Pixelgrade Transparency Report #9: the costs of change

If a year ago, we thought it’s going to be a steady marathon, now it seems to be more like climbing a steep mountain. Challenges never stop, breathing time is virtually non-existent, and the pace we have to maintain is crazy high. We find ourselves at yet another milestone in this tumultuous journey, ready to share what we’ve learned and give you a behind-the-scenes perspective.

By pixelgrade in Along our way
August 1, 2019
Reading time 21 – 32 minutes

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Overview

Many initiatives, great effort back-and-forth, and a lot of giving back.

What a rollercoaster ride these past six months have been! We can’t really believe that all that will follow has happened in such a short timeframe. It feels more like years than months – talk about a way to live a couple hundred “years.” 🤔

Lots have happened since our last report. We’ve put our hearts and minds into numerous new initiatives and experiments, doubled-down our efforts towards our day-to-day fundamentals, had the same hearts and minds stretched, we’ve poked and stepped upon, all while finding the energy to give back, and a lot. Don’t know about you, but we must have some secret sauce (or grit) since we are still here to tell the story. 😏

Product and support

  • A new plugin released: Nova Blocks (a collection of design-driven Gutenberg blocks).
  • Two in-depth free eBooks, one on improving writing, and the other on coming to grips with web performance in this day and age.
  • Four new free themes released on WordPress.org (the lite versions of Felt, Vasco, Noto, and Timber).
  • An updated and comprehensive portfolio across all the marketplaces we’re part of (Envato and Creative Market). Now, we almost have the same list of products on these marketplaces, including our shop (the only tweak is that Noto is not on Envato due to its “non-conventional design” 🤷‍♂️).
  • An intense writing activity on our blog with 26 articles (from educational content, stories around our culture to interviews with our lovely customers).
  • A well thought-out flow of emails with valuable knowledge for those who use our free themes to help them shine in the digital world.
  • A bunch of Thank You Letters sent to our awesome customers around the world.
  • A WooCommerce Add-on for a few of our WordPress themes to help people expand their revenue streams while maintaining design consistency across the board (Felt, Vasco, Osteria).
  • 6 interviews with our customers to know more about their struggles, and to capture various ideas from the day-to-day use of our products.

Team and culture

  • We’ve expanded our marketing department with a designer, Maria, and a content writer, Ioana; we also brought fresh blood for web development, Mădălin, and Alex on the customer support side. Welcome, mates!
  • We’ve diverged paths with George M., mostly because we could not find common values and approaches to make things happen. 
  • Our leadership meetings continued at a different pace, but with the same core desire: to become better leaders.
  • 1:1 sessions to provide guidance for everyone’s growth and to make sure we are all aligned around the same values and goals.
  • We’ve held coaching sessions, both inside the team and with external collaborators.
  • We’ve created a performance evaluation framework adjusted to our mojo and way of working (based on a six-month frequency).
  • We have an in-house chef, Dana, to cook us healthy food from time to time (we can’t wait to get back in the pre-summer rhythm).
  • We attended WordCamp Europe 2019 in Berlin and experienced this edition quite differently since many things regarding the WordPress ecosystem are in flux these days, at least for us.
  • We also had some team bonding activities, such as visiting a local brewery to taste some interesting beers, going to the movies, playing soccer and tennis, simply to sign-out for a bit and just hang out together as a team.
  • We stepped outside of our comfort zone and tried to connect with the community: from marketing events to more technical ones, it was quite fun to get a feel about what’s happening in our close proximity.
  • We tested a one-week of remote work across the team to see how things work out, and shared the experience when we got back to the office.
  • We started using Know Your Team, a tool that helps managers facilitate dialogue and alignment on a more disciplined level. Today, we use it mostly for social and cultural questions, as well as for reading a bunch of insightful guides, while being aware there’s much more to discover than meets the eye.

Fun facts:

  • 🏍 George had plenty of challenges with his motorcycle while traveling across the country, but he learned a lot of useful stuff, including asking for help from locals. 
  • 🛫 Oana traveled around Europe for a full month and published authentic photos with the places, people, and food she’s experienced along the way.
  • 🌤 Vlad went to Tel Aviv with his wife to unwind a bit and to get lost in an eclectic city, where he admired architecture gems at every step; btw, this was our way to wish him a Happy Birthday.
  • 🏡  Alin is going to be a father for the second time, so big congrats and enjoy the new adventure, as well as moving into a new crib.
  • 🎤 Răzvan launched a new rap track on YouTube, and he finally created his official Facebook page as an artist; let the fans join the gang!
  • 🏆 Andrei won a city-break (thanks to his wife’s initiative to participate in an online contest), so he “chilled” at the foot of mountains.
  • ⚽️ Mădălin loves Arsenal from head to toe and he’s a beer enthusiast. What a better combination than this?
  • 👟 Cosmin has spent a lot of money on sneakers of all kinds; it seems that this is his new obsession.
  • 🇮🇹 Maria went to Italy for the first time (Bologna), and she’s thrilled about returning again in August.
  • 👶 Alex had a baby (son) and he’s quite mesmerized about the new lifestyle he needs to accommodate to. 

Revenue

While we focused our efforts on our own shop – where things are moving steadily (+41% increase), the decisions we’ve made and the events that took place during this period caused an overall –13% decline in our monthly revenue. 

  • After dropping the ↬ exclusivity with Envato in April, we lost more than 60% of the revenue through that channel, as expected. This change instantly affected our short-term income, making room for a whole range of benefits that we believe will come in the long-term.
  • Pretty much throughout all this time, the WordPress.com platform had been having problems with a broken script that helped measure product usage. This lead to unreliable data and the impossibility for us to get paid correctly. Fortunately, the situation seems to be getting closer to an end, and we will see the benefits in the next months.
  • For almost two months, we’ve had all of our WordPress.org ↬ themes suspended. The back-and-forth effort and confusion drained us of energy and pushed us a couple of steps farther from this community.

One thing led to another and we hit rock bottom in June, one of the most unprofitable months in our short history. Things are looking better in July, and hopefully, we will recover from this sharp downward trend before it’s not too late. Until then, this is the ugly reality we have to deal with.

When it comes to actual numbers, the last 6 months looked like this:
— $27,190 total monthly average revenue (-13% down from $31,297)
— $9,258 monthly average revenue from Pixelgrade Shop (+41% up from $6,536)
— $12,110 monthly average from Envato (–33% down from $18,247)

Expenses

While the WordPress themes market seems to suffer from a lack of clear direction, internally, our team evolved and, as our main expenses are from the salaries, the total amount of expenses remained about the same.

So, our average monthly expenses hovered around $28,109 (-2% from $28,729), broken down into:
— 69% salaries
— 21% maintenance (rent, software, accounting fees, suppliers)
— 10% occasional expenses (conferences, marketing, hardware)

The numbers and percentages are in the expected range of the last few years. The real challenge comes from the negative cash flow and how we will make use of the resources accumulated thus far, to be able to create the best opportunities from this point onward. One thing is certain: it will not be smooth sailing.

Non-exclusive Envato authors to bring everything under the same roof

We’ve built and sold our first WordPress theme at the start of 2013,  one year after setting-up Pixelgrade as a company, providing custom work for clients at the same time. It was (cleverly) called B:LIV, and it was launched exclusively on the (Envato) ThemeForest marketplace. 

More than six years have passed since then, and in all this time, we have steadily released new themes and built adjacent design tools. We’ve deeply enjoyed the newfound freedom, overwhelming feedback and the authority we managed to gain. 

Two years ago, we went through an in-depth rebranding process and launched our own shop with the main intent of being a fertile ground for growth. Well, our plan paid off quickly, as we’ve simultaneously improved the customer experience and opened doors towards new revenue streams (e.g. selling services). 

Being exclusive authors on Envato meant that we were not able to sell a large part of our portfolio on pixelgrade.com. So our shop started with only 7 WordPress themes, mostly focused on blogging and magazines, even if we had 10 more products.

The frustration with our two disconnected product offerings never went away. It only grew. On Envato, we lacked the freedom to do the changes we felt needed to be done, and, even more than that, we did not know much about our own customers (e.g. where they come from, who they are). Our natural inclination towards a more humane, personal relationship with our customers got roadblocked at every corner.

All these difficulties, mixed up with the downward trend, unpredictable and mostly uncontrollable climate on Envato, led to our decision to give up the exclusivity and bring all of our products into one place. It surely is a financial hit as our monthly revenue from this channel dropped from more than $15k to less than $6k (not taking into consideration the decline of the general sales on ThemeForest since way back in 2016), but we still think it’s the right move in the long term, and that we will be able to compensate through our shop.

What did we get? It feels truly liberating to have full control over our own products, opening a greater spectrum of possibilities in the way we pack and deliver them to the public. Now, we can target new clients by offering themes in the form of bundles, create loyalty campaigns, provide complementary services according to our customers’ needs (starting from installation and setup to the optimization of the site in terms of performance), or even give away themes for free to support initiatives we have faith in.

To Gutenberg or not

During these past 6 months, the new block editor became the new reality of the way people created content with WordPress. It landed in the core and the development has kept an upbeat pace, and from the outside, everything seems to progress in the right direction.

Ever since it was announced, we chose not to take sides and join either of the bandwagons: not the one that was entirely in love with it, nor the one bashing it at every corner. We saw its strong (philosophical) points while, at the same time, we acknowledged the challenges it faced down the line, factoring our own experiences and explorations (notably Flamingo).

We were not early adopters by any means. However, once it was part of the WordPress core, we felt confident enough it was a piece of engineering we could reliably build upon, to further enhance the experience we would offer to our users.

In line with our way of approaching products, we aimed at customizing the editing experience to be in harmony with the goals of each theme we had. We strongly feel that each part of WordPress should cater to the user and, at least, not get in the way. If it can help, even better. 

Gutenberg promised to allow precisely this kind of “power” in the hands of those that “learned JavaScript deeply” as Matt put it. We trusted that the project would live up to the same promise of extensibility that the rest of WordPress strived for.

We decided to introduce two intermediary levels of consistent customizability between our Style Manager system living in the Customizer and the styling and functionality offered by each theme. 

An initial proposal for consistently stylings blocks across a website.

The first level was a WordPress plugin called Nova Blocks through which we could offer Gutenberg blocks that were built with our design principles in mind. We aimed at providing blocks with a low cognitive load, where things would work naturally, and in line with each problem (hero, media card, and slideshow to start with).

The second level was a higher-order one acting as an intermediary between the decisions made in the Customizer and each post or page. We aimed at helping people consistently style their blocks across their site. This was also meant to be a plugin, Blocks Style Manager.

Sadly, that promise of extensibility we hoped for, is not something the current Gutenberg can live up to. Not by a long shot. It is quite clear to us that the editor technically lacks in some fundamental areas that make changing predictable things a complete nightmare. It feels like we are back to the monolithic apps of the past, and it is a big disappointment to us.

Sure, you can create your own blocks and do a bunch of exciting things. You can also add elements to the existing interface areas. But that’s about it. The minute you want your code to interact with existing blocks or interface elements, you realize very little thought was put into this.

As a consequence, we managed to create the Nova Blocks plugin despite the struggles and compromises we had to make. It is not where we aimed at, but it’s the best we could get in the current architecture of things. Sadly, the Blocks Style Manager plugin was a no-go despite our in-depth explorations of possible ways around the limitations of Gutenberg’s code.

What’s more worrisome is that Gutenberg is already talking about legacy and has to improve things while considering all the content already created. Making fundamental changes in this scenario is exceedingly harder and unnecessarily complicated. There are talks around these shortcomings, but it all feels like pulling teeth. 

Temporary suspension of our WordPress.org themes

On May 18th 2019, we were alerted about some talks related to us in the Themes Review Team (TRT) Slack channel. To our surprise, we found out that all of our WordPress.org themes were suspended (and unavailable in the repo), and that our account was locked from sending updates to them. The conversation concerning us was straight out of dystopian novels. We couldn’t believe our eyes about the manner we were being portrayed. 😳

We tried to communicate as openly and honestly as possible, but it all fell on deaf ears. Almost everyone (to be fair) was throwing big words around, with frightening ease and basically, all that was lacking were some pitchforks. It was the first time we had to seriously ask: what kind of a community have we gotten ourselves into? 😕

What spurred all this? About two months back, we decided to do something about the terrible onboarding experience (aka non-existent) people had when trying to use our free WordPress themes. We leveraged all the infrastructure we’ve created for our premium customers, to put it to good use for our free users. The main hub of all this is a custom plugin called Pixelgrade Care that we use for starter content, in-dashboard theme documentation, and in opening support tickets.

Getting-started screen after theme activation.

We wanted to offer all of these to our free users, in exchange for securely connecting their site with pixelgrade.com. To put it bluntly, in exchange for their email address, we would offer one-click demo content, easy-to-access documentation, and premium support — a fair deal by any standard. To achieve this, we had to recommend the Pixelgrade Care plugin upon theme install. For this, we’ve devised an easy to understand notification and a smooth onboarding experience. We don’t like to make things unnecessarily difficult for people.

At the same time, we restructured (modularized) our latest themes, so we would be able to use the same code for both the free and premium versions. Basically, our free users would get the core of a theme, and the paying customers would get one or more premium modules. We made this move so we could maintain and enhance both free and premium themes, while the honest reality is that when the two got disconnected, it was far harder to maintain them – naturally, PRO versions getting priority over the Lite ones. 

The fact that we had the audacity of doing this was the straw that broke the camel’s back. Without any notice, we’ve been suspended, and a long, arduous road of getting back to the previous state began. What was a simple revert in terms of code, turned into a saga of endless back-and-forth communication, weeks of not getting anything clearer to move further, days of waiting for a simple answer, and decisions made without a shred of context or explanation. Shoot first, ask questions later kind of situation.

Needless to say, that the nice image we had of WordPress.org, being a kind community, focused on helping each other and, most of all, having the WordPress user at its core, well, that naive picture was smashed to smithereens. It was a very saddening process to go through, as it meant reconciling our expectations with this all too clear reality.

After about two months of mind-twisting compromises, we managed to get our themes reinstated. Recently, we were removed without notice from the Trusted Authors program. We will continue to be on WordPress.org, but it is quite clear to us that there is no space for change or innovation driven by the needs of your average WordPress user.

Uplifting our goal system with a new role onboard: OKRs Champ

It’s been more than a year since we started working again with the OKRs methodology. For those of you who don’t know what that means, here’s the long story short: a framework — Objectives and Key Results for defining and tracking objectives across a team to measure outcomes and assure alignment. It’s been highly promoted by Google, but nowadays, a bunch of companies of all sizes are trying to embrace and make it work.

The best thing about OKRs is that this system allows us to give our efforts the best chances to succeed while making sure we share the same understanding about where the company stands, both during and at the end of a cycle.

We experienced this approach a few years ago, and things went a bit crazy from a certain point, but that’s nothing new under the sun. Since Oana is a member of The Watercooler, a global community of leaders around the world, she often noticed conversations where managers shared their struggles and headaches with OKRs. 

Therefore, there’s no doubt that it took us a bit of time and plenty of iterations to shape this framework to our particular needs, but, most importantly, to our culture and way of getting things done.

A key factor, in helping us smooth things along the way, was the introduction of a new role within the system: OKRs Champ. At Pixelgrade, it is filled by Oana, our Chief People Officer, where she acts as an ambassador of the framework and makes sure everyone is accountable for at least one objective. 

It is relevant to highlight the fact that after playing around for almost three years, we came to the conclusion that we should split objectives in two: one laser-focused on the company’s success (such as: building valuable products which are used by a lot of people or putting in-place upselling strategies to level-up our chances to earn more money: from free themes to premium ones), and another one individual, shaped in such a way that all the people from our squad gain more clarity in terms of personal growth aka learning and acquiring new skills (packed under knowledge-sharing sessions, taking courses, reading books, and so on).

Weekly status and focus documents posted by the OKRs champ.

There’s a great deal to share regarding the impact that an OKRs Champ has on both the system and the people, but here are some of Oana’s main responsibilities:

  • Coordinates and facilitates the process of defining and fine-tuning the OKRs right from the start of the cycle.
  • Keeps track and reinforces the necessary habits of working with OKRs across the cycle (writes weekly check-ins, pushes people to measure their progress and the level of confidence on a regular basis).
  • Runs a follow-up and feedback meeting at the end of the cycle to capture insights and what to improve for the upcoming session.

This role is a mix of evangelist and project manager who needs to have strong communication skills, as the main job is to coordinate the various puzzle pieces while keeping the bigger picture in mind. For us, the OKRs champ makes sense both in the short and long run because we’d experienced first-hand how solid habits need reinforcement, good practices, loads of positive examples, and plenty of stories to keep everyone on the same page.

More educational content

We’ve been writing even more in-depth content on our blog, that was better tailored for the specific audiences we outlined when defining the key results within the OKRs system. This way, we succeeded to have more focus on crafting the best articles, which has helped us get closer to the desired business outcomes (having a coherent content calendar was super useful as well, because it projected a clear path towards what we want to accomplish with our blog). 

On top of that, we’ve been far more strategic with our content: we wrote by following a specific funnel in mind, known among marketers as content pillars. 

Basically, what it means is that you put together articles aimed at hitting one of the three main stages: Awareness, Consideration, Decision. 

Therefore, we had the chance to genuinely lead visitors from one step to another by offering the right educational content for the right action he or she is going to take. No push, no fake news, just the right message packed and delivered at the right time.

Let me share a specific example for the photography and visual artists tribe, our core target for the last cycle within the OKRs system:

After repeatedly putting in practice this way of approaching content, we’ve noticed that we have quite a lot of thoughtful knowledge to share in order to help people build more attractive digital experiences and level-up their online presence. 

So guess what? We went the extra mile and put together our first free eBook on How to improve your writing style to educate folks on how to craft engaging digital stories. It was downloaded (and hopefully read) by 1,185 people from a wide range of industries (marketing, software development, arts & crafts, PR, entrepreneurship, photography etc.). Plenty of them reached out to us via email, to thank us for giving something back to the community:

“I think this eBook is great because it shares the experience from somebody who has actually been writing professionally for a number of years, so they’ve really learned by doing. Most of all, it’s great because it’s not a “what to do”, but rather what I’ve done and what works for me, and could probably also work for you. It’s more of an inspiration rather than a checklist. The thing is, writing is something very personal, and you need to find your own style, and this eBook takes you through Oana’s journey as an inspiration to your own.”

A few weeks ago, we launched another free eBook — WordPress website performance in this day and age,  this time far more specific and better tailored for those who want to make the most out of their digital game. We’re still promoting it, but so far it reached almost 400 folks, which is already a good result since the profile of this resource is far more narrow. However, we got some nice feedback from people active on Reddit too:

“Thanks, Vlad. That was one of the greatest texts about website performance I have read in a long time, and I could not write it better myself, love the style of writing and relaxed view on performance and life pulled together.

Guys, even if you are “experts” in website performance, read it, it is definitely enjoyable as a read, even if it was a long read .. and if you are new to website performance, there are a lot of good thoughts and knowledge in this ebook.

Thanks again for writing such an outstanding piece of work, much more fun to read than an A-Z performance list article, everyone else is writing on their blogs. Well done!”

We’re not ashamed to say that we take pride in giving so much back to the community while also helping people achieve success with their websites. Regardless, if individuals need a helping hand with the way they’re putting together online stories or if they require reliable tactics about offering a flawless experience for their visitors, we are a reliable resource for them. For those in need, feel free to spread the word!

Insights on running Facebook Ads for WordPress themes

We started using Facebook Ads to promote our products for more than a year ago, so these insights are not strictly related to the past six months. 

We haven’t run any ads in the past, but we felt like we could benefit from sharing our educational content with more people and see if we can drive extra sales. At the same time, during these past months, we managed to validate and also invalidate some of our hypotheses and draw some conclusions.

Our first dab in Facebook ads started with the promotion of several blog interviews with customers of one of our WordPress themes. Once that was completed, we moved further and created retargeting ads to those that showed interest. These retargeting ads promoted our theme and were designed to get us conversions.

They didn’t manage to do that. That was our first signal that something might be off. 

We didn’t give up and continued experimenting with remarketing ads, promoting blog posts and running discount campaigns (either as part of the Black Friday campaign or stand-alone). We even managed to get an Account Manager from Facebook that assisted us in running some test ads and provided valuable insights regarding our campaigns.

So, after a year of running ads here are our conclusions:

#1 Promoting blog posts is a sure way to get more visitors on your blog and (maybe) generate conversions. 

Boosting that post on Facebook does work and it has brought us plenty of new people into the fold. The cost is decent and should be considered an investment. If one is looking for conversions, the story is quite different. Certain articles managed to generate sales at around $45/conversion – a very high cost, especially for the WordPress market. So, I recommend seeing these direct conversions as a bonus. 

#2 Running discount ad campaigns timed during popular yearly events will work out for you. 

One of the most prolific campaigns for us was on Black Friday, but results came with a twist. We managed to generate sales from remarketing to current customers at $10/conversion but not from reaching out to new audiences. 

Our suggestion is to use these “sales periods” to convert undecided customers, since people who haven’t heard of you before are way less likely to convert (and are more expensive to get).

#3 Promoting a single WordPress Theme does not work. 

What I mean is using your product presentation page and promote it either to people who interacted with it or to new audiences (people who might need a product similar to yours). 

It seems like, in the WordPress themes market, no matter the methods or how much we fine-tune our audiences or ads, getting direct conversions either does not happen or happens at a cost that doesn’t make sense business wise. Still, it might be different for you, and I’ll be happy to hear more if you managed to make it work, but for us, this strategy is a dead-end.

#4 The best performing ads are free content ads, like eBooks. 

As you read above, we launched two eBooks in the last six months and using Facebook Ads to get more downloads has proven as a solid strategy. 

The key is to create valuable content that answers people’s needs and to make sure your landing page follows all the right principles. For the first part, I recommend taking Skype calls with your customers to find our their needs. For the second one, I recommend Rob’s talk from WCEU 2019 or to watch the Landing Page Sessions from Unbounce for more insights on landing page creation. 

If you want cold numbers, we’ve managed to convert at $0.65/download for the eBook on writing, at a conversion rate of 62% and at $1.82 for the one on web performance, with a conversion rate of 47%. 

As you can see, there’s a big difference in cost between the two, even though we targeted the same audience. Therefore, keep in mind that the topic of the eBook is going to influence your results big time. If you want to generate sales from free resources, make sure the eBook offers educational content strongly related to the product you’re selling.

⛱️  Enjoy the summer

If you managed to plow through everything we, so whole-heartedly, wanted to share with you, raise it up 🙋‍♀️. You deserve a big hug and so do we 🤗, but we’ve made it!

Now take your eyes off of whatever screen you are looking at and let everything sink in. Go for a walk in the park, find a sunny beach or a shady spot under a tree, and enjoy the rest of this summer. Challenges and headaches will always be enough to go around for everyone.

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