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Eric Sink on Starting Your Own Software Company
prostoalex writes "The topic of starting your own software company was recently brought up on Ask Slashdot as a way to fight current employment trends. Eric Sink from SourceGear, who shared his software company-building experience before has written a new article published on MSDN. Getting started with your own software company suggests several simple steps to evaluate your abilities, count your estimated expenses and then start the software company, if the idea still seems feasible."
The advice seems very balanced and well-thought out. I RTFA and enjoyed it a lot. I want to encorporate these ideas as I start to look for a new job as I recently burned out at my support job and quit for sanity's sake. This is good stuff.
"What we do in life echoes in eternity." Maximus Decimus Meridius
Starting your own software company is easy, but you'll probably go under. The key is coming up with something that people really like so much that they're willing to pay for it. Obviously you have to conciously avoid geek tendencies to go Linux-only or to use Emacs for a GUI and so on. But that aside, it is still tough to come up with a real niche where you have _the_ product that people want to buy. You can't just jump into an existing niche with a text editor or password manager or anything else there are fifty of already. You also can't compete with high-end applications like Maya and Photoshop. Finding the right niche, and filling it correctly, is most of the battle.
In my experience the software companies that make it do because of one guy's good idea, whether it be a new software product or simply a new business model on old software/services.
;). Sometimes you'll get burned.
I've moved around a lot and have worked for 10-12(? not lookin at the resume right now) different successful software companies.
Every single one of them was started by some guy in his garage. He had the idea and drive to actually make it work first. You need to do that before you sell it.
If you simply want to charge for software consulting instead of sale of software, just put in your contract you aren't libel. You don't even need a company then, just marketing.
Here we go, bottom-feeder company:
Go to fry's electronics (outpost.com) and buy every item that has a mail in rebate the same price as the store price, i.e. marked as "free". This happens sometimes at fry's. After the rebates, all you pay is taxes, it just requires the overhead funds to do the purchase in the first place. Make SURE to read that you CAN send in more than one rebate
Then, resale the items on ebay as some "bargan buys warehouse" and make buyer pay shipping. As long as you made more money than you paid in taxes it's a profit. How much profit then only depends on volume.
It's a simple small business that you could do from home and an occasional browsing of fry's for the free deals.
It's bottom feeding but you could probably do $200,000/yr if you have a nice website...
The right answer for 99% of programmers is to become a contractor. People have been becoming contractors since time began yet for whatever reason this is now a big deal. In 1999, most of the programmers out there were contractors.
As a contractor you're satisfying all the reasons the authors give for starting their own "businesses" and it's a lot less of an initial risk.
Yes, but that doesn't change the fact that you CAN never find anything in the MSDN. Even the integrated MSDN that ships with VS is shit.
Best example: invoke help on the Format function in VB 6. Result: complete useless crap. To find the possible format expressions you have to look through 4 more pages that ere not even linked directly to the main page...
"Very few truly versatile people have the determination to finish a Ph.D."
There is a difference between being versatile and unable to focus! One could argue that having the ability for focus myopically on one detail FOR A NECESSARY WHILE should be included in versatility. Versatility is not the opposite of being able to focus. By his definition that author seems to have confused ADHD with versatility.
Truly versatile people tend to score very inconsistently on MBTI. The are far to busy switching between all the different hats to spend time being in one of 16 pigeon holes. I went to a "team building" type of seminar where groupings were made to sort out "big picture people", "detail oriented people" etc based on a similar test. By scores I fit evenly in all the groups -- so I was pushed into the smallest one. (BTW, I am versatile, and I have a Ph.D.)
NT's are the typical "geeks" I'm an INTJ. It's their way of classifying people that broadly splits people into four groups:
Artisans, who like action and activity, craftspeopel, artists, and lives of the party usually fall under the SP group. Guardians these are typically the politicians lawyers managers they love order. Those people who worked their tails of for straight A's were likely guardians. These two groups each make up 30-40% of the population, and typical couples are made up of one of each. NFs are the Intuitives, they care an aweful lot about the feelings that someone undergoes through their day. NTs we're the Rationals, we love to think, don't usually care about appearance, and are generally all the stereotypical geeks things are apt descriptors of rationals. If you loved math and science and took all your toys apart to see how they worked and then generally didn't care for them you are likely a rational. NTs seem to be highly over-represented on the internet, likely because were pretty rare, geographically diverse, and don't mind the tradoffs that come from electronic communication. There is an excellent book about MBTI called Please Understand Me and and an updated version of it called Please Understand Me II.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
http://www-swiss.ai.mit.edu/~bob/clarisworks.php
It's a bit out of date (we started in '89), but even so, we were told it was too late to get into the software startup game. We had no business plan. Yet we managed to beat our Microsoft competition (MS Works), with no venture capital, in fact without even incorporating... of course, getting bought by Claris helped. But I think keeping everything ultra-low overhead was essential - *all* of our time was spent designing and developing, and none on coming up with a business plan, a "failure plan", etc., as described on the MSDN article. YMMV...
There are still plenty of great ideas out there, waiting to see the light of day.
Sink's company produced AbiWord.
Just count the number of times people have come to you with a "great idea" that they want you to code in return for a "piece of the action". My response is always "Pay me $$$ and a piece of the action, then we can sit down and talk."
Then they get all mad when I point out that their idea by itself has $0.00 value without my talent, and that, if I'm going to code it for nothing except a "piece of the action", why don't I just code it for "all the action". After all, ideas aren't protected, only their implementations (and they don't have a clue as to how to implement it except to "con someone into writing the code").
Then I tell them that they don't have to worry, their idea really sucked, and I can point to a dozen similar ideas that others have tried.
Borrow from friends and family.
Have a working spouse.
Borrow from your credit cards."
Obtain money from a potentially major customer
This one is often overlooked. If a company has a problem they need solving and is willing to fund some of your development effort to solve it, this is a golden opportunity. Depending upon what problem you are solving, the company may not be interested either in owning any of the IP you create or supporting the product if/when it takes off.
This is how the company I'm with now started and their sales are $500MUSD per year. It all started from a $500K investment from a major industry leader, who remains the company's biggest and most valued customer.
Accounting software. Yes, much bookkeeping software already exists, but one company noticed that there was no package available that was 1) in Dutch, 2) Easy to use for lack of (unnecessary) features, and 3) able to get non-accountants going quickly. They targetted home and small office users, with success
Gym software An older example, but one of the best known ones, and one of the earliest small business niches to be recognised. Many companies discovered (independantly) that there was software to do accounting, software to work out training regimens, and software to track client training progress, but nothing that integrated all of these functions. Someone discovered this niche, and now there are quite a few packages that fulfill all of the IT needs of gyms.
Power plant maintenance and safety management software With power plants being the domain of big, wealthy firms, you'd think they would already have decent software to coverall aspects of this. Not so, apparently. One student wrote a package to do data mining and efficiency improvements for a nuclear power plant, as his graduation project. He turned it into a business,, and now he is talking to many large European energy suppliers to sell his software. You can find profitable niches even in heavy industry, apparently.
Pattern generation for embroidery machines I kid you not. Years ago I found out that patterns for embroidery machines were all made by the machines' manufacturers using record-playback... I asked to have a custom one made, and was quoted a price of about $500 for a simple pattern.
I thought of starting a business, and sell software able to create patterns from scans to shops with such machines. Shops would be able to embroider custom designs onto jackets and such for $15 rather than $500. I never actually did it, but I know that the manufacturers of embroidery machines have only recently started to offer such software.
This last example also illustrates the point against having too strong a competition. I could have been successful selling this software, but I could never have competed against the manufacturers, once they got into the action. I suppose being first to market wil allow you to outdo the larger competitors, but it will not last. Don't let such products be your only products. Or hey, you could get lucky and be bought by the larger competitor.
Niches for software and IT services abound. Look around you, especially at areas where IT services seems 'too expensive', like small businesses, bakeries, mom&pop stores and such. Look for businesses with particular needs, and think about how IT can fill those needs.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
1>Call you company mikerowesoft
2>sell it to microsoft
3> Sell Microsoft's letters to you on ebay
(Current bid: US $3,751.00)
4>profit!!!
If you want to make money do NOT start a software business. Start a service business built around software or start a consulting business that involves programming as part of a systems integration service.
Or if you really want to make the big bucks, take a good look at basic developments in new technology and figure out how to make some type of device. You will still end up doing a lot of software development but you will end up with a useful device as well. Do some research on FPGAs, PICs, embedded Linux, LCD screens like the 640x480 used on the pocket Zaurus SL-C860. Check out the camera servers from Axis or the flash-based webservers from Intrinsyc, i.e. CerfCube. Read through some of the mini-ITX projects at http://www.mini-itx.com and check out the wireless mesh ideas at http://www.locustworld.com.
Use your heads and don't just reinvent the wheel over and over again. There is no future in software as a product but there is a big future in software as part of a product.
First, being a former high school jock (yeah, me and Al Bundy... great), I can tell you that being popular with women in high school is a combination of looks, status, and confidence. That's not to say you have to look like a movie star, that's not what I mean about looks. You have to have a look. It has very little to do with salesmanship in a clever sense. Frankly, if Bill Gates wasn't loaded, I doubt he could get a date, but he certainly knows how to run a business. I also doubt Brad Pitt is much of a salesman.
Being a good salesman IS a hard skill. Managing people effectively is hard (unfortunately you can't learn that in school, thus the MBA problem). Having to work as an independent contractor has been a mixed blessing for me. I've seen my share of stupid businessmen. I've also seen my share of smart businessmen. Frankly, most geeks are smarter. You just have to acquire a new skill. So, don't buy into this geeks can't run a business hype. You have to like it or be willing to tolerate it. That's the problem. I hate meetings. I just don't enjoy chewing the fat with clients. I can do it, but I'm miserable. Frankly, every competent geek needs to find a good salesman. You also have to mature. If you're still whining about sticking it to da' man, you're probably not ready to handle running a business. However, like I've said, that hasn't stopped a lot of non-geeks.
I've also seen my share of dishonest yet rich businessman. They lie through their teeth, or at least spew enough bovine fecal matter to make the sale. I don't like doing that. I've lost a few contracts because I wasn't willing to tell the client what they wanted to hear. That happens too.
The biggest thing is that you need to network. You've got to get connected. You need to be attending chamber of commerce meetings, not industry meetings. You need to be at the country club or the rotary club. You need to go and smooze at the local Democratic or Republican party meetings. That's all part of real business. It's where skill and OPPORTUNITY meet.
What do you mean my sig is repetitive? What do you mean my sig is repetitive? What do you mean....