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prostoalex writes "Eric Sink from SourceGear, well-known in the open-source world for AbiWord Suite, shares his thoughts on starting and running a software business. One of the keys to a successful business, as Thomas J. Watson once said, was to double the rate of failures. Eric Sink tells the story of what mistakes he personally made, what could be avoided, and what's important for geeks to know when starting a software company."
One of the keys to a successful business, as Thomas J. Watson once said, was to double the rate of failures.
One of the other keys I have found to a successful business is to work your ass off. This could certainly be seen as doubling failure rates. Interestingly though in the software business many companies appear to be adopting Microsofts model by releasing all of their failures to the public and letting the public sort them out. Other companies (like Apple) certainly have their share of failed products, but they do not foist them on the public. Rather they work them until they are good, or they do not release them. Also, often I have seen in my consulting, businesses that start out strong through insight, hard work and luck get run into obscurity through the next round of managers who take over the company. (it also happens when parents turn their businesses over to their kids who do not have nearly the same work ethic.
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"Fail fast" was the mantra of Tom Peters in the late 80's. I believe that he has since denounced all his teachings of the 80's and early 90's in order to cash in on a whole new "chaos" philosophy.
I agree with the whole fail fast notion. Try stuff as fast as possible to see if it will work. I think we see this philosophy played out in things like RUP and Extreme Programming.
I guess my point is that this news is 15 years old. Someone should search the Slashdot archives for a dupe from 1989...
"If you want to improve, be content to be thought foolish and stupid." - Epictetus
I worry about the potential of any new software company nowadays. Personally I know 2 people who attempted to start their own business. One started a software consulting company, the other a restaurant.
The software consulting company charges thousands of dollars for any gig and the business comes WAY too slow. I am talking once a month on the best case scenario. The other person started a restaurant and makes couple thousand daily. Just on take outs alone, $30 + $30 + $50... you get the idea, it adds up fast in volume. People can't get away with not eating. They can get away with no software upgrading.
Basically if I had the money, I would start a gym, a club, a bar, a restaurant, a stripe club... anything but a software company in today's market. It's a shame to see globalization and everything IT related go so downhill.
what's important for geeks to know when starting a software company
Easy that one:
- You can be 99.999% sure you won't become the richest, most hated guy in the world, or create the ROMs of an icon computer with a fruity name and end up teaching smalltalk to children.
- Out of the remaining 0.001%, you can be 75% sure you company will fail miserably, just because your products don't stand out, or because your services won't be different, or because your prices won't be attractive.
- Out of the remaining 0.00025%, you can be 99% sure your beginning of a success will attract shitty venture capitalists who'll try their best to make a fat pile of cash on your back by telling you to "go public" and "grab marketshare", ruining your chances of being profitable in the long run like you originally planned by growing organically.
- If you're part of the remaining 0.0000025% who'll manage to make an honest, sustainable, sane affair in the software industry despite the odds, you damn well deserve a medal.
"A door is what a dog is perpetually on the wrong side of" - Ogden Nash
One of the things that amazed me about my experiences in running various different types of companies is how common-sense can often take a back-seat to "groupthink", doing what others tell you you should, without necessarily considering whether you think it is a good idea.
Investors can be particularly dangerous. The problem is that many investors like to see themselves as having a mentor or sage-like relationship with entrapeneurs. Since they are the "money", entrapeneurs are often quick to indulge this fantasy and the end-result is that people whose company-running experience might be solely based on what they learned on the golf course from other similarly well-informed investors, find themselves a willing audience among those who might actually know what they are talking about.
Investors aren't the only problem. There is a thriving ecosystem of people within large companies whose primary talent is climbing the corporate ladder, but whose actual contribution to profitability is highly questionable. During the tech boom many such people decided that they would try their hand at running small tech companies, often they would be brought in by investors to replace the entrapeneur-CEO, in the hope that they would be more "seasoned" (whatever that means).
The results are generally disasterous. This happened in one of my former companies, and the guy was an idiot. He spent $100,000 (of $3MM funding) on a launch party just weeks after 9/11/2001, $50,000 on an "image consultant" buddy of his, and christ knows what else. It rapidly became apparent that he was incapable of doing the job he was supposed to do, but fell back on the tried and tested (big company) strategy of paying other people to do your job for you. With limited funding it didn't take long for us to run out of money.
Anyway, I could go on, but the bottom line is:
don't accept any advice on how to run your company unless it makes sense to you, irrespective of what anyone says.
About half of this seems to be telling us that he should have used pre-built Microsoft(tm) technologies instead of rolling his own.
I wonder how this article would have been different if it were not posted on MSDN, where the self-interest of Microsoft in its current context is, um, obvious.
D
In his dig at the Java platform he mentioned that "you shouldn't use bleeding edge technologies".
This illustrates one of the dangers he did not list - "Don't learn the wrong lessons".
I built a Java/Swing app around the same time. It was a pretty complex user app, not just a simple program - and we managed to completely satisfy the clients and make the program perform acceptably on a very low-end target platform (PII-133 with 32 MB of memory). For what he described (replacing a complex spreadsheet) he should have been able to complete the task.
Why did our app work and his fail? Because we knew Java and Swing well by that point, and knew what was possible with some time spent optimizing. We had a plan in our head for how to reach a target level of performance that would be accepted and more than met that goal.
The lesson he should have learned was "Know your technology well before you embark on a project". The reason why it's so important to learn THAT lesson is that it applies to any project, not just ones using "bleeding edge" technologies. The only difference between an established and bleeding edge technology is the level of support you MIGHT be able to find. And that is not enough of a difference to totally affect either failure or success.
I think the most appropriate quote on this matter is one from Mark Twain:
"We should be careful to get out of an experience all the wisdom that is in it -- not like the cat that sits on a hot stovelid. She will never sit down on a hot lid again -- and that is well; but also she will never sit down on a cold one anymore."
"There is more worth loving than we have strength to love." - Brian Jay Stanley
That's pure unadulterated bull- and anyone with business sense KNOWS this.
A market with no competition may not be a market afterall, but it may also be an untapped, unsold to market as well. You take a risk entering into a market with nobody in it- but someone has to be first into it. Let only the big players or the bold ones get into there first and then collect the tablescraps? Bullsh*t. Utter bullsh*t.
Anyone that takes this man's advice to heart is setting themselves up for limitations, etc. that may actually doom your business as much as he did his for the early part of it's existance. Better yet, he's currently making products that compete with SourceSafe- which means he's got PVCS, ClearCase, Perforce, and Seapine to deal with as competitors as well. I hope he's got a MUCH better product than all the above and a LARGE budget for advertising and all.
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
There is no one open source business model... in fact, open source tries to be as business agnostic as possible. What open source is, however, is an excellent software development model. There's plenty of people like my employer who use open source technologies and understand my obligations to patch, report bugs, and otherwise support the software we are exploiting. It helps us get our job done.