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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."
...on starting a company is right here.
Lots of similar ideas there, including a few rants against VCs and incubators.
The Army reading list
Advice on starting a software company from the MicroSoft Developer's Network? I have to say I'm just a tad leery of this generosity.
Enough about Erik Sink's efforts. What about the companies started by Jon Fail and Trevor Bankrupt?
Ahhh, finally step 2...
1) Start small software company with flagship product
2) Get bought out my Microsoft
3) Profit!
I know tht;s a bit flippant .... but if you use a PO Box for your company's registration and correspondance and no one ever is going to come to your house you're not going to piss anyone off .... and they probably wont care
Anti-slash: In sacred jihad against slashdot
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
One way to increase your self-awareness is to take a standard personality test. There are several such tests, but my favorite is the Myers-Briggs Type Indicator (MBTI).
Determine your personality here: http://www.humanmetrics.com/cgi-win/JTypes2.asp
I'm an ENTJ (coincidentally, the same as the author of the article).
How could I say to men: "Speak louder, shout! For I am deaf!"? -Ludwig van Beethoven
The Association of Shareware Professionals has some great resources for writing, marketing, and selling software for the author on a tight (read almost no) budget. While some companies probably get VC help, I think this a great start for research if you are interested in trying out some capitalism with your software. There is a lot of competition due to the low barrier of entry, but a motivated individual with talent could end up quitting their day job. WinZip is a good example of a success.
Tech News, Reviews and Tutorials
Finally, I can be the one outsourcing to off shore development centers, and getting richer.
Yes, this is a joke.
In all fairness to Apple and MSDN/MS....
Browsing through the docs at Apple is like visiting a good friend's reading room.. things are how you expect them, already picked over, and some pages already dog eared. There are a few dozen or maybe a hundred volumes, all on topics that interest you.
Visting MSDN is like visiting the Library of Congress. It's all there, it's just a matter of finding it all.
Point being, metaphor aside, that MS is responsible for a LOT more software than Apple is, and even when you figure in hardware, it is a large deal bigger job to manage all that info for MS. And it's not just volume, they have to keep mounds of info for products that haven't been sold commerically in over a decade.
It's a big job for Microsoft. Maybe Apple does a better job, but if you multiply the amount of info Apple needed to carry by about 50 or 100 times you'd quickly see that MSDN is not too shabby. It's pretty close to on par with offerings from competitors like Sun and/or IBM.
just past the 1 year marker, having started my own business. he forgot the one thing that i think is the most important. make contacts before you take the leap. sadly, who you know is more important that what you know. if it weren't for the contacts i've made in advance of starting my business, i wouldn't have lasted two months.
TODO: come up with a clever sig
I started my own company developing new ways to access the internet that is cheaper and more reliab}=20 ]} } } }&..}=3Dr}'}"}[NO CARRIER]
- Ideas are worthless
- Know Yourself
- Understand the business
- Seed capital
A startup can be rewarding, but risky, difficult, and challenging. If you're going this route, be prepared for the difficulties and determined to make it succeed.It's all about execution. The idea by itself is worth nothing.
Are you really prepared to do what it takes to force this company to succeed?
You may not need a business plan, but you need to understand your product, competitors, and where your cash will be going during the first several quarters.
Initial financing is difficult to acquire for a risky new startup and, even if you do find it, you'll end up working with little or no salary for the first several months.
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.
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.
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I'm sorry, but the MBTI is severely outdated. Here is a much better series of personality tests
Most important, in no order is this, this, and this
I disagree with his statement about a business plan, he concentrates on the one thing most people write then for, getting venture capital or a bank loan. While it is true that a VC or a bank would require this there is a very good reason to write one. It is focus yourself on what your are trying to accomplish.
What is your product, who are your customers, how do you do business, what are your expectations. Do decide to write customized software for dentist offices or are you just desperately doing anything for cash? How are your customers going to know who you are and what you do if you are not willing to define what you do to yourself!
Also starting your own business does require alot of focus, you have alot of things to do and you have to be timely about accomplishing them. Paying employees, the bills, contacting customers, while you are very scattered in what you working on, you cannot hop from one to the other just because you cannot focus one thing. The IRS will have your butt in a sling you don't do payroll properly, your customers will have your butt in a sling if you don't deliver what you promise, the list goes on and on.
The other thing about small business is he ignores that you don't have to do everything yourself. There are alot of companies that cater to small business to do the time consuming but boring things that have to get done, like payroll. Always look around for help in this area because for $50/month(or whatever) is cheaper than you spending 8 or 10 hours a month trying to figure all the forms and making sure that they all get done in time.
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.
You mean you're extremely slow to make decisions, but once you've decided, you're unstoppable?
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.
I posted this a little late when this was discussed a couple of days ago, so here it is again so that it can hopefully help out some people.
:)
;) My research led me to these guys who created a corporation for us in Delaware for about $100. We also bought a corporate kit from them (for ~$50) which included a corporate seal and all the necessary legal documents. On a side note, a lot of the informati
You can't just throw clever programming at the problem and get money out the other end. For one, it takes a hell of a lot of marketing knowhow, something that most geeks should have known they were crappy at when the prettiest girls went to the fast-talking football players. There is much more to making a company than clever tech. Tech ability is becoming a cheap commodity.
Amen. This gets right to the heart of what most people here don't seem to realize, much less mention. Starting a software company requires great coding AND marketing skills, not to mention a good sense of what would even be a good product to make. I'm speaking from experience here; I've succeeded in my own startup.
Most geeks either don't have what it takes or aren't willing to put forth the effort required to make a software company succesful. Aside from the coding, there's the packaging and the selling. After the packaging and the selling, there's the support and maintenance. And by maintenance, I don't just mean maintenance regarding your product...but your company. Because once you get to the point where you've got a nicely packaged product that needs to be supported and maintained (assuming you've done it right), you've also got a nice little beast on your hands called a corporation.
Now I imagine that most of this stuff would be a breeze for the average slashdotter, except for the part about packaging and selling (i.e. marketing). This is the most difficult area for geeks to master. The head of the evil empire is where he is today because of his mastery in this area. But Bill Gates isn't the only geeks with those skills, so if you want to succeed, find yourself a partner with (very important) BOTH marketing AND technical skills. Let him do all the talking. Let him handle user iterface, software packaging (installers, icons, etc...) and you can concentrate completely on coding while he puts a pretty face on it and handles the customers.
Of course, this is all easier said than done. So I'll tell you what I've done and how I've succeeded. Hopefully this information will help you succeed as well
A couple of years ago I was running out of contract work and I didn't want to go get a "regular" job because I don't like being a cog in the man's machine. So I decided to start looking for opportunities.
Step 1: Look for an opportunity
I figured it would be easier to start in a niche market with little competition. I also knew that small businesses are a ripe market for IT services. It just so happened that one of the companies I was doing part time consulting for was a small business in a niche market. The owner of this business had excellent contacts in his industry as well; I don't mention the industry because I don't want to invite competition
I knew I possessed the marketing and people skills necessary, but I didn't quite have some of the coding skills to pull it all off. So I talked to a friend who is a top notch coder working for a large web hosting company who was interested in starting a business. I told him about my contact in this small, nich market and about the need for certain types of software. We both had similar outlooks on life and our personalities were a good match for a business partnership, so we agreed to start a company.
Step 2: Incorporate
I then did a little bit of research to learn how to actually create a company. Whichever of you is the smartest one should handle this. I just happen to have a 156 IQ, so it was a breeze.
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...
I would think seriously before starting a "software" company. As an experienced software company executive, the current legal and economic climate minimize the viability of any software firm.
First -- unless you are well funded, the errors and omissions insurance is either unavailable or so costly as to not be economically viable. Starting a software company today, considering the patent portfolios of most companies and the litigious environment, is simply negligence.
Second -- if I had a micro-payment for every person who thought that he or she could "do better on their own," I would make Microsoft look like the corner grocery store. Frankly,it is not that there are no good ideas nor that there are no goiod people. The current legal environment practically limits any innovation. Until software "patents" are struck down, this issue will not change. If you think you have a "hot idea," you would be best served, and probably save yourself a lot of litigation costs, by keeping it to yourself.
Third, many people starting a company naively think "gee, I earn $60,000 per year" so I can just charge that to the customer myself and make a killing. However, to "earn" $60,000 in salary, you would need to bill, on average with very low overhead, $150,000 to $180,000 of work. Are you prepared to do that (including working three times your current work week)? Most new entrepeneurs fail because they underprice services. Undercutting rarely works unless you have a true commodity. And even then, you better have reserves to survive when your competitor undercuts you simply to make a point.
Frankly, I would councel people to make use of there time for something worthwhile and not waste time on software. The patent environment makes it almost impossible to innovate without paying license fees. It simply is not worth it.
Please do yourself a huge favor and follow this link S.C.O.R.E.
Get a free ipod.
Eric didn't disavow AbiWord. He just doesn't recommend open source development as a way to make money.
My other Slashdot ID is much lower.
My company is staying afloat because I immediately outsourced to the Russians. They were way cheaper and better than the Indians. Plus, I love Dostoesky.
Hey, if you can't beat 'em, join em.
You got to start with outsourcing just to stay competitive.