Transition 2.0: the future of an open source agency

Lately there's been a lot of changes taking place around here. After the closure of Bryght and moving offices, I've had a lot of people asking me how things are going and what's happening at Raincity Studios.  I'd like to try to answer some of those questions here.

But to understand where we are now, I think we need to look back at where we came from and what we have achieved over the past five years.

When Raincity Studios first started, most of us were recent graduates of BCIT's new media program and each shared a love for open source and drupal. Mark Yuasa and I led the early development of the studio, closely followed by Erik Hermans in late 2004. Will Pate and Mariska Richters then joined the team in the spring of 2005 giving us a solid foundation on which to build a company. Our beginning was humble and our future was exciting.  

Early on we developed a very organic operational model. From our first makeshift office in my poorly ventilated basement to our beautiful gastown office overlooking the Burrard Inlet, people were always the priority and our emphasis was on empowering our employees. We wanted people to not only produce their best work possible, but to sincerely enjoy doing it. We were a lifestyle company, we produced excellent work and we always maintained great relationships with our clients.

And this model was very successful for us. Over the next few years Raincity grew from a young start up with no revenue to an established and reputable development agency with offices in Canada and China. We employed over 40 folks from around the world, from Africa to the UK, Canada and USA. Over this period we also experienced a steady growth in our revenue, from ~480k in 2006 and ~700k in 2007 to ~1.3 Million in 2008.

In late 2007, under an aggressive plan of action, Raincity took on two exciting initiatives. First, we began the process to acquiring our long time hosting partner, Bryght. We had always had a great relationship with Bryght, founded in 2004 by Boris Mann, Kris Krug, Adrian Rossouw, and many other great folks, and our acquisition was part of a plan to revive the pioneering Drupal deployment and hosting business. At the same time, we began exploring new markets in China. With a dual mandate to research the use of social media at the 2008 Olympic Games and to work with the Chinese open source community in Shanghai and Beijing, Raincity expanded our operations internationally and open an office in Shanghai in November 2007.

It was a very exciting period for the company, but along with the increased revenue, came larger projects, an expanding scope of our business operations and increasing complexity. The past year has been a roller coaster for our team; we saw two amazing projects that showed great potential fail to be successful in the market. After delays in our action plan due poor business processes, we were unable to close our second round of funding. We began facing cost over run, lower monthly revenue, a higher need for human resources and an outrageous monthly deficit being generated by our hosting business.

Since late 2008, we have been working hard to repay our debts, finish projects already in our pipeline and reorganize our operational structure. In order to achieve a sustainable operational level, we were forced to make the difficult decision to close our Shanghai operation. In an additional effort to keep our ourselves as lean as possible, we've re-examined our operational expenses and moved into a smaller office. These decisions have allowed us to cut our monthly operational cost by more than 60% per month.

This process of restructuring has indeed been a difficult, but the early results look very promising. Over the last several months we have paid over half our debts, mostly in arrear salaries owed to graciously patient employees and partners. Through various government assistance programs, we have also been able to apply for grants and tax credits which will be put towards our the remainder of our debt repayment. We're grateful for the existence of such programs and the assistance they are providing to continue our efforts to restructure the company and our offerings.

I would like to personally thank everyone for his or her understanding and I kindly appreciate everyone who offered to help with this restructuring. Your support in the past has helped us define who we are as a company and your ongoing dedication during these hard times is helping us redefine ourselves once again.

As we restructure our operations at Raincity Studios, we intend to keep doing what we do best: building vibrant and sustainable online communities. Our current team represents a wealth of experience managing small to large-scale projects across a range of industries with a specific attentiveness to the user experience needs of online communities. With the experience we've gained over the past five years in the open source development industry and by returning to our roots in service and consulting, we are very excited again about the future of Raincity Studios.

We will continue to keep you in the loop as our restructuring process continues. Thank you again for your support and encouragement