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

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.

One thing I do know...

[2.7182]

never hire someone just because they are your friend.

And the book is good IMHO.

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...

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!"

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...

[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...

[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

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

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.

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.

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.

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.