10 Things I’m learning about the Business of Software…

An article by Glen    6 Comments

After reading and reviewing MicroISV, I’ve done a brain dump on bunch of key software business ideas I learnt from that book. This stuff may be old news for you, but it’s really making me think right now…

• Forget the VC thing for now. A 200 page business plan isn’t worth it… but a 2 page one probably is. There is power is committing stuff to paper and if it forces you to cogently present your “one big idea”, and how you’re gonna get there… it’s worth it for you. Anyways, you’re much more desirable to a VC if your app is out there and creating buzz then if you’re still getting off the drawing board.
• You have to be able to clearly define your target market… and the smaller your target market the better. That seems weird but it’s like this: there are 10000 other online photo organisers out there and how is yours going to break through the noise? You probably can’t even affort the Adwords to get visible. Now.. online photo organisers that are niche targetted for wedding photographers? Now that’s a market. Wedding Photographers have heaps of money, you can look up 30 in your local yellow pages, and probably drop in and talk to a few. You can add *real* value in your design, promote it more easily, and make a good living for you and yours.
• Users don’t care about technology and you probably shouldn’t either. Does it matter that it’s AJAX powered and uses the latest MVC framework? No, that’s not a selling point. To use the above example, a selling point is that you can transform your photos with a single click, and view the previews in realtime to make the call on what the right contrast is. That’s stuff users care about. People don’t buy the steak, they buy the sizzle. So make it sizzle with practical features that are easy to use and easy on the eye. Spend some money buying some nice icons, and get a nice template for that web app. It’s likely to have more appeal to your users than that new infinitely scalable and configurable web framework that will take you three months to learn.
• Small companies in the bootstrap stage can’t affort big marketing $ and shouldn’t try. You don’t have the expertise or the $ to throw at marketing, so build organically – in other ways. You’re likely to get *much* better return from blogging it, writing articles about it, getting it reviewed, and generally creating your own buzz than spending thousands on ads.
• Release it for sale earlier rather than later. Don’t spend three years on it perfecting it, you might not even have a decent market. Keep your business model “non-binary”. Get something out there that someone is willing to pay for then iterate, iterate, iterate. If no-one’s willing to pay for it then at least your found out early and can move on to something more profitable.
• You’re better off release a new enhanced version of your current product than have an ever-expanding line. People will line up for an impressive v2 or v3 who won’t necessarily love your new clipboard manager app.
• Focus on Revenue. It’s all about revenue. This was actually a big eye opener for me. Fight your programmer instincts and ask yourself “What’s the minimum coding I can do that will increase sales?” You might think it’s a cool new feature but if it doesn’t swing new users your way, it’s not worth implementing. What feature would really make your users life easier? What would really save them time? Implement that.
• Be conservative about your profit estimates. When budgetting with your wife, plan for $0 revenue from this thing. Then if everything goes brown, you’re still happily married. This is a good thing. It’s worth protecting. Make sure they are on board with the huge time suckage this thing is going to be – they are paying the price for this so they better know that they come first.
• A big part of getting your ISV going is bootstrapping. For most of us that means working a day job and powering on after hours / part time. You’re better off having a plan B than just quiting your sucky day job and planning on becoming a Software Giant. Hold on to that dream – it’s what will keep you going – but add some wisdom to the passion. If you starve to death in the process, or you lose your family home, well… I think that price is too high. YMMV. Don’t think “if only I had six months off I could develop a killer app…” start now at 10 hours a week in the early morning and actually execute on that vision.
• Execution is everything. Steve Jobs said Real Artists Ship!. It’s not about the talk, it’s not about perfection, it’s not about a million features. The ultimate validation of any artist is getting their stuff out for public consumption. Be brave. Get it out there and listen to your customers, beta testers, bloggers, and others who will say it’s great/ok/fair/rubbish and give you invaluable (and sometimes painful) insight into how to make it unbelievable.