Slashdot Mirror
Unemployed? Why Not Start a Software Company?
"Every time I see a group of 5-10 self-described 'great but unlucky' IT workers looking for a job, and how their previous company had to lay them off because their former employer had this 'stupid idea' it was to move all the jobs to Elbonia, I have to ask myself -- why don't these guys get together and start a software company. If you don't make these 'mistakes' of outsourcing development to Elbonia, couldn't you compete pretty well?
Best of all if you ever did need to grow, in this job market, you can get highly educated and experience software engineers even more inexpensively than China or India -- I've heard some internships are unpayed these days.:-)
Yes, I am taking my own advice, and trying this, even though I was not unemployed."
I'm not sure it's that easy.
The biggest problem for unemployed software engineers getting together and forming a company is financing. If you're unemployed, you probably don't have a lot of cash around to provide seed capital for your business. If you do scrape together enough seed capital or find an angel investor, you're usually stuck with not drawing a salary and having no health insurance for about a year as you try to ramp up your business. And you're doing all of this for a high risk venture where only 1 in 10 businesses actually succeed.
Nevertheless, I'm building a startup right now, Findory.com. But I wouldn't underestimate the obstacles here. It isn't something that can be done lightly.
Find a dedicated concept or conceptual area to exploit. How to do this? Simply ask folks what areas they are having problems with software needs.
I'll tell you that a number of folks are doing quite well at the interface between biotech and software. The amount of data that is being generated by biotech is truly mind boggling and we need software tools for analysis and visualization of that data. Software that is capable of analyzing multi-dimensional datasets is particularly in demand right now with gene chip analysis and the work we do in our lab on molecular phenotyping. For instance, we are adopting software used in the remote sensing community to analyze "multispectral" data sets in the retina and other tissues and the communities that this software came from (GIS, Remote sensing, Intelligence) are very interested in software that can help distill multispectral data real time to enable streamlined processing and analysis. Your link to DARPA is particularly informative for these potential projects, but don't forget about other resources as well like the National Institutes of Health.
Visit Jonesblog and say hello.
There's not enough business in the software industry to support the existing industry, otherwise those who were in it before wouldn't be unemployed, and you propose another company?
See, I am a very creative guy. but not a very good programmer. Maybe the bulk of people who are out of work are programmers, or not up to the ask of assembling entire programs....
More than 90% of IT workers i know are employed. 100% of the good IT workers i know are employed.
...done that. And I have to warn you, it's not easy. What you think makes a good product will in fact be very different from what your customers think is a good product. You can plan on at least a year of post-release development before your software meets the needs of your clients. And you'll have to be doing the development while taking the time to advertise the existing version, so you can at least make enough money to make ends meet.
My best advise is to start a small software company while still employed. Don't advertise too much, and listen to what your customers have to say. If you keep constant development going, you should have an excellent product prepped for the next time you're out of work (or to start off on your own).
Javascript + Nintendo DSi = DSiCade
This is really no different than saying "Hey! You're unemployed, right? Why don't you just get a job? That would fix things right up!"
Where do you think the money comes from when you start a company? That's right, investors. Now, if you can't find a job, what the hell makes you think that you're going to be able to find investors?
"Hmmm. You've been looking for a job for the past year. Unsuccessfully. You have no experience running a company. You don't have a clear business plan. You have no leadership skills. Well, what have I got to lose? Here's ten million dollars. Have fun!"
ZFS: because love is never having to say fsck
The company I am working for I didn't join because of their great ideas. Though what we are building is very cool. It was the fact that the CEO and President are both Ernst and Young alumni, and two of our Board of Directors have significant experience in the industry we are building it for. On top of that, they have a rock solid business plan that I was very impressed with, and know what's important to spend money on (legal, dev workstations, software licenses) and what not to (not working off of a yacht yet).
Add to that what an earlier poster said about financing and you have the mix to keep most people from starting or suceeding at this. Show me software developers who know how to create a good financial plan, can prove a track record of delivering software, and know the industry they are building for, and I bet very few of them are unemployed.
Random Musings
Starting a software company sounds like a neat idea but is easier said than done. When you are unemployed, the primary focus is finding a way of paying those rising bills. Starting a company is not going to solve that right away. It takes quite a bit of time before you get into the profit making green zone.
Also, software company is about having an idea that would make for a good software. When hunger strikes and you are driving down a freeway, you are not looking for a gourmet restaurant. Any fast food joint does it for you.
Free XBox, PS2
I'll give you the same answer a friend of mine gave when he and I were quitting a consulting company about the same time and someone asked why we didn't start our own.
I don't know anybody who's good at sales whom I trust.
There is no 'i' in team, but there is in fiasco...
... defense soliciatations.
These are alot harder than you think.
1. There are alot of companies with deep pockets going for it.
2. You will spend a huge time writing proposals down to accounting to the cent before you get into what IT guys would want to do. PHB type of things. And you are not guarenteed you will get the job or get paid for that work.
3. The amount of waiting for things to go through would destroy a business with no income.
4. I can almost guarentee you that a bunch of unemployeed slashdot readers will not qualify for these types of jobs either finacially or with experience contracting with the government.
The surprise isn't how often we make bad choices; the surprise is how seldom they defeat us.
If you cannot learn to contract properly, then do not try it. The correct spelling of "you are" is "you're," not "your," you ignorant Git.
WEll, frankly, 3 days is not enough time to come up with an idea, never mind designing a coding a solution. Then, there's marketing, etc. You seem to have gotten lucky with what you've written, but it's pretty much impossible to write 30 useful programs with an average beginning-to-end time of 3 days. If you could do that, you'd be giving Bill Gates a run for his money...
---- It puts the lotion on its skin or else it gets the hose again. It does this whenever it's told.
My company does unpaid interships and I'll tell you why:
At most other shops, interns are paid, allright, mostly to make coffee and do the tasks no one wants to do. And it's OK that they get money for that.
At our company, interns receive a personal training plan and are basically treated like students. The employees are encouraged to spend lots of time with them, teaching them what they know. Our interns work on real projects, and are getting real experience with their desired field of work. This costs the company a bunch of money, because time and resources are diverted to implement these training plans.
So, no, we're not paying them additional money but when they leave (and some get assimilated by us), they know a whole lot more about their future jobs. Getting this knowledge across basically costs us money that - let's face it - we're never getting back in any way. It's true, an intern also produces stuff during her stay, but the value of that doesn't compare at all.
My friends and I tried to start a business venture and I'd say our idea had some viability but people seemed to commit in varying degrees at varying times. I think one way to get everyone to commit is to put a price on it.
For instance, one big problem we had was determining how much we should spend on marketing. We thought it best to go on a situation by sitaution basis as we encountered them and to determine, at each time, whether marketing ventures were worth it. I think this was a big mistake.
What we should've done was determined how much it would've cost to start a business BEFORE we set out for it. Even a rough figure will be good enough to prepare everyone to how much they are going to be committing financially to a company. I would then recommend amassing this money and then setting out on your venture.
This way you can set a budget for costs such as marketing. When you send out an ad campaign for $500 or $1000 you won't be thinking about how much of that comes out of your own pocket but you'll be thinking like a real business like how much of your total marketing budget that is, whether it was worth it and whether you want to spend it again. If you pull it out of pocket right then you'll always be stingy because you have no real solid metric to evaluate costs.
Finally, putting your money on the line from the beginning (whether it's $1000 or $10000) makes you try a lot harder.
"Injustice anywhere is a threat to justice everywhere." - Martin Luther King, Jr.
Thats an insulting attitude. It's like saying "Hey, you're an assembly line worker, why don't you just go out and start building something". The fact is that there is more to making a successful software company than writing code. In fact, the code is the easiest part of the process. To be successful in business you have to identify a need and convince someone to give you money to address the need. Software Engineers (typically) are not well suited to salesmanship. IMHO you need at least 3 different personality types to start a software company. You need someone with creative energy and vision who can ariculate that vision in a way that motivates both clients and employees. You need a financially minded individual who can see the vision and convert it into dollars and cents - making sure that its a viable venture. and you need an imaginative technical lead who can turn the vision into a product that meets the needs of the client and keeps to the bottom line. It's not just a matter of writing code and raking in the bucks.
So at 10$ a day you would only have to do this 100 days a month to cover basic cost of living out in the real world.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
In the spirit of Rounders (the movie), I wouldn't call it luck.
To quote, poorly, from the movie:
"Why do you keep on thinking it's luck? Why do you think the same 4 guys end up in the final round every year at the World Series of Poker?
I wouldn't say Bill Gates got lucky but I'd say he bet on a high probability event. He knew computers were going to get big and he knew they could exist in the consumer space so that's where he bet his money.
It's the same with Warren Buffett. He adjusts his portfolio so that a certain % of it is on high probability events and smaller %'s are invested on lower probability (high risk, big return).
"Injustice anywhere is a threat to justice everywhere." - Martin Luther King, Jr.
I did this over a year ago, with no financing. In fact, I was in debt upto my ears. First, some misconceptions need to be cleared up:
- don't get an office. They cost money. Work From Home. If you have multiple people, either work remotely and meeting irl a few times a week, or choose one central house/apartment and setup shop in a room there. Basements are fine, so are spare bedrooms.
- Use existing hardware.
- Get dirt cheap hosting and put up a good looking website. customers won't know you're only paying 5$ a month for the site.
- don't pay yourselves salaries - I've seen way to many people think 'I need X amount of cash to pay myself Y per week for six months until the business is making money'. Plan on paying yourself what you can, and using unemployment as a cushion until things take off.
Heres how it works: while on unemployment, come up with an idea for a type of software business, and then throw up a website (make sure it looks good), and start writing software. You have to keep looking for a real job, but as long as you aren't making money on the biz, you don't have any income to report, and still get unemployment. If you want to sell products, write them while still on unemployment. If you want to do consulting or custom work, be finding clients while on unemployment. If you are small enough, and have learned to be lean, then your first customers will pay enough that you drop off unemployment and go from there. If not, then divy up the money, pay for expenses, etc (The biz can pay you back for the web hosting, for example), then pay yourself. You Can make money while on unemployment, as long as it's not much - they will reduce how much you get from unemployment in a near 1:1 ratio.
If you do good, you may find yourself off unemployment and making better-than-unemployment wages within a month or two.
You may fail, miserably, but with a cost-of-entry of a few dollars a month and your time, it won't cost you much to fail. If you aren't on unemployment anymore - say if it ran out - then find a job somewhere else to tide you over while you try to get the business going. After all, a 8$/hr job at a bookstore is a lot more money than 0$/hr.
Also remember that starting a business is Not for everyone - many people want the security of a known salary, and don't like the idea of taking risks. Others don't want to work long hours, especialy on something so risky. Ask yourself if you are one of those people.
Me, I've been lucky, and perhaps that has skewed my perceptions. My friend and I were discussing starting our own company, and then a client fell into our lap... a client that by themselves paid our bills and allowed us to grow the business for 6 months. Of course, now we're looking for more clients, since things are slow, but thats the nature of owning your own biz - risk.
neurokode.com - yup, thats me and my partner, and yes, it needs work - we've been too busy to touch it much. Need contract development, or a code audit? Contact us. Want tools for DB development with python? Check out pdo.neurokode.com
man is machine
Now, OSS models change this equations. because most software (unless you are doing a lot of custom stuff) has to be number one or two to survive. So companies spend a lot of money on marketing and discount the software to try and "tip" the market to a point of increasing return for there product. Open software does not require this expense and in a way almost guarantees that your software will begin to build a critical mass (if it does not you are barking up the wrong tree)
HPC for Primates. Read Cluster Monkey
Rent, food, electricity, gas, water, garbage service, internet connection etc. These things cost money. To pay for them is why people have jobs. When you dont have a job you cant pay for them. So where are you living while you write this software?
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
I have observed, from closeby, many people starting their own software business in the last few years. The ones that survived were the ones that had a client from the outset.
You can build something you like and/or you think is useful, and then try to sell it. That doesn't work. Most likely no-one is interested, or only interested in your product if it is changed considerably. Moreover, if you have an "off-the-shelf" product, people don't want to pay a lot for it.
Get a client, and build what that client likes. This brings in money. Make sure you take into account that on average you work 20 paid hours per week, no more. The rest is needed for time between jobs and for finding new clients.
You will still be cheaper than the big guys, so you may be able to sell yourself. Especially since renting someone from a big guy is as likely to get you a cheat as a good developer, while you, obviously, are a certified good developer.
In the past when I did odd jobs I usually offered a "no cure no pay" scheme, if it wasn't a very big job. Clients are willing to pay more for such a scheme, and as long as you know you will succeed, no harm done (just make sure you define the "cure" conditions).
If there is any time remaining, build your brilliant general solution and try to market it.
There are several good books available on writing and marketing software as a small business. Find one and read it. It will help you avoid the greatest pitfalls. I learned a lot from Hudgik's "Writing and Marketing Shareware". It's fairly old but contains lots of good advice.
I agree with your expense assessment, mostly. I don't agree that engineers can't practise business skills.
This is a skill set like any other, which takes learning and practice - lots of it. The problem is that creating software for 60 hrs./week leaves little time to learn an enormous set of skills.
And from what I see when I look at people who are effective in business, the only way to perfect your skills is to spend enormous amounts of time interacting with other people - even (especially) in social settings. Now, if you've exhausted yourself building a product for a year, assuming you had expenses covered, how would you have had the time to be out talking to new people 60 hrs a week, too?
The skills you learn as an engineer have to be practised solo, in front of books and computers. Now you know why engineers are also accused of having poor social skills.
your expenses are 48k without mentioning kids? no offense, but that's not lean enough. consolidate all those loans while interest rates are still low. turn credit card debt and loans into a bigger/fefinanced/second mortgage. at least get out from the interest.
clothes? you're working from home
food? kraft m&c/ramen
fun money? you're working 6+ days a week
CARS AND GAS? you're not going anywhere cause you work at home
trim it down, naw
You ought to be able to cut that back some more. Try getting rid of your car and moving to a cheap apartment near public transit. A car (gas, maintenance, and insurance) is probably your second-largest (after rent/mortgage) or largest expense. Unlike mortgage payments, car payments don't even build equity for you.
I am one of the lowest of the low, one of the so-called serfs of science. As a graduate student at a Canadian university, I live in downtown Toronto on a stipend of $22,500 per year--from which I pay $6000 per annum in tuition. It is possible to live on $14,500 per year--that's $1200 per month. It just sucks.
So, the question is--how much of your lifestyle are you willing to sacrifice for your company? Living on $4000 per month? That's nearly fifty thousand after-tax dollars per year...Unless you're supporting a family, try to dredge up some memories of your student days, and recall all the ways to cut costs.
~Idarubicin
There is most like something besides software you can do to earn money if you start slow and do not try to over-extend.
I now program, cook, bake (and yes, those last two are different skills), play bagpipes and do/teach these from my house. I retrained and started really slow. Used my work/social networks to get low paying (sometimes free) jobs in the new skills until I had a couple of regular clients (it took a couple of years). In the meantime I kept programming for the man.
It is eight years later and now I take a contract or two that interests me, have a regular batch of students that pass through, and play at lots of weddings, funerals, graduations, etc. It is quite varied, I have lots of fun, and get paid quite well for what I like to do.
The point is, just do what you like while you are doing what you need to get by. If you work at it, you will get good enough to be paid for it. Until then, just do good work and do not live beyond your means.
Think about what you are spending your money on. You do not need $100/mo DSL if you get get by with $10/mo dial-up and occasional trips to the library or Kinkos. You do not need $500/mo co-located server if you can get by w/ $75/mo shared server space. You do not need ___ if you can get by w/ ___ . Just fill in the blanks and adjust your expectations and money requirements accordingly.
You can live in the US and quite well for $1000/mo if you change your expectations.
http://nwbagpipes.com/
Other posts have touched upon the economic costs of starting a business, namely issues such as marketing, advertising, distribution, facillities, and so forth, so I will skip those for now.
Do not underestimate the difficulty in coming up with a profitable idea. Again, as mentioned elsewhere, once you develop a product, you'll spend the majority of your time either providing support (which does make money) or fending off the competition (which creates headaches). Obviously, the easy situation is to find a niche market wherein potential customers are willing to pay for a solution.
Let me give you an example. A year ago, I ran into a group of principals at a conference and we started talking about computers. They obviously had a few complaints. Their school district requires them to electronically submit certain forms on a periodic basis, and the forms themselves were extraordinarily difficult to work with; one such gripe was that you could not save your work but had to do everything in one sitting. If you've spent any time around a public school lately, you'll know interruptions are more the rule than the exception.
Anyway, it sounded like a great business idea. Slap together a python script (or whatever) that mimics the forms, allows principals to save, spell check, etc etc, then open the appropriate email/http connections and submit it. Charge each school a $25 site license, multiply that out through the district and I was looking at maybe $5,000 for just a few days work. Word of mouth would spread to other school districts and principals would be beating down my door looking for similar niche utility products - or so my contacts said.
So what happened? It turns out these forms they were griping about were severely bug-ridden Word templates copyrighted by the district. I can fix the bugs in the templates in less than a day, but if it was that easy, I'd soon have more competition than I could deal with. It wouldn't be long before some 14 year old kid figured out how to fix the forms and undercharge me. And there was the looming spectre that the district might sue me under the DCMA if I attempted to profit off of their work.
Point being, there are lots of "needed" software products, but just because you can do them doesn't mean you should base your business upon them. I haven't ruled out working for the district, nor should you if you are in my shoes, but in the long run, you're much better off spending your time looking for bigger projects that you can actually depend on as a source of income. And that is the difficult part.
You have to find a market that is presently underserved, and where they have some problem that can be solved with software that is worth spending, oh, at least $10,000 or more to solve. You can't build a business out of $500 software sales unless you have a lot of seed capital.
Generally, you need a sales rep that has some sort of background or insight into the market you have chosen. If you want to sell inventory management for shoe stores, you better get a sales rep that used to run a shoe store, or that sold to shoe stores, or had some other industry contact.
There will be dry periods. You can't count on self-funding a startup and paying everyone based only on some custom projects up front. If you can all work for half pay for a year, or if you have a couple people that will work for stock only, then you have better chances. Generally, you can't get investors to put money in early unless someone on your team has a personal track record. Otherwise you have to wait until you have an established revenue stream.
The other comments are germane. You need someone to do support. There will be a lot of on-site work. You will need someone with both software skills and people skills.
Most of the costs are salary and travel. The professional fees, the phone, the fax machine, paper for the copier -- these don't really add up. Not like a market salary for two developers and a sales rep, anyway.
I believe that it is tough right now because most businesses that have a custom software need have already replaced their DOS-based systems. Most are reluctant to change. The overall consolidation in so many businesses means that most of the small corporate clients are much larger than they were 10 years ago. These larger businesses are less willing to deal with smaller, newer software firms.
And there is increasing commoditization of software. Places are willing to have a clerk spend a day or two each month "doing the reports" in Excel. It's hard to sell against that, particularly with the small outfits.
All that said, the deals are still out there. And it beats sitting around the house even if it isn't particularly lucrative.