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On Starting a Software Business

stephaniehurlburt.com

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Re: On Starting a Software Business

#61

Post by jboggan »

pikachuaintcool wrote: post #47
westoque wrote: post #8

Interesting about the 50-50 split. If you talk to most people in the valley, they would probably tell you this is the worst thing you can do. That is, if you're looking from the perspective of a VC.

Taking money from a VC is probably the worst thing you can do.

Please expound, I feel like I understand some of the risks but am curious to hear your objections. I personally would prefer bootstrapping but I think there are times when a market is growing quickly and you don't want to be left on the sidelines.

Re: On Starting a Software Business

#63

Post by siliconc0w »

chubot wrote: post #46
siliconc0w wrote: post #41

Consulting doesn't scale, software does. One pragmatic strategy to find product/customers: 1) Pick an industry 2) Ask someone in that industry what they use spreadsheets for 3) Build something better There is a lot of 'cybernetic' processes that are a mix of humans with domain knowledge and machines with spreadsheets for schemaless storage and querying. Generally the move is to encode the domain knowledge into code a…

I've heard this before, but part of the appeal of the spreadsheet is that Patty from accounting or Joe from HR can modify it without having to ask any IT staff, including you. So I don't think it's a foolproof scheme, unless your solution is also programmable/customizable, which is a lot of work.

Yeah it's not foolproof just a way to start.

Here is one random example that comes to mind. "Risk Management" is something every company needs to do or pretend to do.

So someone gets stuck with this responsibility and they create a spreadsheet that looks like: Department | Risk | Likelihood | Impact

So this is a fairly mediocre solution but it kinda works and "risk management" for "Small Company Co" becomes "Bob's thing".

Of course there is very likely software that already does this but in my experience it's usually what the hipster programmers call "enterprise garbage". You know what i'm talking about - buzzwordy site with stock photos, long annoying sales cycles, no online demo or sign up, some java server you have to deploy, and some extjs/jquery interface that is ugly and each click takes 5-10 seconds. You aren't competing with these guys, you're going after the long tail of small companies they are ignoring.

Your move is to register some fun name - "Riskly", "Riskque", "Risksalot", etc. Next, hire a graphic designer to put together a fun colorful site, hire a college kid to make a fun video with royalty free upbeat music and narration showcasing your app, and build a simple CRUD app with maybe some built in risks for certain industries and some cool simulations/reports.

So go spend a few years of your life and see if you can't 'Disrupt/Fix Risk Management'. Or go work for a large company for eight years, take all your earnings, go to Vegas, and let it all ride on a 10:1 bet. It works out about the same.

Re: On Starting a Software Business

#64

Post by jaggederest »

Silhouette wrote: post #45
bluedino wrote: post #33

Earlier quoted context omitted.

I'd like to hear more specific experiences on switching from working for free to $CONSULTING_RATE for the same client I helped a local business group with their website, their previous host shut down and all they had was an archive on CD, they had some quotes for 10-20 hours to get it back up and running (and then everyone wanted to charge them hosting/domain registration). I did the work for free. A couple hours imp…

This is an example of a more general problem with undercharging (or doing spec work) in any creative industry. If you don't charge what you're worth, perhaps because you're trying to be helpful or offering "mate's rates", then you may get one happy client but you'll also get underpaid. Then that client will happily recommend your (excellent value!) services to their friends and colleagues who are also looking for (ex…

I phrase it as "Standing problems I solve for free, sitting problems are my usual hourly rate."

Which is to say, if I can solve your problem for you before I get tired of standing up, I'm not going to bother to charge you. In my case that's usually a half hour or so.

People seem to respond well to that, in general. I think it's in line with how most people view the value of their own time.

It's also a one off, as well. Just because it only takes me 15 minutes a week doesn't mean it's free.

Re: On Starting a Software Business

#65

Post by bryanh »

simonswords82 wrote: post #57
siliconc0w wrote: post #53

Earlier quoted context omitted.

O(n) vs O(log n)

In English s'il vous plait?

Basically it's saying for every extra dollar you want to earn in consulting you must hire more engineers. For traditional software you can continue to sell the same bits over and over and not hire an extra engineer for the Nth sale.

Re: On Starting a Software Business

#66

Post by billpaetzke »

simonswords82 wrote: post #57
siliconc0w wrote: post #53

Earlier quoted context omitted.

O(n) vs O(log n)

In English s'il vous plait?

The above comment is implying:

Consulting requires linear increase of resources. Software product requires logarithmic increase of resources. Therefore product business is more efficient to scale than consulting.

Re: On Starting a Software Business

#67

Post by [deleted] »

siliconc0w wrote: post #41

Consulting doesn't scale, software does. One pragmatic strategy to find product/customers: 1) Pick an industry 2) Ask someone in that industry what they use spreadsheets for 3) Build something better There is a lot of 'cybernetic' processes that are a mix of humans with domain knowledge and machines with spreadsheets for schemaless storage and querying. Generally the move is to encode the domain knowledge into code a…

[deleted]

Re: On Starting a Software Business

#68

Post by jaggederest »

IanCal wrote: post #35
quadcore wrote: post #30

Earlier quoted context omitted.

Thank you, that gives some meat. Ultimately, I was focusing on the fact that if a customer brings you n new customers, n only via marketing. If n > 1, you get new customers with something else than marketing - so to speak.

Actually anything n > 0 will mean you get customers by more than just marketing by definition. n > 1 for a static n is exponential growth. Edit - though under 1 you can see a limit. For example, if n = 0.5 then you would expect to grow to twice the size. In reality it's much more complicated, but on a purely mathematical basis this should be right.

N is literally the percentage of your steady state customer base that comes from referral.

So it's the divisor on your marketing expenditure for any given customer quantity.

N > 1 never reaches a steady state, those are "viral" businesses.

Re: On Starting a Software Business

#69

Post by EGreg »

itwy wrote: post #54
EGreg wrote: post #44

Observe what people are doing inefficiently that you can fix. Test whether they'd buy it with google adwords or facebook ads and conversion rate to filling out the form and putting in credit card. Refund everyone. Imagine how it would be viral and test your hypothesis as well. So your customer acquisitin cost goes down exponentially!

Do you mean before building the actual product?

Yes

Re: On Starting a Software Business

#70

Post by schnable »

siliconc0w wrote: post #63
chubot wrote: post #46

Earlier quoted context omitted.

I've heard this before, but part of the appeal of the spreadsheet is that Patty from accounting or Joe from HR can modify it without having to ask any IT staff, including you. So I don't think it's a foolproof scheme, unless your solution is also programmable/customizable, which is a lot of work.

Yeah it's not foolproof just a way to start. Here is one random example that comes to mind. "Risk Management" is something every company needs to do or pretend to do. So someone gets stuck with this responsibility and they create a spreadsheet that looks like: Department | Risk | Likelihood | Impact So this is a fairly mediocre solution but it kinda works and "risk management" for "Small Company Co" becomes "Bob's th…

Odds are probably worse for the startup unless you have actual experience in Risk Management.
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