This UX Design studio pulled itself out from a debt of Rs 20 lakh to revenues crossing Rs 5 crore during the pandemic, here is how

• Founders of Lights Out Studio, Saksham Mendiratta, Business Growth and Adil Singh, Experience Design with a bunch of 30-year-olds, turned their company around, from a debt of Rs 30 lakh to revenues crossing Rs 5 crore in three years.
• After surviving through a huge debt and rebranding its studio to keep up with the pace, Lights Out Studio is all set to clock Rs 5 Crore this fiscal.
• We speak to the founders of Lights Out on their journey so far, find out more about the factors that got them out of their debt during a global pandemic, and discuss their larger vision for the studio.

The global pandemic and the following lockdown pushed many established companies to the brink of bankruptcy, small organisations found their troubles heightened and budding business aspirants kept their dreams on hold for a year and a half. With demand slowing down and the cost of input rising, the earnings of many MSMEs took a hit.

UX Design Studio, Lights Out, also found it difficult to close its debt. As the pandemic receded and the economy improved, Lights Out Studio pulled itself out of its debt and is now on the road to profitability.

Lights Out, which started as a Digital Agency in 2018, decided to pivot its focus to Product Design in 2020. It was quick to realise that studios’ diversification and rapid experimentation reduces much of the risks that Startups face in pursuing one single idea to exhaustion. Good execution of the Studio model can result in multiple successful products in a year and as Greg Isenberg, Founder of Late Checkout predicted, product studios represent the future of Startups. Studios might give a way to eliminate much of the risk without losing out on the possible reward. After surviving through a debt of Rs 20 lakh and on its way to clock 5 crore in revenues, Lights Out has now transformed into a human-centered & design-solution led powerhouse.

We spoke to Founders of Lights Out Studio, Saksham Mendiratta, Business Growth and Adil Singh, Experience Design about their learnings from this experience, challenges ahead and vision for the studio.

Q. Can you walk us through your journey so far and share a few key milestones?
We started as a Digital Agency back in 2018. Grew to about 6 team members and 75L in revenue. But the business didn’t scale well as we weren’t excited about building a social media agency. Most “agencies” in India fall into this trap of growth / scale: new clients, hence hire, deliver mediocre work (or in most cases, clients don’t approve of the quality since they’re forever riding on FOMO), client drops, new client comes in, the vicious cycle continues. We just didn’t want to be a mediocre player in a very big pool. Meanwhile, Product Design (website & apps) was emerging as our area of strength and hence we decided to pivot in early 2020 to just become a ‘Product Studio.’ Little did we know that we’d be hit by a pandemic right then. We almost started the new financial year with a loss of 20 lakhs and then built our customer base one by one purely focussed on Product Design. The journey of growth into a niche is more satisfying (and painstakingly long) than that of a generalist.

Another key milestone was our entry point into the US market with a key collaboration with Nik Sharma was a turning point, that got us new customers and helped build a solid portfolio, in the US. Sharpening our focus further, we entered into original content creation with our podcast & newsletter IP’s, that helped build solid credibility in the Indian market, especially amidst DTC business builders.

From here on, we’ve now started to invest in emerging DTC businesses: our understanding of the sector is very high and we know how to grow consumer-tech business. This should help cement our position as an investor and build the mindset of backing great founders & teams.

Q. What does your clientele look like today?
We work with businesses that qualify 3 parameters:

• High-growth
• Consumer-tech
• Serving affluent markets

Our past clientele include: CureFit, Kapiva, Fittr, The Souled Store, Pela Case (Canada), Calamus Ultrabikes, SugarFit, HDFC, Sharma Brands, to name a few.

Q. You started 3 years ago as a Digital Agency and shortly in 2020 after the revamp, you had to face your biggest crisis ever. Tell us what kind of challenges did you face as a relatively new business?

As a new business that had just rebranded (in March 2020), we were pushed to start from ground zero when the pandemic hit. With just a couple of customers that we retained, we narrowed our focus and area of work furthermore from there on. Staying niche helped build experience & credibility in one sector: consumer-tech.

And consumer-tech (largely DTC businesses) has risen massively in the past few months, thanks to the global increase in online spends. We were quick to realise that there’s no dominance in this sector when it comes to business design & technology consulting. And hence, the leapfrogging pace came in naturally.

We retained our focus on culture, worked with selective clients, and stayed true to adding more value to existing businesses as opposed to bringing in new ones (retention is far easier than acquisition).

We also built internal content IP’s through our podcasts & newsletters, that become a distribution engine for our thoughts & experience in this sector.

And right there, the perfect mix of a service-based consulting business was born.

Q. You have managed to turn around your company from a debt of Rs 20 lakh to revenues crossing Rs 5 crore this year. So, how did you make that happen? Which expenses did you cut back on and where did you turn your focus?

Scale has purely been a sub-set of our quality of work.

We focussed on fewer projects and massive turn-arounds in each of the projects we worked upon, that helped build our work-of-mouth credibility. Every single project that we’ve worked on in the past few months, has been a referral.

We also focussed on building a team that comes with an entrepreneurial mindset. Every single team member has contributed to the growth of the business by doubling up on ownership & learning. And that’s been one huge differentiator in our journey.

Instead of cutting down, we ramped up our expenses on building in-house content, that has had a long-term benefit for us. Instant gratification was never our thing and we’ve always aimed for a longer vision.

Q. The product designing industry and client needs are evolving rapidly. How are you keeping up with the pace?

The product design industry in India takes its inspiration from the West. Given that almost 50% of our clientele is based in the US, we are far ahead of the curve to catch trends and help businesses in India implement them.

Product Design for consumer tech is now catching up on building better design & experiences in their products. And we’ve largely focussed on just those products that are built for affluent consumers and have a great experience wired in them.

It’s for these reasons that we believe that we’re on the leading end of the product design spectrum, to bring in new trends in India and become a formidable player in the product design space.

Q. What do you think sets you apart?

Our approach with our customers, culture and our mindset:

Customers:

• We work with high-growth businesses. Hence, we utilise past data and trends to forecast and build better experiences for them. This works in their favour since it comes from an external consultant who has the vantage point of an outsider.
• We work with businesses where we solve critical business challenges: like increasing acquisition, better retention or even build communities. And so we end up working with the founding teams, for whom these projects are as critical as their core growth objectives.
• We don’t work on typical briefs that most ‘agencies’ globally would want to. We spend close to 2-4 weeks just ironing out the challenge at hand, help them formulate a solid business objective and then begin work. It elongates our sales closure process, but by the time we sign off on commercials, we’ve added immense value for them to be immersed in the process with us.

Culture: We operate as a studio in all aspects. And we absolutely hate the agency culture. Here’s how:

• Hire people who have had an entrepreneurial stint in their life. It’s a mindset that we deeply admire and propagate.
• Flexibility in all senses: Our team can plan their days / weeks / months in advance since they have visibility of the projects and can tailor their personal & professional commitments accordingly.
• We don’t have time in / time outs or the concept of leaves
• We spend time on debriefs: analysing where we went wrong as well as building on what we were great at.
• We push people to come up with their own ideas (0-1) and help nurture them as independent projects that can spin off as investable businesses.

Mindset:

• We believe in the positive sum game mindset. We put our content, strategies and even execution techniques through our content, for the industry to grow.
• We wish to remain niche by design but continue to focus on adding value to each customer. It works in everyone’s favour when an external consultant comes with such a mindset.

Q. What are the challenges ahead and what kind of changes can we see at the studio in the next few months?

Being a bootstrapped business, we get lesser attention as compared to the ones who draw investments. But because we focus on profitability, it helps us reinvest back into the business and build more leverage and strengthen our moats.

We’re entering DTC investments, so Lights Out Venture is an off-shoot of the product studio that will start gaining momentum in the next few months. We’re keen to invest in 4-6 DTC businesses (globally) in the next calendar year, 2022.

We like to go slow, but stead in our approach and hence confident of what we’re building.

Q. What is your larger vision for the studio?

To become a dominant expert in the consumer-tech space across:

• Building new 0-1 products, in-house that are born through assessing gaps in the market and are community-driven.
• Becoming an original content creation hub pushing content across different channels of video, podcast and written content, at the intersection of business & technology.
• Invest and back exciting DTC businesses that help create value in the consumer-tech ecosystem.