Timesheets are like routine physicals: they range from minor annoyances to big headaches. So there is a lot to like about CreativeWorx‘s inaugural product, TimeTracker.
For companies and professionals who bill by the hour, prompt and accurate timesheets are money in the bank. The founder, Mark Hirsch (@hirsch_mark), has a long history and deep experience in creative fields so has wisely decided to start with the advertising sector.
TimeTracker integrates smoothly with the more popular elements of Adobe Creative Suite (Photoshop, Illustrator, et. al.) and Microsoft Office Suite (Word, Excel, Powerpoint, but not yet Outlook) with more integrations soon to come. This makes it possible for TimeTracker to auto-populate a first draft of the user’s timesheet. The user then confirms, adjusts, or supplements the data to create a finished timesheet in a fraction of the time it would take to manually fill out this data.
TimeTracker even takes periodic snapshots of what the user is working on, making it a snap to recall which project you were touching up in Photoshop for an hour last Tuesday afternoon. It also provides a good audit trail in case a client pushes back on a particular invoice.
No single player dominates this niche with the vast majority of agencies using either a homegrown solution (or just Excel) so the field is wide open.
The monthly fee for this service is reasonable and, like most investors, I am a big fan of the recurring subscription revenue model. CreativeWorx even has some paying clients and we really like that.
So far, so good. So what’s not to love?
The Total Addressable Market feels small. You have to add in freelancers (notoriously cheap) and related industries that use timesheets but don’t live or die by them (less of a pain point, potentially different requirements / integrations) to get to respectability.
Mark points out that TimeTracker is just the first of what he hopes will be several products servicing the creative industry. This may be true but unless the new products naturally flow from the first, there is little synergy here beyond an existing customer relation which only goes so far. In other words, if their second product largely stands on its own, it is a completely separate roll of the dice.
And it is hard to see what naturally grows out of TimeTracker. Timesheets are pretty much the end of the process and not a core value-add so an extension upstream or into something more core is a bit like the tail wagging the dog. Perhaps they could extend the timesheets into invoicing…. (Billing-as-a-service anyone?)
So to be conservative I have to look at TimeTracker as a standalone business. Does it pass the “big enough” test? On the surface, it might… if they can maintain pricing. A market that is big enough when you can get north of $100 (or $200) per user per year shrinks pretty fast if competition forces you to slash prices.
Ironically, in this regard timesheets’ non-core nature acts in CreativeWorx’s favor. Even if a competitor offered one of their clients a hefty percentage discount, the absolute savings would be so de minimis as to not be worth the client’s time to evaluate nor the risk or disruption of switching systems. Also, once CreativeWorx’s solution has delivered its quantum-level improvement over the existing situation, it is hard to conceive of what it would take to similarly leapfrog TimeTracker. A client who is still patting himself on the back for switching to TimeTracker is not going to switch again any time soon just for an incremental improvement. That said, they may be more vulnerable to competition in the more price sensitive freelancers segment of the market.
So I’ll buy that CreativeWorx has an edge on keeping its existing clients in the face of competition but what about new clients? There, the playing field is entirely level. How do they avoid competing on price for new clients and, if they cannot, can they lock up enough of the market quickly so that it does not matter?
Like all good entrepreneurs, Mark cites his one year plus head start and a feature development queue as long as his arm. I question the value of first mover advantage if your plan for what comes next is to just keep running. Once the big boys decide to come after you, they can throw 10x the resources at it and catch up very quickly… especially since they can follow your roadmap. So it’s not enough to start climbing before the competition, you want to pull the ladder up behind you.
Two ways to pull the ladder up behind you are network effects and (what I call) data compounding.
Network effects mean that the value of the product or service for any single user goes up as the total number of users increase. Let’s take a simple example: the telephone. If you were the only person on earth with a phone it would be essentially useless. The moment a second phone is sold, it becomes useful (assuming you know and actually want to talk to this second phone owner, that is). With each additional phone sold, your phone becomes increasingly more useful. Now imagine that someone invents the “NuPhone”, a phone with better sound quality, lower price, lower cost per call. The one catch is, you can’t use it to call anyone with a normal telephone. Would you buy a NuPhone? It would have to be so overwhelmingly superior to the telephone that you were sure that was only a matter of time before everyone else switched over. Otherwise, it’s just useless. This dynamic is what makes companies like Facebook and eBay so hard to unseat.
(Not impossible – after all, Facebook toppled MySpace despite its network effects – just very, very hard.)
Does TimeTracker have network effects? Not that I see. It would not reduce the value I get from their service if I (or my agency) were their only customer and the value would not go up if they later signed 1M other users. Are there new features they could build in with network effects? I am not sure. Perhaps there is some way that different vendors servicing the same end client could benefit if they all used TimeTracker? Perhaps not. That said, even though features like these would not be implemented for a while, figuring out what features they could add to give them network effects should be a strategic priority.
So what about data compounding? It is a similar concept to network effects only instead of the total number of users driving the increased value, it is driven by cumulative data collected. For instance, if I have just one agency client who has worked on a candy bar ad campaign, I don’t really have much data-wise. But once I have clients who between them have worked on ten candy bar ad campaigns, I have some potential very interesting benchmarking data. There is definitely a data play here but to make it work CreativeWorx needs to be proactive and smart about collecting the right project metadata to make their data useful. How well they do this and how quickly they can get to meaningful sample sizes will determine whether they can get data compounding working for then in time for them to leave the competition in the dust.
Let me know what you think.