Micro-ISV: From Vision to Reality

prostoalex writes "When you read a news item about a company buyout or a two-person research project hitting big, how many times have you thought "I wonder if I could run a software company." Apparently, quite a few of software developers are discovering the entrepreneur within, which explains the ever-increasing number of threads on the Business of Software, Software CEO and other similar forums. However, most of the software entrepreneurs are coders, and not business majors. For them the business side of running a company constitutes that grey area that people with suits, expensive glasses and knowledge of word "synergy" learn in business schools. What will be the market for your product? What should you charge for a software app? Should you go freeware, ad-ware, shareware, trialware or open source? How will you accept payments? What are the laws for incorporating a company in the state of Nebraska, and will the IRS go after you, if you don't hire an accountant, and incorporate in Moms basement, which is zoned for residential area? How about marketing - will you be able to reach all the left-handed accountants in the Eastern United States, or should you buy a highway billboard advertising your image editing application?" Read the rest of Alex's review. Micro-ISV: from Vision to Reality author Bob Walsh pages 376 publisher Apress rating 8/10 reviewer Alex Moskalyuk ISBN 1590596013 summary Step-by-step guide to building a software empire

The questions are all valid and so are the suspicions. As young entrepreneur travels around the Web forums and self-help sites, he, perhaps, becomes discouraged, overwhelmed by the amount of information and by the obvious risk factor of the software business. There are just so many things involved in running a software company, that someone ought to write a book. A book that wouldn't talk about C++ vs. Java, or object-oriented vs. procedural languages. But a book about running a small, one-person software company. Bob Walsh's Micro-ISV: from Vision to Reality introduces an aspiring software enthusiast to all aspects of running a software company. Whats a micro-ISV, you ask? The term ISV or independent software vendor, was coined by Microsoft to describe the set of software companies that were

• not yet killed by Microsoft
• not yet bought by Microsoft
• too small and insignificant to present any interest to Microsoft, except for selling them developer tools and MSDN subscriptions

The term micro-ISV was coined by SourceGears Eric Sink, who was writing a "Business of Software" series of columns for Microsoft Developer Network, and relates to one- (seldom, two- or more-) person software development company.

Micro-ISV: from Vision to Reality is a handbook for independent software developers interested in generating a side or main income on their own. A quick glance at the table of contents will be a bit deceptive, as there are only 7 chapters. But they are surely packed with lots of useful information and references. Bob Walsh takes the reader from coming up with a good idea for a software product (Chapter 1) to establishing a development environment for a successful software startup (Chapter 2), where the reader learns that CVS servers are not optional. Chapter 3 - "Presenting the Product", is 60 pages long, and talks about appealing presentation and promotion of the product mainly through the product or company Web site. A spoiler: Bob Walsh chose BlogJet Web site as an ideal candidate for a case study on how to design customer-friendly and at the same time income-generating Web sites for a software product.

Chapter 4 - "Business is Business", focuses on what a developer from US, UK or Australia need to know about their local incorporation laws, and what should be done come April 15th. Throughout the book the author assumes that the reader is on a very tight budget (sorry, venture-funded startups), and thus prefers to do most of the stuff himself or get the best quality for the money. "Focusing on the customer" (Chapter 5) deals with marketing (and offers some practical advice instead of general sentences about "solving the customers problem") and establishing support business. Chapter 6 - "Welcome to the industry", discusses potential promotions and partnerships that are useful for software developers and their companies, and finally Chapter 7 - "What Happens Next?", offers some perspective on micro-ISVs who made it big.

The book is sprinkled with illustrations, references to existing micro-ISV practices, and interviews with owners and managers of successful software companies. Interviews are essential part of the book, and they help the reader to gain the perspective on the software industry from someone else than the author.

Throughout the book Bob Walsh recommends numerous services, but at the same time they never feel like a plug. His suggestions include glyfx for icons, GoDaddy for domain names, 2checkout and PayPal for payment processing, InvisionPower for customer support message boards, DemoCharge for producing those walk-through tutorial movies, and are generally motivated by personal experience or recommendations from the others in the industry. He also pays a great deal of attention into available free sources, if the software developer is on a really tight budget.

The book itself is Windows-centric, which is hardly authors fault - this is the single largest market for independent software vendors, defined by hundreds of millions of users who are online, and thus marketable via Download.com, Google AdWords, Yahoo! Search Marketing or Windows Marketplace. Mac OS market is never really discussed in the book, although some chapters, which are not market-specific, might be interesting to independent software vendors for Mac OS. Commercial market for Linux software applications is close to non-existent, unless answering telephone support calls or selling service contracts excites you.

The language of the book is approachable and makes the title an easy read. I found it a bit over-packed with Web site screenshots - after all, do we really need a screenshot of www.businesslink.gov.uk to get the point that this site offers entrepreneurial advice for those in the UK?

The appendix includes all the referenced URLs, books and articles for each chapter, which makes it a useful resource. Its also available online on the companion site for the book, that also contains authors blog. The question of whether to blog or not to blog is also discussed in Chapter 3, together with a review of available blogging platforms and downloadable packages that might be suitable for a software company. The interviews in the last chapter also seem to be presented in a haphazard manner, as if the author collected some content, did not find an appropriate place in the book for a sidebar, and then decided to dump everything left over into a single chapter. However, for someone starting a software company some of the interviews might be invaluable.

Bob Walsh's book is not a good material when your next startup involves creating a social bookmarking Web site, a highly popular blog, Linux consultancy or a scientific application that would be interesting to 5 big clients on this planet. However, for the use case when you think you can write a usable and popular Windows application and also sell it online to hundreds, thousands and (hopefully) millions of users, this book will be indispensable. If you're just thinking on whether or not you should start a software company, perhaps you should familiarize yourself with the writings of Paul Graham first. If you think, however, that the software industry is dominated by major players like Microsoft, Adobe, Google or Symantec, consider the top downloads list on Download.com and then see how many of popular products in that list are made by the companies that you might have never heard of.

In his spare time Alex likes to read good technical books."

You can purchase Micro-ISV: from Vision to Reality from bn.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.

Comments

Har

[Anonymous Coward]

Slashdotters discussing business is like accountants trying to discuss Linux... Like it or not, it is the truth...

Re:Har

[qwijibo]

I like that analogy, it's funny. The truth in that statement probably hit a nerve in someone and that's why you got modded Troll.

I work with a bunch of business people and have learned a lot about business from them. I'm a Unix sysadmin and programmer, but have learned enough from them to do ok with the business side as well. I think the fundamental problem technical people have with business is that technology is demonstratable. You can always say "show me" if someone tells you something you don't believe. Business is inconsistent and based on many common, irrational underlying assumptions. (At least, that's how it looks to me.) The most useful business skill a technical person can develop is the ability to look someone in the eye and lie to them with a straight face. As far as I can tell, that's what separates the good business people from the ones who will work 25 years in the same job and never make more than $40k.

On topic: it's hard to see things from someone else's perspective. Most business people don't understand technical people and vice versa. The benefit of discussing business strategies on slashdot is that there are some of us who are technical, but also run businesses. It's rare, but it is possible for those who are willing to learn nontechnical skills.

Re:Har

[Daniel Dvorkin]

The most useful business skill a technical person can develop is the ability to look someone in the eye and lie to them with a straight face. As far as I can tell, that's what separates the good business people from the ones who will work 25 years in the same job and never make more than $40k.

Depending on your definition of "good," apparently. "Proficient," yes.

Re:Har

[ahooton]

The most useful business skill a technical person can develop is the ability to look someone in the eye and lie to them with a straight face. As far as I can tell, that's what separates the good business people from the ones who will work 25 years in the same job and never make more than $40k.

Sorry, gotta disagree here. That's what separates "good" (more accurately effective) sales people from bad ones, not good business people from bad ones. If the people responsible for managing the business do this, or even let the sales people do it too much, there are two reasons the business will ultimately fail:

• Reputation in the target market(s) will become so tainted people will not trust the company (I've witnessed this personally)
• The internal operational stress/failure of trying to meet customer commitments based on lies will become so large that all the good people will leave (I've witnessed this personally as well)

Lying to customers may (or may not) solve some kinds of issues in the immediate-term, but used as a strategy will kill a business.

Re:Har

[qwijibo]

In large companies, I've noticed a clear tendency to overcommit and underdeliver. I will concede that what you say is certainly true of small companies. I should have qualified my earlier statement to that effect. Large companies do not have to relate income with expenses, as is critical to a small business, so this type of trend can go unnoticed for quite some time.

In most companies I've worked for, I've been tasked with making good on the overcommitments of the sales people. I've been fortunate enough to have overcome all of the irrational promises put in front of me. However, many times these were not met within the unreasonable timeframes promised by the sales people, so the profits were small or negative in these deals. I worked for one company that eventually went under by making too many sales based on poor assumptions. My current employer went 200-300% over budget for my last major project, but as a company in the top Fortune 100, they look at success independently of cost. If it were a small company instead of a small department in a large company, it would have gone under for a severe underestimation of the resources required. As a large company, they were able to go significantly over budget and get the project done successfully. I suspect that one individual's demotion was in no small part related to high overrun of this project, but he was not let go because even though his judgement on the budget side was lacking, the project was a resounding success.

Here's your answer.

[Slicebo]

"When you read a news item about a company buyout or a two-person research project hitting big, how many times have you thought "I wonder if I could run a software company." "

Never.

Not even once. Thanks for asking.

Re:Here's your answer.

[Anonymous Coward]

It looks like you have a problem expressing the integer that precedes the positive 1, and follows -1. That number is called "zero". Welcome to year 628.

Re:Here's your answer.

[Ansonmont]

I've thought about it, done it, and I am thinking about it again. My guess is, like all references, this might give you a few pointers, and help you to avoid some common pitfalls, but you are probably better off doing something to help your business than spending a lot of time reading how to help your business. No one book's solution is going to fit your situation. That said, it is probably worth a quick skim.

One question about the review. Alex says two different people/corporations/entities coined the same term. See quote below. SO which is it?

-A

"Whats a micro-ISV, you ask? The term ISV or independent software vendor, was coined by Microsoft to describe the set of software companies that were
not yet killed by Microsoft
not yet bought by Microsoft
too small and insignificant to present any interest to Microsoft, except for selling them developer tools and MSDN subscriptions

The term micro-ISV was coined by SourceGears Eric Sink, who was writing a "Business of Software" series of columns for Microsoft Developer Network, and relates to one- (seldom, two- or more-) person software development company.

Re:Here's your answer.

[Anonymous Coward]

Microsoft coined the term ISV, or "Independent Software Vendor".

Eric Sink coined the term Micro-ISV to describe very, very small ISVs.

One thing I do know...

[2.7182]

never hire someone just because they are your friend.

And the book is good IMHO.

Re:One thing I do know...

[Strudelkugel]

never hire someone just because they are your friend

Yes, you are taking big chances if you do. There's an implied assumption that you all want the same thing. This is the root of a lot of bad surprises. There's nothing wrong with hiring a friend, but if we are talking startup, you better be certain the friend (as well as any other new hire) understands the business plan and knows what their role in the company is, what their responsibilities are, and how they will be compensated.

In other words, forget about the fact that someone is your friend. You have to have a hiring practice that is as objective as possible. Otherwise you will have one less friend. This is my experience.

Re:One thing I do know...

[Heembo]

never hire someone just because they are your friend.

Yea, isn't this why our current government is so f@#$&d up?

To charge or not to charge?

[tcopeland]

There's an interesting post on Dharmesh Shah's blog about how startups may not want to give away their software for free. One of the points he makes is that in order to charge for something you've got to set up an infrastructure - credit card validation/debiting, SSL cert, and so on - and it's good to get that in place so you can start bringing in some money right away. It's a good read.

I suppose a middle ground might be a free, but invitation-only beta. This seems to be working well for indi, at least so far...

Re:To charge or not to charge?

[Saeed al-Sahaf]

There's an interesting post on Dharmesh Shah's blog about how startups may not want to give away their software for free.

People often code out of passion, but rarely want to work for free.

Re:To charge or not to charge?

[erc]

You mean, rarely can *afford* to work for free. There's a difference.

Re:To charge or not to charge?

[Saeed al-Sahaf]

You mean, rarely can *afford* to work for free. There's a difference.

No, I mean rarely *want* to work for free. Very few people, even those who can afford it, choose to give away their labor.

Re:To charge or not to charge?

[erc]

I guess you haven't been around very long. I was a frequent poster to alt.sources back before the web - there's lots and lots of folks around the world who chose to give their stuff away for free.

Currently, there's sourceforge and freshmeat, just to name two, where you can browse hundreds of software projects with source - all for free.

So, where does that fit into your idea of "few people want to give away their labor for free"?

Re:To charge or not to charge?

[Saeed al-Sahaf]

So, where does that fit into your idea of "few people want to give away their labor for free"?I don't care what newsgroup you where part of back in to day, or how many projects you have at Sourceforge, it's irrelevant. Out of all developers, almost certainly all *good* developers, the number that wish to work for free (beer if you wish, or whatever), is small. I'm sorry it doesn't fit with you political views, and honestly, if more people leaned in a Socialist direction, the world might be a better place. But that's just not the way it is.

Re:To charge or not to charge?

[erc]

Haha, you're kidding, right? No *good* developers want to do OSS? I'm sure that guys like Alan Cox, Remy Card, and a host of others would laugh in your face...

Re:To charge or not to charge?

[Saeed al-Sahaf]

I didn't say no good developers want to do OSS. I said very few good developers want to work for free. That includes OSS, which is not synonymous with working for free. The guys at IBM and RedHat (and many many other less "high profile" shops) are certainly not working on OSS for free, and I seriously question if they would give up their generally upper-middle class life-style to do so. Alan Cox does not work for free, and though I don't know for sure, I'll bet Mr. Card is paid for his work as well. Even the Socialist pretentious blowhard RMS does not work for free.

Re:To charge or not to charge?

[Daniel Dvorkin]

Out of all developers, almost certainly all *good* developers, the number that wish to work for free (beer if you wish, or whatever), is small.

You are, perhaps deliberately, confusing proportion with raw numbers. You may be right (or you may not; I really have no idea) that the proportion of developers (good or otherwise) who want to let others benefit from their work without demanding payment is small -- but there are a hell of a lot of developers in the world, and obviously enough of them are willing to share their work to make F/OSS a going proposition.

I just checked out the hucksterish link in your .sig line, and I have to say, I'm not surprised that someone who would link to such a site thinks the way you do. Fortunately for the rest of the world, there are enough of us who are more interested in turning out good code than we are in "changing the paradigm" with get-rich-quick schemes. And you and people like you will keep on enjoying the benefits of our labor without paying us a single red cent. You're welcome.

Re:To charge or not to charge?

[erc]

You're dancing around the issue, sir. First you say that no good developer would work for free. I started with that. And yes, Alan Cox and Remy Card worked on Linux for years (as did we all), as a labor of love, before some were fortunate enough to be able to be in a position to be paid for their work. Most are not, and that's a fact.

Re:To charge or not to charge?

[adamofgreyskull]

Errr...not sure about Alan Cox or Remy Card or any of the other excellent OSS developers out there but certainly RMS feels that he would rather earn a living as a waiter and develop Free software in his spare time than earn a living developing proprietary software. So yes, it seems he would be willing to code for free. Plus he spends more time now giving speeches on Free software advocacy. (I've also been led to believe by interviews with him that he lives pretty frugally.)

Who do you think was paying Linus to develop Linux when he was a student? Did he give his labour away for free? Err...yup. Maybe he wasn't as good a developer as he is now, and he's said as much before, but he wasn't exactly a slouch either. And I'm betting the other early Linux kernel hackers weren't getting paid to work on it.

You seem to be saying that no good developer works for free. So you're saying all the developers working on free (as in beer) software in their spare time aren't good at what they do? I haven't audited all the projects on Sourceforge and checked whether their authors have been compensated for their work, but I'm guessing by the same measure that neither have you.

Perhaps you're right, but if I were you, I wouldn't make such sweeping generalisations, if only because you might hurt someone's feelings. :)

I disagree

[Feminist-Mom]

I work at a company started by a close bunch of college friends. We basically just did exactly what you say not to do, because we all wanted to do something together. It's worked out really well because we all know each other so well. For one thing I was given 6 months of paid leave off when I had my daughter.

Re:I disagree

[Anonymous Coward]

For one thing I was given 6 months of paid leave off when I had my daughter.

This is exactly why you do not hire friends. Favoritism. If you think nobody in your company resents your six months of paid leave, you are dead wrong.

Re:I disagree

[Feminist-Mom]

No they don't resent it, because they all know that they could do the same. And everyone respects everyone else's need. And it isn't favoritism since it applies to anyone in the company.

Re:I disagree

[digitaldc]

No they don't resent it, because they all know that they could do the same. And everyone respects everyone else's need. And it isn't favoritism since it applies to anyone in the company.

Everyone except for Smithers.

Re:I disagree

[Anonymous Coward]

Good for you. I seriously doubt that the paid leave is good for your company, which is the focus of this discussion.

Re:I disagree

[shawn(at)fsu]

If you think nobody in your company resents your six months of paid leave, you are dead wrong.That all depends now doesn't it? Is his comapny still just the six friends? I think your jumping to conclusions.

Re:I disagree

[Anonymous Coward]

You got lucky.

There are a lot of problems with doing business with friends, such as:

- the pre-existing friendship will interfere with the business needs. What if you need to fire somebody? Or, take your example. Was having the business pay for 6 months paid leave really the best choice for the business?

- are you hiring the person because they're a friend, and available? Or because they are the best person possible for the job?

- communication. You'd think it would be better, because, hey, it's your friends. But all kinds of assumptions get made that would never happen with strangers, and these can lead to misunderstandings.

- when the business relationship goes south, so does the friendship.

Sure, it can work out. But it is by far and away the exception, not the rule.

Re:I disagree

[MagicMike]

Paid leave is just another form of compensation as well, I mean, if he has half the salary, what's half a year off? As a previous poster said, never jump to conclusions, or assume you know how or why someone is compensated

Accept what?

[kclittle]

How will you accept payments?

Uh, this is /. We've all taken a vow of poverty. We conceive, design, code, debug and distribute all our work for free, as Saint Stallman has decreed we should. At night we stab our tender parts 100 times with those cheap ballpoint pens given out at every Linuxworld, and chant "Down with the evil money-grubbing Microserf infidels!"

Re:Accept what?

[kassemi]

"At night we stab our tender parts 100 times with those cheap ballpoint pens given out at every Linuxworld, and chant 'Down with the evil money-grubbing Microserf infidels!'"

I don't think I'm alone when I say I do that in the morning. I (and most other /.'ers) do other things to our tender parts at night during my coding breaks :)

Re:Accept what?

[mary_will_grow]

Yes, Stallman wants us all to be poor. Thats his point. Good job. You must have been great at those reading comprehension exams.

Its not like the F/OSS model helps clear the patent minefield and limits how much "reinventing the wheel" happens in a software company. Its not like this added efficiency would cause growth in the industry, providing more jobs for all.

But keep towing the party line for those .com billionaires who agree with you.

Re:Accept what?

[Woy]

Down with the evil money-grubbing Microserf infidels!

Oh, you work for McAfee.

Re:Accept what?

[Anonymous Coward]

Amen, brother!

Chapter 16: Just write an anti-spy application

[xxxJonBoyxxx]

"If you think, however, that the software industry is dominated by major players like Microsoft, Adobe, Google or Symantec, consider the top downloads list on Download.com and then see how many of popular products in that list are made by the companies that you might have never heard of."

4 of the top 10 downloads (including #1) are anti-spy applications. In other words, automatic ways to clean out all the other crap you've caught from surfing download.com are download.com's biggest application.

what can suck is when your spirit is crushed...

[davidsyes]

... because the area you live in is zoned as residential. Then, you try to explain you're ONLY doing business via the web and on your computer. There's no noise, light, vibration, fumes, em-emissions... no customers coming to the house, and even if there IS an OCCASIONAL business meeting, the neighbors won't know the visitors from regular visitors.

Then, the clerk tells you need to get a neighborhood review, you need to disclose in drawing, almost architecturally, you layout of your business area in relation to the home area, you need to list and describe ALL your equipment used for the business, and so forth. ALL neighbors within 250 or 300 feet of your house are entitled to shoot down your getting a permit. ALL THEY HAVE TO DO is oppose you. Slow you down. Discourage you. Waste your time and money. Force you out of the neighborhood or make you return to corporate America (whether or not they have an agenda to do so) outside of YOUR terms... You can appeal, fight, and win, but...

It will take weeks. You have a zillion and one things to do: deal with the IRS, BOE, FTB, county registrar, find a newspaper to advertise in for 4 or 6 weeks, decide if you're REALLY ready to commit in spite of all the legal and procedural and code crap thrown at you.

Because you mention you're ONLY doing business via the internet and from home, you're assumed to be a perv, or a thief, or an ID grabber. You then are told you have to visit with the local police department: be photographed, thumb printed, and registered. And you're trying to run a SOFTWARE and art company and not doing anything related to anatomy or adult entertainment. Nevermind, that city doesn't want to become a haven for ID thieves and high tech criminals. It's not personal... so they say

You try to explain your neighborhood has more noise from the cars zooming up an down the street, that there is a 45-foot moving van owned by a homeowner who brings it home EVERYday... you try to convey your concerns that the pseudo ganger-banger kid next door might decide to burgle your home and fence your shit...

The city and county officials tell you to go to a city council meeting to express your concerns. They then tell you you must be a city resident, and must prove it by giving your name, address, and such before and to the committee/council and those present. It will be televised.

Talk about running a MODERN entrepreneur out of town (a town win piss-ant, archaic codes that do more harm to small, quiet, budding businesses).

Yes, that happened to me. IN CALIFORNIA. Fortunately, the timing of that bullshit coincided with my selling my home before any foreclosure happend. Talk about having your entrepreneurial spirit smashed by close-minded, myopic city planners looking out for money more than sensibility.

Re:what can suck is when your spirit is crushed...

[Anonymous Coward]

There will also be a $5000 dollar leaving town fee.

Re:what can suck is when your spirit is crushed...

[qwijibo]

A little bitter? I'm not surprised that happened in California. I left 5 years ago because I got tired of the inmates running the asylum. The whole world isn't the earthenware vessel of excrement you'd think it was from dealing with those kinds of people.

I opened my own home based company here in Arizona and it was amazingly simple. Probably took a total of 4 hours of my time. Most of that was time to go back and forth to the Corporation Commission office downtown to file and pick up my papers. I had to publish notice in a newspaper, but that took about 15 minutes with a phone, credit card and fax. I spent about 30 minutes on the phone with the IRS to get my EIN.

Then again, I did have a business license(home based business) around 10 years ago in Sunnyvale and it was nowhere nearly as onerous as your story either. I wouldn't be at all surprised if you lived in SF with all the problems you noted. If you don't like the way things are run where you live, you could consider moving.

Someone once said nobody can walk all over you without your consent. Someone who can get their spirit crushed by a little bureaocracy isn't going to be able to run their own business. There's a lot of BS you have to do, but how's that different from any other part of life? It may have been easier for me because I didn't ask for permission from anyone. I figured out what I needed to do and did it. Some minimum wage functionary could complain that I didn't fill out their form, but I don't think we have as many of those local government jobs for people with no skills or education here. I'm also not deeply concerned with whether or not the Chamber of Commerce puts a gold star next to my name. The IRS and state aren't going to come after me for some major problem, so I think I'm fine.

Re:what can suck is when your spirit is crushed...

[bigpat]

What is it that you were trying to do? Did you make the fatal mistake of asking permission to do something before doing it? Never do that. Never. Just do it and if they question it, then that is when you fight. The first rule of citizenship is to never ask permission from your government, unless you need something from them or unless there is no ambiguity about what you want to do and what permit you need to do it and that there is no way they can turn you down.

Re:what can suck is when your spirit is crushed...

[Anonymous Coward]

You need to relocate to a business-friendly state like Idaho (http://business.idaho.gov/ they will even pay you to move here (http://www.idahoworks.com/Incentives/tabid/426/De fault.aspx)

The personal property laws are amazing compared to states like California. Many construction contractors in Idaho legally run their business out of their home and keep all of there equipment in their garage.

Re:what can suck is when your spirit is crushed...

[Anonymous Coward]

>There will also be a $5000 dollar leaving town fee.

screw you quimby!

Re:what can suck is when your spirit is crushed...

[Rob86TA]

... but you're obviously not bitter!

Re:what can suck is when your spirit is crushed...

[CagedBear]

Next time tell them you are going to do bookeeping for small businesses.

It's quiet, involves computers and would justify a T1 line but is less mysterious to politicians and old-timers than "software" or "internet".

Re:what can suck is when your spirit is crushed...

[SdnSeraphim]

It is not like this everywhere in California. 2 of the 4 places I have lived have been in unincorporated areas of a county. The county regulations are usually less severe than city regulations. For example, where I live now, I only had to make a statement that I would not have customers coming to the house. Other than that, they didn't care as long as I paid $100 for the business permit. Same thing with the other unincorporated area.

In one of the cities (pop 140,000) I lived, I also had to make a statement that I would not have customers come to the house. I still had to go through the planning department, but they rubber-stamped it.

Though not everybody has a choice in where to live and start a business, and in general I agree that there are too many restrictions on very small businesses.

Re:what can suck is when your spirit is crushed...

[davidsyes]

My ordeal was in 2002 in Kalifornia.

I can deal with a few skirmishes here and there. What I DON'T like is the (local) government inviting the public into my HOME when I am not even running or trying to run an open-shop/open-to-public business. It's not THEIR place to publish non-commercial entities' private areas if a city planner can visit and verify the premises is run according to the filings. Would they do this to an EMBASSY or consulate? (Oh, no that's "foreign property" (anyone remember bugged embassies?); but, all else needs a floor plan so the cops of auditors know what to look for...)

I did move. I, but not from SF. It was in central Kalifornia that this happened. I moved to the Portland, OR area. It was amazingly simple to get incorporated. Just go to the DOR (Department of Revenue). I think it was all of about $30 to file.

Even better, compared to KA, you DON'T have to pay $800 a year "for the privilege of doing business in sunny, temperate, big, surfin' California." I don't give a RAT that CA tries to appease new busineses by saying new corporations are exempt their first year from paying the $800 franchise/incorporation fee. It's HIGHWAY robbery for small businesses and chump change for big businesses that actually MAKE money. If at the end of the State and IRS filing year and after examination of the "true" submission of my business and personal income statements my business didn't bring in a damned penny (my short-lived OR-based company sold only 3 copies ($60 worth) of copies of my "art", but in CA this would cost me like hell if I tried to do it here and persist here) then my/a business shouldn't have to pay $800 a year. CA'sr excuse was "Well, your business enjoys certain benefits from being incorporated in California. One of them is that you get listed with the Chambers of Commerce in every city in the state. " WWWOOOPTY fuckin' do. HELLO! McFly, this is 2002, 2003, 2004, 2005. I can do THAT myself via the Internetsss.. I mean INterneT. If I screw with the public and my customers, I AND my company'll end up in the BBB'S DATABASSE. Wasting companies' money and time. To run opulent programs. SOME government programs (when not abuse or when minimally abused) are extremely beneficial to the public, but extracting $800 a year (minimum, it's only the MINIMUM) when it is clear that that business is doing terribly but still needs time to try to "make it" is NOT business friendly.

Anyway, in Salem, OR I submitted articles of incorporation (basically 8 pages of self-written legalese to serve as a poison pill to deter piratical types of investors or competitors from submitting spurious bullshit contracts to try to buy out through coercive and/or adversarial terms what I was doing), and drove back to the Portland area. I spent about a week poring through more city-level political/technical mumbo jumbo for about 4 or 5 surrounding , and was glad I didn't live in specifically in Portland city proper.

However, at the city level, I again experienced something similar to that central Kalifornia city. This time, I was a bit more prepared. I can't remember EVERYthing that transpired, but the main things were that the local-level functionary told me that EVERYthing in the spare room in which I would conduct business in my apartment was considered "business property or assets". She said anything that was in reach-- if I used it out touched or breathed it in the function of my business, it was business property and that at the end of the year the county assessor would tally up the value and then determine whether or not to assess a tax. I was dumbstruck. I wanted to SCREAM. However, she continued, the assessment wouldn't kick in unless I had some $11,000 in assessable stuff. Even so, the tax was very low, something like 1% or maybe even 1/2 of 1%. The small tax wasn't the real problem. Then, I told her my business would have virtually NO assets: only ONE computer I would "give" it, some labelmaking and printing equipment, and maybe a calculator and a chair. The computer desk was 4 piec

Re:what can suck is when your spirit is crushed...

[Anonymous Coward]

Um... ok. Well I've started 2 companies in "Kalifornia" and, oh the horror, San Francisco, and 1 company in Santa Rosa, and I've never experienced anything like you've mentioned. The only thing that sucks in CA is the $800 tax a year that the state imposes for Corporations and LLCs; this does not apply to Partnerships or Sole Proprieties (why if you made only $60 were you trying to incorporate?). San Francisco requires nothing that you mention regarding your home, and there is no tax at all, other than the business license fee ($25 or $150 depending on your sales), if your sales are under some number (pretty large IIRC). Everything you mentioned seems to apply to your city. Well guess what, CA is a huge place with tons of cities, most very different from each other. Your city didn't magically get these strange laws, YOU voted (or more likely didn't vote) for them. So I'd leave that city, which you strangely never named, of yours and move somewhere else.

Re:what can suck is when your spirit is crushed...

[davidsyes]

If you run a business and do it as SP, and something goes wrong, some one can sue your ASS off and wipe you out.

If you at least incorporate, and and have the misfortune of being sued, then, so long as you have no improper operations or gross/egregious negligence, then you stand a vastly greater chance of keeping your personal assets OUT of the hands of legit or frivolous lawsuits (well, as long as your assets are not enticing your attorney to ask for a stake in them...)

Also, I incorporated to have a bit more "legitimacy" in the eyes of potential book sellers and local stored. I managed to sell three copies to one store. Plus, IF -- by some wild stroke of luck -- the business grew faster than I expected, then at least the accounts and activities would be isolated from me personally (with the exception that my original material would never leave my ownership as long as I'm alive and have anything to say or do about it) and it might then be possible to do business with bigger or other businesses expressing interest and respect for my stance on IP.

Not incorporating leaves you without a legit corporate shield. It's more of a headache, but I don't really want to commingle my personal income and assets with the business itself. An, in Oregon, other than paying $200 for a power of attorney to take your mail in the event you get sued or the state has to subpoena you or somesuch thing needs you OTHER than your home address, then Oregon is probably a better deal for incorporated home-based businesses (that don't have my personal issues) than is California. Unless you don't like rain and poor people. But, Portland itself is pricey as hell for retail space, and they have some interesting employee taxes there for companies setting up shop. I think they also drove away some big-name paper and manufacturing businesses to the other side of the bay/river.

Even a kid (SOME, not ALL) selling lemonade probably should incorporate if they're making enough money (to cover the annual tax, or at least quite the first year and then incorporate a DIFFERENT line of business, since California keeps an eye on people who [cough cough] "go in and out of business to avoid [cough cough] "their tax obligation") and want to someday incorporate a BIGGER business. Taxes and compliance can be a pain in the ass, and coordinating all the forms, submitting to questionnaires on time, filing reports and so forth bog down so many entrepreneurs and bigger business that it out to be criminal to demand too much information, unless the state (or State) creates a direct portal that allows those interested businesses to (do a Borg/neural) linkup.

But, some will say NEVER, EVER let the government get into your business affairs, or they'll find new ways to regulate or tax not just YOUR business, but every other startup and existing business. That may be true, but if they're going to tax our asses off, I'd like to have less damned paperwork associated with it. Snoop my employee base, look at the activities, snoop the cashflow, ping my suppliers, [cough cough run (secret)] credit checks, whatever, ... just cut back on the goddamned paperwork.

WHEW!

Re:what can suck is when your spirit is crushed...

[davidsyes]

Damn. Wow. I'll admit I used some terse language. But, there is NOTHING flamebait about recounting my PERSONAL experience. It's amazing how our experiences are colored by the filters through which we see things, and someone decides I'm flamebaiting. Why the hell would a flamebaiter spend an hour crafting and spell-checking and grammar-checking a tome such as mine? Aren't most flamebaiters firing off one-liners and obvious stuff. Who reading what I wrote could say it is an utter non-truth. You can't even prove it's true.

But, I am sure the others who took the time to read this gave me the beneft of the doube, and they time counts more than the modder who ascribed 20% flamebait to me. I am willing to bet that 40% of the US population born here AND immigrated here has or WILL have experienced or heard from some what who has experienced what I did -- once they try to start or run a business as a law-abiding (read, gullible) person. Call THEM a flamebaiter at the peak of their rage and they'll probably set upon you with a word or two. But, for me, its mostly in the past...

sheesh.....

Re:what can suck is when your spirit is crushed...

[radtea]

Try Canada, if you really want a micro-ISV-friendly environment. The health care system will ensure you get the same mediocre standard of care as everyone else while you start your business, you can easily site your business in the same time zone as your major (American) customers, and you can incorporate both federally and provincially in your pyjamas. I did.

Because the law governing incorporation is mostly federal, Canada doesn't have the same patchwork of incompatible nonsense as the various states. And while the taxes are a bit higher, the health care system is really not terrible, and talking to the American entrepeneurs I know that is a big difference. I have kids, and would never be able to run my own company unless I was sure of access to decent (not exceptional) care. I've always been so-so about the Canadian health care system, but I never realized how small-business-friendly it is until I got in the game myself.

As someone else has pointed out: never hire a friend because you like them. That's something I once did and would never do again. And make sure you have a good accountant. That's probably more important than a good lawyer, because a good accountant can keep you out of a world of trouble before it ever happens.

Economics of a Microisv

[RunFatBoy.net]

With the world as your audience, it's quite possible to carve out a good living by servicing a niche market. The economics of a Microsoft vs. Joe Developer pursuing an end market are entirely different. A few millions may not mean anything to MS, while its quite sustaining from a small business's perspective.
-- Jim http://www.runfatboy.net/

Save $5.10!

[Anonymous Coward]

Save yourself $5.10 by buying the book here: Micro-ISV: From Vision to Reality (you even beat the B&N member price). And if you use the "secret" A9.com discount, you can save an extra 1.57%!

Re:Save $5.10!

[Anonymous Coward]

Or forget the book and just go into business spamming slashdot:

http://tinyurl.com/nw5df

It's ok, but I think it will age badly

[neveragain4181]

I have this book and quite like it, it's something that fills a need and has moments of usefulness. With everything else to do in starting up a new software business this is nice to grasp and think 'that will do for my lack of experience'. The market it serves is desperate for 'silver bullet' info, and a lot of it is common sense - Use a Search Engine to Find Things! Pay Tax if you Need To! Don't Draw Your Own Icons! Its very readable though, kind of like business-porn for startup types.

My problem is a lot of the content is tips that consist of links to websites. I think a couple of years down the line this book will be basically the 'Micro-ISV's Guide to 404 Not Found', either that or the authors personal recommendations will have changed radically.

N/A

Woe is Me

[Anonymous Coward]

Wow - if life where that hard for me, I might have to consider packing it in.

If bad luck is following you like the plague and the world is seemingly out to get you, maybe you should analyze your tatics. Perhaps a little more honey might make the bueracratic wheels spins a little faster. A little friendly small talk can be surprisingly helpful. A cold - just the facts approach will entirely legitimate according to the written rules can cause things to be much harder than they should be.

Independent Software Vendor?

[LordOfTheNoobs]

Judging by the criteria, are you sure that isn't Insignificant Software Vendor?

Don't forget the other 80% of your company

[hedronist]

Ansonmont said, "but you are probably better off doing something to help your business than spending a lot of time reading how to help your business."

I can't comment on the value of the book being reviewed, but I can say that techies have a tendency to blowoff "the other 80%" of the business of being in business. In particular, techies are notoriously weak at marketing. I am speaking from direct, personal, and expensive experience here.

There is a book, "Crossing the Chasm". Had I read and understood it when it first came out 1991(?), I might still have a company. My company made the error described in paragraph 3, page 40 (first edition numbering). I did not understand (and claimed I didn't need to) the difference between Early Adopters and Visionaires (early part of the adoption curve) and the Early Majority.

Was I a smart guy? Absolutely! Did I need anyone telling me how my product was only a piece of the solution to the customer's problem? Hell no! This is hubris before the fall. It's bad enough when you are doing it with Other People's Money, but it's a lot worse when you are funding product 2 with the profits from product 1. Can you say crater? I knew you could.

My point is that no matter how high your IQ is, or how uber-geek you are, you don't know everything. Reading business books at home won't tend to impact your productivity on the project and it just might prevent you driving a good idea off a cliff you never even knew was there.

I did it

[stabiesoft]

I started my one man company about 10 years ago. Started by consulting to pay the bills and wrote code when not employed. It is certainly possible. In my case, I no longer consult as the products generate enough revenue. My experiences say you must keep updating the product, provide good service to your customers, and not get too discouraged when a prospect says your product sucks. Oh, and be ready for wide variations in your income.

Haven't you learned from Wall Street yet?

[Anonymous Coward]

1) Find a company that speeks uber geek.
2) Give them first round funding so they can "buy" users by selling product at amazing losses.
3) Pump the PR neswire
4) Go public
5) Short the sh*t out of the stock
6 Rinse and Repeat

See making money with software has nothing to do about the software. Gee, thought everybody knew that by now.

yet...

[Anonymous Coward]

yet they still use IE. It's brains we should be selling! It's like fixing a flat tire on your car everyday and accepting it as completely normal, fixing the flat tire everyday, and not doing anything about the problem.

Can you say "PO BOX"?

[Anonymous Coward]

never never never never use your real address - get a PO Box and pull the shades. or Just get the hell out of California.

I was a Micro ISV

[Anonymous Coward]

I created a product in 1997 as a way to learn Java and as a way to create a product that was in the market place but was way over-priced for what I thought it would take to create myself. I had a day job and worked on it at night. Many late nights. But I finally got it out. At it's peak I was making about $2K a month, nothing to live off of but it was cool nonetheless. Then I got busy trying to become a dot-com millionaire (almost, just missed it) and let the product suffer. Sales lagged and I haven't upgraded the product in almost 6 years. The amazing thing is I still get an occasional sale just because it's out there and the buyer doesn't know better. But now there are many similar low-priced alternatives and free open-source ones so I don't really feel any incentive to upgrade it. But it was interesting experience. Having served as an executive at a few startups since I feel I have a pretty good business background for my next micro-ISV experience.

Also, I'm not sure of what their definition of ISV is. Would that include online software services that make money, or only software that gets downloaded and installed? There are a lot of guys working on websites that they hope to make money off of. I would bunch those guys into the micro-ISV camp but the software is just delivered as a web site/service and not a bag of bits.

Marketing Lesson 1: Users Are Worse Than Idiots...

[Anonymous Coward]

they sometimes are perversely self-destructive.

I developed and marketed an environmental application that reduced a complex engineering task to a clerk's job (and made it more interesting, too). The package can save a company millions/year. But the people who buy these packages do not seem to understand what's at stake.

Example: one company I courted was using a competitor's package and they were displeased with it. So I demo'ed. 10 minutes into the demo the clerks who handled the application asked to try it. I let them go and, to their boss's amazement, they began using the app almost immediately, without prompting or guidance from me. They loved it! But the boss wasn't swayed. He kept the old package.

Break to 2 years later: an engineer from the company gives me a call. It turns out the competitor's package had serious bugs and consequently all the company's environmental calculations over a 5 years period were completely wrong. That is important because the EPA can shut you down when this occurs.

My competitor had notified their customer of the bugs and offered a new version (supposedly w/o bugs). The company would have to buy the new version at full cost and manually re-enter the 5 years' data! My competitor offered to provide contract workers to re-enter the data. Astonishingly there was no automated migration process.

So they had a choice:

• stick with a vendor whose package had never worked , had a poor user interface and was expensive or
• buy my package which worked properly, had a terrific UI and was lower in price.

Of course they bought the upgrade to my competitor's shitty package.

My attitude now is "I don't care." I'll never develop another piece of software without someone paying me $$ up front. In that case I'll do the right thing and give them my best work. But no more taking risks for me. Finally I understand that writing good, useful, easy-to-use software does not means you'll find a buyer. Buyers are worse than idiots and the market is both chancy and finicky.

got webcam?

[alizard]

At night we stab our tender parts 100 times with those cheap ballpoint pens

You know, there's a commercial market for that sort of thing.

It's easier than you think. 10 simple steps.

[RonTheHurler]

Have you ever heard the truism "It's easier to be forgiven than to get permission"

I know many people who've started small business, even one who sells software on-line. In every case, they started producing and selling first, then went on to find out what documents and licenses they were supposed to have gotten. I know of one person who went for an entire year before learning that he even needed a business license in Los Angeles.

But guess what- the city, the county, the state, the national government, they all want the same thing, your tax dollars. It's not in their interest to shut you down, instead, they're well aware that by "helping" you become compliant, they'll get more revenues in the long run.

It's not my main business, but I sell software on-line too. Starting a business is trivial. Here's the steps I took:

1. Get a credit card with about $10,000 available. This will be your line of credit.
2. Scrape up about $200 in cash.
3. Open a bank account.
4. Get a PayPal account linked to that bank account.
5. Web site, product, start selling.
6. Establish a (small) market, then look for someone (Lawyer, Accountant) who can help figure out whether to incorporate and how. Use a professional.
7. Ask your bank to help you with your merchant account and taking credit cards on-line. It's easy.
8. Be frugal, but don't be afraid to spend money where it's needed. Henry Ford said "If you need a tool but you don't buy it, you pay for it anyway but don't get to use it."
9. Always be ready to adapt.
10. Customer service really does matter. Remember, your market IS your business.

One thing I learned from all those MBAs is that nothing is permanent. Put a stick in the mud, and you can always move it. Pricing, location, corporate status (Sole Prop, LLC, C-Corp, S-Corp, LLP, etc..) number of employees, bank accounts, payment options... Just details. They can all be adjusted. First you have to build your MARKET. Without a market, you have no business.

Here's the funny part- I've worked for several of those dot-coms who's names you'd recognize but which no longer exist. On average, they were funded with about a hundred million each (yes, dollars). Each one hired as many people as they thought were needed to do all the things- dozens, if not a hundred or more people on payroll... At lunch with a CEO and VP of marketing one day, I confided that I thought the best way to approach business on-line was to start as small as possible and build a niche first, then add to it. Both those MBAs laughed at me! It took about a year, but I finally quit and walked away from all those stock options. They turned out to be worthless of course. And out of all those companies, the one I started with $200 and a credit card is the only one that still exists.

As programmers, you have some incredible advantages over most MBAs. You have LOGIC. You are CREATIVE. You have a propensity for PROBLEM SOLVING. You can think through and visualize a plan of action from beginning to end. You can change course and re-program the system when requirements change. You know that very few, if any, projects are ever really finished. You're a hacker who knows how to shoot from the hip to get a job done on deadline, even if it isn't "elegant". You know that "Done" usually only means "it works at the moment and when it breaks, we'll fix it". Guess what, these qualities plus a willingness to try and fail then try again are what make entrepreneurs successful. Another advantage you have is that you won't have to hire some expensive tech guy to do your programming/sysadmin/DBA stuff for you. I can't count how many people have asked me who does my web sites. It's fun to watch the blank stare on their faces when I tell them "I did".

In the 1990s I was a very highly paid consultant (pure techie) and a VP at one well-funded dot-com, but I've been in business for myself six years now, and it's great to be the one who calls the shots. I'll never go b

Re:It's easier than you think. 10 simple steps.

[davidsyes]

Wow, this should be modded up. Several of the replies to me were worthy of mods up.

Thanks for the criticism... constructive or otherwise. I'll be able to use some of the things here.

To the other poster: Canada is nice. I've been there. Made some friends their years ago. Back in 2002 when I was trying to start a business plan for an Internet Cafe/diner, I accidentally ran into business codes and health care and compliance documents on the net and found some of it extremely interesting in that it gave me a different perspective on US-based taxing, health care and such. I ended up with better angles on my plan and something in me made me write the plan to pay myself $12 or so per hour and up to 3 or 4 employees $9 per hour. The entire spread sheet (a workbook with several sheets) was so detailed the SBA/SBDC/SCORE counselor said, "You didn't write a BUSINESS PLAN; you wrote a COURSE, a THESIS" and told me to pare it down. But, he and several bankers liked it. Two bankers lied that they didn't have it, but since I had bound it in a special covering, I caught one in his like and made him give it back, since he wasn't interested in LENDING to me. (I had already had a 2nd mort on my home, and no banks wanted to be 3rd fiddle...)

Sometimes I feel I could probably license or sale the plan to some biz colleges as a model for students. But, I figure others out there probably have similar things going on.

DS

As a Business Major

[Anonymous Coward]

That's quite the laundry list of things to take care of. I'd certainly be worried about getting it all right (or not!)

The trick to it all, of course, is to outsource the work, assuming that you have the money or connections. Put everything down on paper in as much detail as possible, then run it by experts in the given area.

Buy an hour with a lawyer (preferably a law student, they're cheap to free) and find out what you need to be compliant with the laws.

Before you start work, figure out who you're trying to sell the product to and how you can best please that market. e.g. Google "sells" search functionality to the general public. They then sell targeted advertising space to other companies. They drive up the value of their adservice by making sure that those who see the ads are those who are most likely to be responsive. Say I'm selling hardware, do I want a techie or grandma to see my ad? If you find that one demographic may want your software for one reason while another wants it for something different, consider splitting it into two projects and tailoring each to group. That's "market segmentation". Obviously try to save as much time and effort as possible by keeping things in common. e.g. Sure and Secret (At least, I think it's those two. If not them, then Secret and something else) are two distinct products targeting two completely different segments. What's different about them? The label. Nothing more.

As for the accounting, under normal circumstances, you ARE the company. This is as much common sense as it is a legal reality. All you really have to do is keep track of what you spend on the "company", what revenue it returns, and what your net gains are. Expenses are generally deductable. The profit should end up just being tacked onto your pre-tax income. So, be safe, get an accountant. But you shouldn't be needing his/her services much AT ALL.

IBCs

[Anonymous Coward]

Rather than spending all that time filling in forms to enable the government to steal from your pocket more easily, why not just incorporate in the Bahamas? Only costs a few thousand dollars and you'll make that back in less than 1 year. Software development (well, licencing anyway) is an ideal business for offshore incorporation.
I guess
1) Get the product as close to finished as possible
2) Incorporate the offshore IBC
3) The IBC buys the source code from you with an agreement that you will act as agent for them in your country
4) You set up the licencing deal as per usual (assuming you are selling to one or two large companies)
5) Customers pay into the account in the Bahamas
6) Go there an personally pick up your money (Don't get any smart ideas about using an offshore credit card to buy everything and then pay the bill off with the IBC account, various government extortion departments (tax dept) are in vestigating people with high credit card usage.

That's what my team's come up with so far - if anyone has other info to share, glad to hear it.

Re:IBCs

[Anonymous Coward]

Contracted for a customer who did that. Bad mistake. All the time and energy invested to avoid paying ~30% taxes could easily have been spent focusing on customers and generating way more than a 30% increase sales. Is your focus serving an ever increasing number of customers? Or is your focus trying to hide income? You can only focus on one thing at a time...

You've got to eat and pay the rent

[fantomas]

So what's the model for paying the rent and feeding you if you give the software away for free? presumably consultancy and post "sales" support, installation support, etc. You might avoid having to deal with online financial transactions but you're still going to have to learn to deal with the technical aspects of ensuring cashflow in the right direction. And just as importantly the social aspect. Make sure you think about how you will do this. Maybe sign up for some small business courses. It's a business, doesn't matter if you're selling software and IT expertise or potatoes or used cars.

Me and my friends ran a small internet/database company for a while, this was a real killer for us. We were craftsmen, we loved creating things, working to build beautiful solutions, but none of us really loved doing the books or threatening to get in the lawyers if people didn't pay up. We hated being 'hard men'. In the end we gracefully wound things down slowly and felt proud about running a nice little business for 3 years but we learnt some hard lessons about our strengths and weaknesses and being businessmen.

Re:Marketing Lesson 1: Users Are Worse Than Idiots

[Derkec]

You never know when a competitor's wife is your customer's sister. People purchase software for the worst of reasons and that's life. Some customers are flat out unwinnable. When I worked for a small ISV that built software for a data intensive industry, we always offered to convert potential customer's data to our software for free. Sometimes it was a day or two's work, but it was well worth it.

Uhhhhh

[woolio]

Its very readable though, kind of like business-porn for startup types.

Ah...yeah....riggggghhhhhht...

I don't have a problem with porn, but something about your description just plain disturbs me...

And I am reminded how thankful I am that I went into engineering...where we don't have 'engineering-porn'.