For most agencies, growth eventually hits a ceiling. Services scale in a straight line, and in valuation terms they rarely trade above 2x annual revenue. Products, on the other hand, can command 10x that or more. Rick Webb highlights this contrast in his book Agency: Starting a Creative Firm in the Age of Digital Marketing.

The math alone makes the idea irresistible. Take what you already know, turn it into software, and scale it infinitely.

That’s why so many agencies eventually try to make the leap. It feels like the next logical step, the evolution from project-based work to intellectual property.

But the leap from service to product isn’t really about numbers. It’s about DNA, what a company is built to do and how it thinks.

Rick Webb put it best in Agency:

“For what you’re contemplating is a nearly impossible task, attempted by thousands of entrepreneurs through the years and accomplished by very few.”

He was right. I’ve seen it firsthand.

When Good Intentions Go Sideways

The first time I watched an agency try to build a product, it was a team that had already done well in the service world. They had great clients, good margins, and a reputation for solving tough problems. But they were tired of having to sell. The dream was to create something that could make money while they slept, a product that could scale faster than services ever could.

The intent wasn’t bad, but it was off. Instead of starting with a clear problem or user insight, they started with a desire to escape. Ideas poured out fast, but most were half-formed or disconnected from what the agency actually did best. There wasn’t a dedicated product team, just a few people trying to juggle client projects and prototypes at the same time.

Because attention was split, the work never had a chance to mature. Priorities changed weekly. Every new idea felt like the one that might hit, and each time, momentum drained as client work inevitably took over. By the time a prototype emerged, it looked polished enough to sell, but it wasn’t solving anything anyone actually needed.

It wasn’t a failure of talent. It was a failure of intent and structure.

That experience taught me something I still think about a lot: you can’t build a meaningful product from fatigue.

You can only build one from focus and actual market need.

The Other Kind of Product

A few years later, I worked with a company that approached the challenge differently. We didn’t dream about replacing our service business. We looked at what we already knew, where we had credibility, and how technology could extend that advantage. The products we built came from the same world we were already in. They solved real problems for both private and public sectors, in places where accuracy, reliability, and clarity mattered most.

This time, the process began with validation. They tested assumptions before they built features. They built small, tested often, and refined constantly. The result wasn’t perfect, but it was valuable. The product fit into their existing ecosystem instead of trying to replace it.

More importantly, it created new revenue streams. One product was licensed. Another became a subscription service. A third generated consulting work because clients wanted help integrating it.

That balance made the business stronger. According to NetSuite, companies that diversify revenue streams are more resilient and often grow faster than those reliant on one model. That played out in real time. Instead of betting everything on one big launch, they built multiple small ones that supported each other.

No one retired early. But the company was healthier, more stable, and more scalable.

Success isn’t about one breakout product. It’s about building systems that sustain growth over time

When creativity and performance work as one system, every story starts proving itself in the data.

The Reality of Product Building

Even in ideal circumstances, the odds are tough. MIT Professional Education cites research showing that up to 95 percent of new products fail. The number changes depending on the study, but the theme doesn’t: product development is hard, and most attempts never find traction.

MIT Sloan Management Review studied service firms that successfully “productized” and found that success came from structure, not inspiration. The firms that did it right created dedicated teams, measured progress differently, and moved slower, not because they lacked urgency but because they respected the process.

That shift requires humility, which isn’t always easy for agencies built on speed and client responsiveness.

I’ve written before about how creativity becomes a growth multiplier once the operational side is solid. The same thinking applies here. A product without design leadership and storytelling isn’t a product at all; it’s a prototype in search of meaning. You Built the Foundation. Now Build the Story.

Ryan Holiday described this mindset beautifully in Growth Hacker Marketing through the story of Instagram’s origin. The app began as Burbn, a messy check-in platform overloaded with features. The founders, Kevin Systrom and Mike Krieger, noticed that users weren’t using most of the app; they only cared about the photo-sharing function. So they stripped away everything else, rebuilt the product around that one behavior, and relaunched it as Instagram. Within 24 hours it was the top photo app in the App Store. Less than two years later, Facebook acquired it for a billion dollars.

That story gets told a lot, but it sticks because it’s a case study in listening. The founders didn’t fall in love with their original idea. They fell in love with what users actually wanted.

Agencies can learn from that. They’re used to showing polished work, not unfinished ideas. But products need iteration. They need space to fail quietly, adjust, and evolve. The best builders don’t assume they’re right; they assume they’re testing.

Where Design and Storytelling Fit In

Design is often treated as the final layer of a product, the polish. But inside an agency, design has to become the connective tissue. It is how vision, logic, and user behavior stay aligned. Good design doesn’t just make something beautiful; it makes it coherent.

That means design leadership is not about fonts or color palettes. It is about connecting the dots between business need, user experience, and brand story. It is about making sure every decision serves the same intent.

Storytelling plays a similar role. Every great product has a story behind it, a narrative that explains why it exists, who it serves, and what problem it solves. When agencies build products, they often skip this for themselves, even though they do it perfectly for clients. A strong story isn’t a marketing layer. It is a strategy tool. It keeps the team aligned when the roadmap gets messy.

In both companies I worked with, design and storytelling were the difference between confusion and clarity. At the first, the drive was to make money fast, not to solve a problem. I shared my perspective, but leadership had their own direction, so I focused on keeping the creative strong where I could. The second company approached it differently. They used design and storytelling to define what the product actually was and how it fit into people’s lives. I helped shape how those products were positioned and communicated, making sure the story matched what the technology really delivered. That experience reinforced how much marketing matters long before launch.

Story and product have to grow together, or neither one sticks.

The earlier that connection starts, the stronger the foundation becomes.

The Leadership Lesson

When I look back at both experiences, the biggest lesson isn’t about technology. It’s about leadership. Building a product inside an agency tests every instinct you have. It forces you to choose between flexibility and focus, between pleasing clients and protecting priorities.

The agencies that succeed at it don’t just have better ideas. They have better systems and more honest conversations. They define success differently. They create boundaries around the product so it can grow without being smothered by service demands. They understand that products aren’t short-term profit centers. They’re long-term credibility builders.

That’s what separates the few that make it from the many that don’t.

Webb was right when he wrote that most agencies won’t pull it off. But he also pointed out that the ones who do usually build something useful in their own industry or for their clients. That’s the key.

The best agency-born products don’t escape the service model. They elevate it.

Every time I’ve been part of building something new, from concept to design to go-to-market, I’ve learned that success isn’t about brilliance. It’s about alignment.

Intent, focus, and patience.

Those are the things that turn an idea into something that actually lives in the world. When teams stay open and keep shaping the story as the product grows, it evolves into something stronger than any launch alone can capture.

Build something real, with multiple revenue streams, designed to adapt and grow with user needs, and it will keep proving itself long after the launch.