customers on any level.

We focused on these areas for more than three months, and we’re happy with the results, both soft in terms of relationships and hard in the form of income. 

The main lesson we want to share is this: in marketing, it is okay to be laser-focused on specific tactics because it forces you to make the most out of available resources and be creative. However, wandering for too long in such a tight playground, with so many constraints and limitations, can become frustrating and overwhelming

It’s a thin line between narrowing the gap and making sure that you don’t lose sight of what may lie just behind the fence.


🏆 Rosa 2 became our hit theme straight from launch

We will not rephrase here what we already said in the official article that accompanied Rosa 2 — the sequel of the best-selling restaurant WordPress theme. We think it makes more sense to share some insights about how did it become our hit theme from its first 30 days, with around $5K in revenue.

First of all, let’s face it: Rosa 2 is, by far, the brand new way of creating websites within WordPress. It may come as cocky to say that, but let’s admit that the way we’ve been building it will challenge the status quo of premium WordPress themes in the ecosystem. And we are not done with it, not by a long shot.

It is pure joy to do marketing around a product that is well designed and developed. We don’t shout, we just wisely pack the story and place it in the front of the right people.

Second, we did quite a lot of things to keep momentum with Rosa 2, from pre-launch activities to after-launch tactics. Here is an overview:

  • Reach out to our most active affiliates to test-drive our product and share feedback
  • Reach out to publishers who wrote about the first version of Rosa to check out the theme and update the roundups and articles with relevant information
  • Reach out to big publishers — who don’t usually answer our e-mails — to explain what decent media coverage should look like and argue why Rosa 2 deserves a chance
  • In-house testing sessions to make sure we capture different perspectives on the product
  • A comprehensive checklist for launch day (official article, videos, visuals, copy, e-mails, etc.)
  • Guest posts on the relevant websites highlighting the theme’s features and functionalities (WPBlog, WP Pluginsify, Themeora, etc.)
  • Articles on our blog to show how Rosa 2 is being used (examples, interviews).
  • Personally reaching out to Rosa 2 customers to schedule Skype calls and find out more about the ways through which they manage to make the most out of our product (work in progress).

One of the best things we did was to keep putting all our perspectives on the table and take advantage of the complementary skills we have: from design to development, from marketing to support and everything in between.

Moreover, we’ve been consistent in how we’ve been communicating about this product, and the results didn’t disappoint. We plan to continue this approach and give our best to understand more about the people who are using it because Rosa 2 hosts a wide range of websites from diverse industries: tourism, food, beauty, lifestyle, etc.


👏 Black Friday and Cyber Monday worked out beyond our expectations

This year was the second time we run a Black Friday & Cyber Monday campaign. We don’t usually run discount campaigns, so this is the only time of the year when people can purchase our themes and services with a generous discount — 40% off everything.

Given that last year we decided at the very last minute to have a Black Friday sale, this time we took our time. We started about a month and a half back and gave ourselves more breathing room and time to explore ideas.

A big bonus was that last year’s setup significantly decreased our workload since we could update and reuse most of our previous efforts. We’re talking about social media ads, email design and schedule, videos, banner notifications, and more. Since this campaign overlapped with other priorities, we decided to keep the necessary resources focused on other tasks. The fact that we were confident with what we managed to do in the past definitely helped.

Our first initiative was to reap the rewards of months of establishing stronger bonds with publishers and get mentioned in relevant roundups. Apart from this, we pretty much duplicated what worked best last year:

  • Social media remarketing ads — in 2018, we learned that targeting new people who didn’t know us before is not cost-effective, and results are lackluster. This time we decided to focus all our efforts in promoting our offer, through remarketing ads, to our past visitors and potential customers that were after a special deal;
  • Emailing — this was our best conversion channel a year back, so this time around we only improved our messages and fine-tuned our targeting. We sent a series of emails to all our existing customers, people that have shown interest in our eBooks, and all our free themes users.
  • Affiliates — we made most of the efforts in this area in a leading couple of months by getting more members on board, improving communication, and improving our WordPress themes’ exposure through reviews and mentions.

We managed to generate $11,012.55 net sales during the Black Friday and Cyber Monday campaign. In just four days, we generated +244% more than we usually make in a regular week and +134% more than what we made during last year’s campaign.

To fully grasp the entire picture, I have to mention that all of this would not have been possible without all the efforts we did in the past year. That includes: bringing our themes portfolio from Envato on our shop, launching a successful premium theme — Rosa 2, improving our SEO game, releasing five new free themes and offering premium support for our free themes customers, significant website speed improvements, the addition of add-ons, and much more. 

Every piece contributed to this year’s campaign surprising success. For full transparency, here is a breakdown of our revenue sources for this year’s campaign:

Of course, when we sell a few weeks’ worths of themes in just a few days, the area impacted the most is, without a doubt, customer support. It was no surprise when we saw a significantly higher number of tickets, but our customer support fellows managed to be on top of things and answer requests in due time. The fact that they have a lot of expertise under their belts made a huge difference; without it, we could have easily got overwhelmed.

In the end, running a big campaign was another opportunity for all of us to overlap and help each other in many areas. It was once again an opportunity to put our complementary skills to work, collaborate, discuss, and create an exciting environment in our office. Building trust among us all these years pays off big time in moments like this. For that, we are grateful.


💔 No communication leads to bad scenarios and broken relationships

I, Oana, already have a lump in my throat, and I did not even start to share what difficult times we experienced at Pixelgrade during October. We (meaning George, Vlad, and I) had limited to no patience and inner resources to hear each other actively and fully. We were so tensioned with everything going around that we did not have the mental space for more. 

On top of that, we already reached a critical point where we lived more in our heads than in reality. We imagined various scenarios on an individual level, but also on a collective one. We were drained, exhausted, pissed off in such a way that things started to crack between us too. On a relationship level, I thought I was going to lose the battle. 

I was so overwhelmed with everything going on — from the harsh business reality to the lack of meaning to even show up at the office — that I thought it’s just a matter of time until it’s over.

I felt it was the final lap. 

For more than two weeks, I worked remotely to protect myself, and I did not have the energy nor the motivation to show up and spend time under the same roof. The tension was too hard to bear. The atmosphere was too dramatic to get along or to get things done.

I was on the edge.

After signing out for a short trip to Amsterdam, I came back with a different perspective, thanks to the multiple discussions I had with my mentor. She succeeded, once again, to mirror my words and behaviors and find light in the dark.

What followed was a super vulnerable yet honest and kind leadership gathering. We used to do them weekly, but at some point, we skipped this habit. We entered the maker mentality and stuck to it. The get the shit done attitude was the new mantra. You work, work even more, and keep things afloat. Because the faith is that more work will generate better results, right? Not so fast, Houston!

We caught up for a few hours of tough but authentic and meaningful talk about what’s going on. How each of us faces reality? What drives us ultimately? What’s the deal-breaker? What fuels our energy in such hard times? What hurts so hard at the end of the day?

We went through each question governed by plenty of emotions: sadness, frustration, disappointment, fragility, confusion, nostalgia.
However, the fact that we genuinely share similar values, even though we live and express them with nuances, helped us navigate the conversation and make it thoughtful and valuable. 

We realized how much does a lack of communication damages and impacts everything: relationships, collaboration, trust, teams, businesses, families, humanity, and so on. 

Better embrace and make the most out of a broken communication approach, than signing out and running from it. As long as it is kind, it is safe.

I am proud of both George and Vlad for being present and sensitive in listening and behaving, but also of me, for my bravery. As a woman in a leadership position, it is often hard to get your voice heard. Not because my partners aren’t able to fulfill my needs (in many senses, they succeed brilliantly, and I am grateful). 

Mostly because I live in a society and culture where women are still considered weak and somehow obliged to prove themselves regularly. I’m not trying to throw any feminism flavor here. It’s just reality as I’m experiencing it.

At the end of that leadership gathering, I felt that the healing process started to install. I was empty, but damn, it was such a beautiful hollow. You know why? Because I knew it was a moment from where I can choose to change the narrative and reconstruct the puzzle. 

I took George and Vlad into my arms, hugged them properly, and let them know I’m sorry that I wasn’t able to do more. They accepted and resonated because it was hard for them too. We agreed that it was a tango. Now, we’re relearning the steps together. 🤗


🎅🏻 Merry Christmas and be gentle with yourself in 2020

We’re grateful for all the lessons we gathered so far, and we’re eager to see what’s cooking next. No matter the ways we will continue to push boundaries at Pixelgrade, we’d like to remind ourselves more often that kindness and acceptance are the most powerful fuel. 

We will continue to change the narrative and make room for new stories in our lives, and hopefully, this will help us become better versions of ourselves. Meanwhile, we’ll sign out from the mundane, catch up with our family and friends, give some proper hugs and say it out loud how much we care about each other. Keep being awesome and gentle. The world needs more of that.

Merry Christmas! 🎄✨