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Why is selling software so weird?

zeptonaut.com

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Re: Why is selling software so weird?

#141
post #136

Earlier quoted context omitted.

Caveat here is that you need to be a sufficiently large shop for this to pan out. Need the economies of scale on your side. I've seen several times smaller organizations attempting to adopt this model (because Google does it or whatever), with the result of the tools team being an enormous bottleneck for the organization.

I am an individual contributor, decently paid at a medium size business. I developed warehouse management systems, inventory managers etc. Very small team and projects have been quite successful.

Do other teams depend on your work?

I've run into like "the build system team", where the build system was some patchwork of hacks that never quite worked, and was also completely opaque to those who used it. The cycle was

1. Try to do something

2. Encounter a build problem

3. Talk to the build system guys, they promise to look into it fast

4. Twiddle your thumbs for a week while the entire team is blocked

5. Goto 1

Re: Why is selling software so weird?

#143

Earlier quoted context omitted.

Similarly, the article doesn't take into account the fact that many developers work on in-house software and developer tooling that are not directly sold to anyone. Custom in-house development follows much the same principle as B2B products: the very high marginal cost are considered worth it by the business because of the degree of specialization they need or the advantage they gain over the competition. Of course I…

Caveat here is that you need to be a sufficiently large shop for this to pan out. Need the economies of scale on your side. I've seen several times smaller organizations attempting to adopt this model (because Google does it or whatever), with the result of the tools team being an enormous bottleneck for the organization.

Not really, it depends on the tool. I wrote a lot of tooling at my last job: ISTR there were about 15 people when I started and a bit over 30 when I left five years later.

For example one tool took about 3 weeks to get to a usable state but it sped up a production task that previously took one person 15 minutes to the same task being done in parallel over 5 units and taking a total of 3 minutes and still only required one person. At our typical sales volumes, it was a no-brainer: my time was paid for by the end of the next month.

In pretty much any small manufacturing/processing shop there are lots of little wins like this.

Re: Why is selling software so weird?

#144

Earlier quoted context omitted.

Having friends in pharma too, I never hear anything about the commercial end that I don't find disgusting. I get that like any business the goal is maximizing wealth, but feeling empathy for the "customer" makes the margins and decisions seem sickening. Honestly, the idealist in me says healthcare/pharma/research should be publicly owned and operated.

The problem is that the production cost for a dose of medication (at least as long as it's a chemical synthetization process) is extremely low... but the cost of bringing it to market extremely high. Only a rare fraction of candidates makes it through the first stages of research and validation, and of what remains a large part gets rejected in human trials. All of these trials are expensive, especially the human one…

I'm sorry, but i've heard first-hand of instances where drug research is terminated because it looked to yield a cure ... then funding funnled to those that produce a treatment, rather than a cure.

Cures are not profitable, treatments that don't cure are.

So yes, everyone loves to dunk on pharma and should.

Re: Why is selling software so weird?

#145

Earlier quoted context omitted.

Having friends in pharma too, I never hear anything about the commercial end that I don't find disgusting. I get that like any business the goal is maximizing wealth, but feeling empathy for the "customer" makes the margins and decisions seem sickening. Honestly, the idealist in me says healthcare/pharma/research should be publicly owned and operated.

Pharma has the additional problem of inelastic demand. Deciding to purchase a candy bar or not is qualitatively different from deciding to purchase cancer treatment or not. Personally, I extend your idealism to any good that has highly inelastic demand. Using markets to price goods efficiently is not a goal I have in mind when I'm considering the distribution of these type of goods.

Yes, but it is an industry that selects "treatment of symptoms" over "cure of illness" because the former is more profitable.

That's an immoral way to shape demand, one that keeps human beings in states of illness rather than providing cures.

Research into cures isn't funded as much as research into treatments that keep "customers" on the hook for their lifetime.

Re: Why is selling software so weird?

#146

The weird part about software is that most of individual code-units (i.e. functions, methods) are not very specific to your product. Thus they could be part of another product as well And then you realize it's actually a huge waste that they are not used by other products as well. You are almost re-inventing the wheel most of the time you write a new function. The value is only in what your multitude of trivial parts…

That is not peculiar to software development, even the most sophisticated F1 motor or Raptor engine is composed of five or six "simple machines" based on only three principals: wheel (wheel, pulley), lever (lever, screw), inclined plane (inclined plane, wedge).

There is complexity in all areas of engineering of course. What makes software special is that it is so easy to create new software, and thus create more complex things.

In fact it is more difficult to create software with simple design than it is to create complicated software. A "hacked" thing becomes very complicated as it evolves. Software is isomorphic to logical proofs, we can think of how it is often possible to simplify mathematical proofs. It is a lot of work however to come up with simple elegant proofs. So it is with programs.

Mechanical devices have to be carefully designed because idea is that once you have the design you will then manufacture many machines having the same design. You need to do that because manufacturing physical devices is expensive. In software you can just start typing.

Re: Why is selling software so weird?

#147
post #85
post #71

Earlier quoted context omitted.

Concerts and plays are a real things that happen in the real world. So is teaching. They don't exist in a virtual space where everything is duplicable ad infinitum and where the next machine is just as capable as the first. Do you pay for music and movies on the internet? I don't, and most people do not directly. They go through platforms because otherwise people just avoid paying for them. Copyright and the Internet…

Music is absolutely duplicable ad infinitum exactly in the same way as software. I really don't see a material difference between recording an album in a recording studio and writing a program at a desk, or writing a book for that matter. Amazon makes good money selling books digitally. In fact I could even argue that an MP3 file and an eBook or any digital content are forms of software you run on an interpreter. As…

>I really don't see a material difference between recording an album in a recording studio and writing a program at a desk, or writing a book for that matter.

You don't write an album on the computer (unless you're a DJ, which is, one would argue, not real music). My point was that things on a computer all exists in a realm where you can "right-click > copy" things. Like, that's it. Still the initial point of building things in the real world, that you can see and touch, stand.

From the OP:

>Software is a great business because, if you can build something that’s useful and provides $10/month of value to someone, it’ll probably cost you a lot less than $10/month to provide that value to a second person. Multiply that by 1,000 and you’re getting paid to do a full time job, even if you only work 5 hours per week. Multiply that by 10,000 and you can retire in a few years. It’s an extremely high leverage business.

>This makes software a weird anomaly.

Yes, software is a weird anomaly, because everything is scalable, because you can right-click copy. Software is a miraculous exception to reality because internet and the computer space is, frankly, some miraculous exception to reality.

Though I may be biased you know, I work in architecture and the software is absolutely horrendous. The added layers of complexity just brings endless frustration -- although in more theoretical fields (like finance) it may work much better, I see your point.

Now I don't see highly-specialized software having a hard time being sold to customers. Most definitely these things sell like crazy, and make their owners ostentatiously rich, which is not the case of the OP. But maybe he should have talked about centralization and monopolies, a logical consequence of scalability, which is what happens when everything is constantly connected as it is on the internet -- because, again, the computer space is a weird space -- and how it makes it much more difficult for small players to gain traction. I use Blender whenever I can -- it is a fantastic software, capable of doing many things, and it's held up by a global foundation where all the actors of the industry play their part. I'm not saying it's the ideal business model, but it sure is the only software client I respect.

Going to work is not really "giving up rights" as much as it is not having the choice. On the computer space, you have the choice, all the time, that's why it's contradictory. Maybe we need to create a completely locked-down computing environment, maybe that's the solution.

Re: Why is selling software so weird?

#148
post #49

> Low volume software is not a good business to be in. I disagree very strongly with this based on my experience so far. Being in the business of low volume software is fantastic if your customers are other businesses . The advantages of low-volume/complex B2B software biz are incredible to me. Contract terms are measured in half-decades. Your users can actually be trained and held accountable in many cases. You don'…

How to sell software and earn a million: 1 x $1,000,000 10 x $100,000 100 x $10,000 And so on I agree with you, low volume doesn't mean anything.

when you have 1 x $1,000,000 customer, they dictate your terms. When you have 1,000,000 x $1 customers, you dictate the terms.

It's why you don't see any trillion dollar company who does custom software.

Re: Why is selling software so weird?

#149
post #148

Earlier quoted context omitted.

How to sell software and earn a million: 1 x $1,000,000 10 x $100,000 100 x $10,000 And so on I agree with you, low volume doesn't mean anything.

when you have 1 x $1,000,000 customer, they dictate your terms. When you have 1,000,000 x $1 customers, you dictate the terms. It's why you don't see any trillion dollar company who does custom software.

The entire point of doing business is to give the customer what they want so we get paid.

The competitive advantage we exercise today is an architecture/process which allows for us to deliver a customized product experience to all of our customers. We de-skilled a vast majority of the implementation & support activities around our product so that domain experts can operate much more directly with the configuration throughout.

Re: Why is selling software so weird?

#150
post #49

> Low volume software is not a good business to be in. I disagree very strongly with this based on my experience so far. Being in the business of low volume software is fantastic if your customers are other businesses . The advantages of low-volume/complex B2B software biz are incredible to me. Contract terms are measured in half-decades. Your users can actually be trained and held accountable in many cases. You don'…

I’d love to know what you build!
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