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Make More Mistakes
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.
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.
Post alot of Ask Slashdot's, and take the advice seriously. :P
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I think investors also like it when numbers add up to 100. Right now you're at 100.000002525 %. ;)
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
Below listed are some of the features hidden by the writer, perhaps guided by principles of neurolinguistic programming or freudian psychology... err.
Be careful about using bleeding-edge technologies.
i.e. use established (i.e. Microsoft) technologies.
A market with no competition ain't.
i.e. stay away from free software. (as microsoft always propose that free software is anti-competitive)
Small ISVs should build apps, not platforms.
i.e. build with existing platforms (i.e. microsoftish)
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
The overriding lesson I got out of this is that a techno-geek starting a business is like a person who loves to cook starting a restaurant. To succeed at figuring out your business model, market research, pitching to financiers, managing employees, buildings, etc, etc, etc, requires a true business geek, not a tech geek. The people who should start tech businesses are the ones who truly love business as well as technology, or those who can find a trustworthy business-genius partner. Incidentally, the pitfalls of the latter approach are showcased in the documentary film Startup.Com .
Yes, I know that the article was published on MSDN, so all of the open source zealots can start in with the conspiracy theories about Microsoft's involvement with publishing it. But the fact remains that an experienced proponent of open source no longer views it as a viable business model and has abandoned his efforts to make money developing, selling, and supporting open source software. You can make money selling hardware that incorporates open source software/firmware. You can sometimes make money supporting open source software. But it's damned near impossible to make money by developing an open source product and selling/supporting it.
Now the nuts can come out of the virtual woodwork and start screeching about the one true religion of open source, but he fact is that not one in a hundred thousand of them has successfully started a major corporation that develops and sells open source software. So if you want to claim that all of those venture capitalists, along with Eric Sink, the developer of Abiword and the founder of SourceGear, are wrong, please include your business credentials when you reply to this.
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.
A difficult year marked by slight hope
Record losses at German blue chips, but restructuring and rationalization begin to show their effect
january
Economics Minister Wolfgang Clement issues a special ministerial permit to allow the takeover of Ruhrgas, Germany's main natural gas supplier, by Eon, one of Germany's two dominant electric utilities. The ministerial intervention overrules the Federal Cartel Office, which had warned against impaired competition both in the electricity and gas markets.
february
The stock market collapse, record insolvencies and belated restructuring and rationalization efforts have plunged German banks into a crisis. Commerzbank and Hypo-Vereinsbank both post the first annual losses in their corporate history. Experts predict drastic sectoral consolidation.
march
At 4.7 million, unemployment reaches the third highest level since unification. The jobless rate stands at 11.3 percent.
Dresdner Bank Chairman Bernd Fahrholz is sent packing as parent company Allianz publishes the first annual loss in its corporate history for 2002, with Dresdner being the biggest burden.
Deutsche Telekom posts a record loss of EUR24.6 billion for fiscal 2002, the highest loss ever posted by a German company.
Wella's founding family agrees to sell the world's second-largest maker of hair-grooming products to Procter & Gamble.
The Bundestag decides to extend shop opening hours to 8 p.m. on Saturdays. The new regulation will take force on June 1.
april
In their spring forecast, Germany's leading economic institutes project economic growth of 0.5 percent for 2003, revising downward their earlier forecast of 1.4 percent. The six think tanks expect the German deficit to reach 3.4 percent, exceeding the limit of the euro-zone Stability and Growth Pact. The government remains optimistic and issues only a slight downward revision of its growth forecast to 0.75 percent from 1 percent.
Germany's most powerful industrial union, IG Metall, reshuffles its leadership. In a surprise move, the board nominates deputy head Jurgen Peters, a hardliner and ardent defender of Germany's extensive system of worker protection, as the successor to Klaus Zwickel.
Frankfurt airport operator Fraport cancels its dividend and discloses a net loss of EUR120 million for 2002 after writing off an ill-starred airport project in Manila launched in partnership with business cronies of the discredited former ruler of the Philippines.
may
The German economy slipped into recession in the first quarter of 2003. Finance Minister Hans Eichel publicly abandons his longtime goal of balancing the federal budget by 2006.
The level of management pay in Germany becomes a subject of public debate. Federal Justice Minister Brigitte Zypries of the Social Democratic Party demands the disclosure of individual board member salaries to improve investor protection.
WestLB posts a record loss for its 2002 business year after admitting that it had to increase risk provisions for its London project-financing arm over a risky deal with British television and radio leasing company Boxclever.
june
Deutsche Borse closes the badly tainted Neuer Markt segment for young and supposedly fast-growing companies. A new, untarnished Tecdax index now serves as the benchmark for investors in stocks that would have been called new economy a few years ago.
The collapse of life insurer Mannheimer Lebensversicherung becomes a first test of sectoral rescue company Protektor, which takes over all 345,000 contracts.
West LB's multi-billion loss causes heads to roll. Public prosecutors investigate both its London group and several managers. Chairman Jurgen Sengera steps down, making way for interim Chairman Johannes Ringel.
Robert Bosch acquires a majority of heating equipment maker Buderus, making Bosch the European market leader in this segment.
Quelle becomes the first German mail-order company to sell cars over the Internet.
After four weeks of industrial action, IG Metall boss Kl