Eric Sink on Starting Your Own Software Company 234
prostoalex writes "The topic of starting your own software company was recently brought up on Ask Slashdot as a way to fight current employment trends. Eric Sink from SourceGear, who shared his software company-building experience before has written a new article published on MSDN. Getting started with your own software company suggests several simple steps to evaluate your abilities, count your estimated expenses and then start the software company, if the idea still seems feasible."
A thread from joelonsoftware... (Score:5, Informative)
Lots of similar ideas there, including a few rants against VCs and incubators.
Re:A thread from joelonsoftware... (Score:4, Funny)
1>Call you company mikerowesoft 2>sell it to microsoft 3>...? 4>profit!!!
Step 3, actually.. (Score:2, Interesting)
2>sell it to microsoft
3> Sell Microsoft's letters to you on ebay [ebay.com]
(Current bid: US $3,751.00)
4>profit!!!
Re:Step 3, actually.. (Score:2)
Wait a second... (Score:4, Funny)
Re:Wait a second... (Score:5, Funny)
Re:Wait a second... (Score:4, Insightful)
Here's some good information (Score:5, Informative)
You can't just throw clever programming at the problem and get money out the other end. For one, it takes a hell of a lot of marketing knowhow, something that most geeks should have known they were crappy at when the prettiest girls went to the fast-talking football players. There is much more to making a company than clever tech. Tech ability is becoming a cheap commodity.
Amen. This gets right to the heart of what most people here don't seem to realize, much less mention. Starting a software company requires great coding AND marketing skills, not to mention a good sense of what would even be a good product to make. I'm speaking from experience here; I've succeeded in my own startup.
Most geeks either don't have what it takes or aren't willing to put forth the effort required to make a software company succesful. Aside from the coding, there's the packaging and the selling. After the packaging and the selling, there's the support and maintenance. And by maintenance, I don't just mean maintenance regarding your product...but your company. Because once you get to the point where you've got a nicely packaged product that needs to be supported and maintained (assuming you've done it right), you've also got a nice little beast on your hands called a corporation.
Now I imagine that most of this stuff would be a breeze for the average slashdotter, except for the part about packaging and selling (i.e. marketing). This is the most difficult area for geeks to master. The head of the evil empire is where he is today because of his mastery in this area. But Bill Gates isn't the only geeks with those skills, so if you want to succeed, find yourself a partner with (very important) BOTH marketing AND technical skills. Let him do all the talking. Let him handle user iterface, software packaging (installers, icons, etc...) and you can concentrate completely on coding while he puts a pretty face on it and handles the customers.
Of course, this is all easier said than done. So I'll tell you what I've done and how I've succeeded. Hopefully this information will help you succeed as well
A couple of years ago I was running out of contract work and I didn't want to go get a "regular" job because I don't like being a cog in the man's machine. So I decided to start looking for opportunities.
Step 1: Look for an opportunity
I figured it would be easier to start in a niche market with little competition. I also knew that small businesses are a ripe market for IT services. It just so happened that one of the companies I was doing part time consulting for was a small business in a niche market. The owner of this business had excellent contacts in his industry as well; I don't mention the industry because I don't want to invite competition
I knew I possessed the marketing and people skills necessary, but I didn't quite have some of the coding skills to pull it all off. So I talked to a friend who is a top notch coder working for a large web hosting company who was interested in starting a business. I told him about my contact in this small, nich market and about the need for certain types of software. We both had similar outlooks on life and our personalities were a good match for a business partnership, so we agreed to start a company.
Step 2: Incorporate
I then did a little bit of research to learn how to actually create a company. Whichever of you is the smartest one should handle this. I just happen to have a 156 IQ, so it was a breeze.
Re:Here's some good information (Score:2, Interesting)
mergers & acquisitions (Score:3, Insightful)
Sivaram Velauthapillai
What about Jon Fail? (Score:4, Funny)
MSDN? (Score:5, Funny)
1) Start small software company with flagship product
2) Get bought out my Microsoft
3) Profit!
Re:MSDN? (Score:4, Informative)
Modded Funny for too close to reality (Score:3, Insightful)
Besides, Open Source vs closed source is not really my beef with Microsoft. What I hate them for is the way they behave as if no other fish should have the right to live in the ocean. They kill other companies by either cutting of the oxygen supply or by gobbling them up, whole.
Why can't they at least be more like C
Re:Modded Funny for too close to reality (Score:2)
You are correct [slashdot.org]! (I read Slashdot [slashdot.org], too.) A venture which he has since disavowed [microsoft.com]...
Re:Modded Funny for too close to reality (Score:4, Informative)
Re:MSDN? (Score:3, Informative)
1) You drink the corporate cool-aid and start company with big new good idea using expensive Microsoft development tools for one of the Microsoft Platforms
2) Microsoft incorporates implementation of the idea into Humungous Office Application X and doesn't pay you a dime
3) Go out of business
'Bought out' by Microsoft? (Score:2, Informative)
Some simple advice (Score:5, Informative)
Re:Some simple advice (Score:2)
Re:Some simple advice (Score:3, Informative)
Re:Some simple advice (Score:2)
Get a PO Box. They are cheap, and useful.
Awesome concise article (Score:4, Interesting)
Re:Awesome concise article (Score:2, Funny)
First step: buy a dictionary!
Re:Awesome concise article (Score:2, Funny)
wheeeeee spell check trolled by an AC
*rolls eyes*
Re:Awesome concise article (Score:5, Informative)
This is good stuff
Sure is. I started a company with some friends. It did great at first, then fizzled. I'm assuming you will eventually want to find others to help build your company. Here are my most critical observations about my experience:
(1) How easy or difficult will it be to work with your partners? Be absolutely honest about this with yourself. Ambitious people have to have egos, but will everyone's ego drive the company forward or turn the company into a battleground?
(2) Write up a business plan. Make sure everyone agrees to what it means in terms of roles, responsibilities and expectations. This will help a lot with item (1). As Eisenhower once said: "Plans are worthless, planning is indispensable."
(3) Hire an excellent attorney to draw up the company documents before you write the first character of code. If you think you can't afford it, or worse, don't think you need to, you will regret it, and it will cost a fortune to do later what could have been done for less at the beginning.
If (1), (2), and (3) are going well, it will not be that hard to raise money. Notice I haven't said anything about the actual idea, just as Sink describes. There are lots of things that people will pay for, and between you and your partners, you can think of a few products. Debate the pros and cons of each idea, then put the best one into the b-plan. Investors will be interested in your product/service, but they will be far more interested in your team's ability to execute. A bad team won't get funding for bottled fountain of youth, a good one can get funding for an arctic ice service.
Re:Awesome concise article (Score:3, Interesting)
What did your business do?
dot-com.
What brought your company down (surely the reasons you listed couldn't have)?
Revenues did decrease, but we had a lot of good experience to leverage a funding effort. Unfortunately infighting did ultimately undermine any chance of long-term success. Be absolutely certain of your partners.
how did you handle marketing
One of the principals in the company had a huge contact list. That's why we brought him in, and it was one of the better moves.
At least we know... (Score:2)
This comment is also a dupe (Score:1)
2: Don't write any software
3: Sue
4: Profit?
Nomanative Determinism. (Score:1, Funny)
Myer's-Briggs Test (Score:5, Informative)
Determine your personality here: http://www.humanmetrics.com/cgi-win/JTypes2.asp [humanmetrics.com]
I'm an ENTJ (coincidentally, the same as the author of the article).
Re:Myer's-Briggs Test (Score:4, Funny)
> I'm an ENTJ
I'm FINE
Fucked up, Insecure, Nuerotic and Emotional.
Re:Myer's-Briggs Test (Score:2)
Re:Myer's-Briggs Test (Score:2, Informative)
Re:Myer's-Briggs Test (Score:1)
Re:Myer's-Briggs Test (Score:2, Interesting)
Artisans, who like action and activity, craftspeopel, artists, and lives of the party usually fall under the SP group. Guardians these are typically the politicians lawyers managers they love order. Those people who worked their tails of for straight A's were likely guardians. These two groups each make up 30-40% of the population, and typical couples are made up of one of each. NFs
Re:Myer's-Briggs Test (Score:2)
Arg!
Please Understand Me is *not* about the MBTI. It is about the four types, and how it *fits* with the MBTI. As for the MBTI, Keirsey hasn't the slightest idea what Intovert/Extravert is, and says it means shyness. He then explains S/N as how Meyers explains I/E. His T/F is absolute lunacy.
Keirsey wanted to know what made people tick, so he looked at the outside of people t
Re:Myer's-Briggs Test (Score:2)
Hmmmm... I took it twice, just because I didn't feel a simple "YES/NO" response was appropriate for some of the questions... that is, I could see going either way, depending on context.
First time, I came out as an INFJ, second time as an INTP. After reading the descriptions of the types, INTP seems more
Re:Myer's-Briggs Test (Score:2)
The idea is to answer what your urges are, not what you actually would do. Further, there are rarely extremes cases of the letters, so the "iffy" questions balance out.
I don't like "telling people what to do" or "giving order" too much...
That's a J/P question. Js like giving orders. They believe in heirarchy.
but I do very much enjoy instructing people in the sense of teaching, or showing somebody how to do s
Re:Myer's-Briggs Test (Score:3, Insightful)
INTP is a very unique group...only 1% of the world's population. But it probably accounts for at least 75% of programmers.
Slashdot readership I would estimate as high as 50%.
Idealistic...fascinated by complex abstract concepts (computers)...and of course doesn't always shower enough...sounds like a
Re:Myer's-Briggs Test (Score:2)
As are all the INs. The ENTs, are nearly as small too.
But it probably accounts for at least 75% of programmers.
Probably not. ISTPs do just as well. Though, i must admit, there were more INTP programmers than other. But, all NTs and the introverted NFs are likely to be programmers too, and show up much more then 25% of the time.
Slashdot readership I would estimate as high as 50%
You are *way* off there. Slashdot readerships has likely a
An ENT? (Score:5, Funny)
Re:Myer's-Briggs Test (Score:2)
Re:Myer's-Briggs Test (Score:2)
Sivaram Velauthapillai
Re:Myer's-Briggs Test (Score:2)
Re:Myer's-Briggs Test (Score:2)
Re:Myer's-Briggs Test (Score:2)
Re:Myer's-Briggs Test (Score:2)
MS... (Score:2, Insightful)
Which is why I've always found Win32 example code, docs, and the like mediocre at best. In contast, Apple always has incredible and astoundly impressive dev docs, support, and communication. Whenever I'm trying to find stuff on msdn, it feels like the days when your searching for something using Hotbot. At Apple, I'm r
Comment removed (Score:4, Insightful)
Re:MS... (Score:2, Interesting)
Best example: invoke help on the Format function in VB 6. Result: complete useless crap. To find the possible format expressions you have to look through 4 more pages that ere not even linked directly to the main page...
Re:MS... (Score:3, Informative)
I recommend using Google to search MSDN. Just add "site:msdn.microsoft.com" to search MSDN (or "site:support.microsoft.com" for KnowledgeBase articles). The MSDN search engine is worthless!
Re:MS... (Score:2)
Re:MS... (Score:2)
Re:MS... (Score:2, Insightful)
Apple has both hardware and software, with heavy docs on both. MS only does software. Sure, MS has Office and some products besides their OS, but so does Apple. MS's docs seem huge by comparison because they've redone the same thing 3-6 times.
As for history, I've seen references to how an API worked back in System 6 in their on-line docs, so Apple has got quite a long history in their documentation too.
The real deal is how much the company needs developer
Re:MS... (Score:2)
My top tip (Score:3, Funny)
Re:My top tip (Score:2)
Actually, this *is* the Microsoft way. But first, you actually have to work for them, not a "perma-temp", then rake it in for a year or two, sell it or fold after sucking all the money out.
This is the light at the end of the tunnel... (Score:1)
Shareware (Score:5, Informative)
WINZIP??????? (Score:2)
Sorry, don't think so. How many WinZip registration keys are floating around the internet? How much lost profit $$ does that represent for them?
To me, it seems like a better example of how writing shareware earns you no money because it's that much easier to pirate/crack.
Re:WINZIP??????? (Score:2)
See it as free advertising targetted at those who will pay.
I register shareware I want to keep using, but even at $.25 it's not worth registering if I'm going to use it monthly - too much hassle. So I only register things I really like.
I assume other people are the same way. I may not register WinZip because I work from the CLI most of the time even in Windows, but other people don't have a CLI copy of unzip, or are afraid of the CLI, WinZip is going
Re:WINZIP??????? (Score:2)
None.
The $$ is in corporate licenses. Every mid to large company knows perfectly well that there are hundreds/thousands of copies of winzip being used by their employees. The license is cheap CYA. I bet there isn't a single SP 500 company without a corporate license to winzip
Finally... (Score:3, Funny)
Yes, this is a joke.
It is not truly necessary (Score:1, Troll)
Finally, you get to /. MS!! (Score:1, Funny)
Re:Finally, you get to /. MS!! (Score:1)
we shall see
do it! (Score:5, Informative)
Re:do it! (Score:3, Informative)
i am in the situation where i see my NEW company making it with very little funding, simply b/c we have the right contacts, entry points, and of course determination (code)
i will be sure to give the update in 1 year
Re:do it! (Score:3, Informative)
If you do start without customer, though, do pick up the phone and start calling like mad (google for the term "cold calling" and learn about good vs bad cold calling).
Now we have plenty of clients and are beginning to grow through referrals.
That was lesson # 1. Lesson # 2 (recent) occured when I spoke with a business-mentor/friend about how our business was doing and he said, about referrals: You have to ask for
Silly Valley (Score:2)
OT,but someone has to make the [NO CARRIER] joke (Score:3, Funny)
Good advice (Score:5, Insightful)
- Ideas are worthless
- Know Yourself
- Understand the business
- Seed capital
A startup can be rewarding, but risky, difficult, and challenging. If you're going this route, be prepared for the difficulties and determined to make it succeed.It's all about execution. The idea by itself is worth nothing.
Are you really prepared to do what it takes to force this company to succeed?
You may not need a business plan, but you need to understand your product, competitors, and where your cash will be going during the first several quarters.
Initial financing is difficult to acquire for a risky new startup and, even if you do find it, you'll end up working with little or no salary for the first several months.
Re:Good advice (Score:2)
Now I know and agree that a good idea on its own is worthless, it just sits there looking smug, but never causes any effect. However, you can have the best execution in the world, be as energetic as you like, without some idea that separates you from everyone else you are 'me too'. About the only thing you compete on is price, and since others can undercut you, the end tends to be drawn out, messy and costl
Re:Good advice (Score:3, Interesting)
Just count the number of times people have come to you with a "great idea" that they want you to code in return for a "piece of the action". My response is always "Pay me $$$ and a piece of the action, then we can sit down and talk."
Then they get all mad when I point out that their idea by itself has $0.00 value without my talent, and that, if I'm going to code it for nothing except a "piece of the action", why don't I just code it for "all the action". After all, ideas aren
Re:Good advice (Score:2)
As you said, the trick is to find a great idea and execute on it.
The hard part is what KIND of software (Score:5, Interesting)
Re:The hard part is what KIND of software (Score:3, Insightful)
The same could be said for Linux admin-ware. Study all the packages, the admins out there, and form your own uber-dashboard.
Ther
Learn about another business! (Score:4, Interesting)
Accounting software. Yes, much bookkeeping software already exists, but one company noticed that there was no package available that was 1) in Dutch, 2) Easy to use for lack of (unnecessary) features, and 3) able to get non-accountants going quickly. They targetted home and small office users, with success
Gym software An older example, but one of the best known ones, and one of the earliest small business niches to be recognised. Many companies discovered (independantly) that there was software to do accounting, software to work out training regimens, and software to track client training progress, but nothing that integrated all of these functions. Someone discovered this niche, and now there are quite a few packages that fulfill all of the IT needs of gyms.
Power plant maintenance and safety management software With power plants being the domain of big, wealthy firms, you'd think they would already have decent software to coverall aspects of this. Not so, apparently. One student wrote a package to do data mining and efficiency improvements for a nuclear power plant, as his graduation project. He turned it into a business,, and now he is talking to many large European energy suppliers to sell his software. You can find profitable niches even in heavy industry, apparently.
Pattern generation for embroidery machines I kid you not. Years ago I found out that patterns for embroidery machines were all made by the machines' manufacturers using record-playback... I asked to have a custom one made, and was quoted a price of about $500 for a simple pattern.
I thought of starting a business, and sell software able to create patterns from scans to shops with such machines. Shops would be able to embroider custom designs onto jackets and such for $15 rather than $500. I never actually did it, but I know that the manufacturers of embroidery machines have only recently started to offer such software.
This last example also illustrates the point against having too strong a competition. I could have been successful selling this software, but I could never have competed against the manufacturers, once they got into the action. I suppose being first to market wil allow you to outdo the larger competitors, but it will not last. Don't let such products be your only products. Or hey, you could get lucky and be bought by the larger competitor.
Niches for software and IT services abound. Look around you, especially at areas where IT services seems 'too expensive', like small businesses, bakeries, mom&pop stores and such. Look for businesses with particular needs, and think about how IT can fill those needs.
Everyone wants the easy way (Score:2)
I hear this rhetoric so often that it seems true, but it is not. It is easier to be sucessful having a unique product that is also in high demand. But where are the ones willing to work hard to make something better than the existing, professional, mature programs?
Where have the real programmers gone? The ones confident enough to
Contractors (Score:5, Interesting)
As a contractor you're satisfying all the reasons the authors give for starting their own "businesses" and it's a lot less of an initial risk.
Re:Contractors (Score:3, Interesting)
Re:Contractors (Score:2)
Re:Contractors (Score:5, Informative)
I've only been at this for 4 months now, but have a freshly signed and delivered 12-month contract (for which I turned down a permanent government job). At least I won't be out job hunting for 6-8 months, which IMO is the biggest down side to contracting.
Re:Contractors (Score:4, Insightful)
Absolutely. The one thing you don't need to have as a contractor is a good idea of something that other people might be interested in. You just work on what your customers find interesting and important. If all goes well, you can transform that into stuff that's interesting for you as well (that's why they hired you).
Also, the one thing that counts more than anything else for a contractor is your contacts. You should build them before you actually start to depend on them financially, e.g. while you study. Actually, it doesn't take much conscious effort. It just happens if you spend long enough among technically oriented people.
...best moronic line in the piece .... (Score:2, Interesting)
There is a difference between being versatile and unable to focus! One could argue that having the ability for focus myopically on one detail FOR A NECESSARY WHILE should be included in versatility. Versatility is not the opposite of being able to focus. By his definition that author seems to have confused ADHD with versatility.
Truly versatile people tend to score very inconsistently on MBTI. The are far to busy switching betwee
Consulting - Software good idea (Score:3, Insightful)
Know Thyself (Score:4, Funny)
Most important, in no order is this [thespark.com], this [thespark.com], and this [thespark.com]
Re:Know Thyself (Score:2)
Suppose a girlfriend or boyfriend that you were *really* into said one day, "You and me just aren't right for each other," and dumped you right there. Did you notice the poor grammar?
HAHA...that's great!
Business Plan (Score:5, Informative)
I disagree with his statement about a business plan, he concentrates on the one thing most people write then for, getting venture capital or a bank loan. While it is true that a VC or a bank would require this there is a very good reason to write one. It is focus yourself on what your are trying to accomplish.
What is your product, who are your customers, how do you do business, what are your expectations. Do decide to write customized software for dentist offices or are you just desperately doing anything for cash? How are your customers going to know who you are and what you do if you are not willing to define what you do to yourself!
Also starting your own business does require alot of focus, you have alot of things to do and you have to be timely about accomplishing them. Paying employees, the bills, contacting customers, while you are very scattered in what you working on, you cannot hop from one to the other just because you cannot focus one thing. The IRS will have your butt in a sling you don't do payroll properly, your customers will have your butt in a sling if you don't deliver what you promise, the list goes on and on.
The other thing about small business is he ignores that you don't have to do everything yourself. There are alot of companies that cater to small business to do the time consuming but boring things that have to get done, like payroll. Always look around for help in this area because for $50/month(or whatever) is cheaper than you spending 8 or 10 hours a month trying to figure all the forms and making sure that they all get done in time.
One entrepreneur's experience (Score:5, Interesting)
http://www-swiss.ai.mit.edu/~bob/clarisworks.php [mit.edu]
It's a bit out of date (we started in '89), but even so, we were told it was too late to get into the software startup game. We had no business plan. Yet we managed to beat our Microsoft competition (MS Works), with no venture capital, in fact without even incorporating... of course, getting bought by Claris helped. But I think keeping everything ultra-low overhead was essential - *all* of our time was spent designing and developing, and none on coming up with a business plan, a "failure plan", etc., as described on the MSDN article. YMMV...
There are still plenty of great ideas out there, waiting to see the light of day.
Another source of funding is... (Score:5, Interesting)
Borrow from friends and family.
Have a working spouse.
Borrow from your credit cards."
Obtain money from a potentially major customer
This one is often overlooked. If a company has a problem they need solving and is willing to fund some of your development effort to solve it, this is a golden opportunity. Depending upon what problem you are solving, the company may not be interested either in owning any of the IP you create or supporting the product if/when it takes off.
This is how the company I'm with now started and their sales are $500MUSD per year. It all started from a $500K investment from a major industry leader, who remains the company's biggest and most valued customer.
Re:Another source of funding is... (Score:2)
I have always thought that for a software company, it would probably be a good way to start out:
Develop a piece of software to alpha/beta quality, then find a company that would like to use the software. Offer some form of a deal where they get the software "free" and future updates "free", in exchange for some seed money.
Ok, so at first it wouldn't be "free", but if the company grows and the software becomes something big (ie, you get many more clients), they might
Re:Another source of funding is... (Score:2)
Borrow from friends and family.
Have a working spouse.
Borrow from your credit cards."
Sounds like good advice for losing your house, your friends, your marriage and ending up in debtors prison.
Not Worth It (Score:3, Informative)
First -- unless you are well funded, the errors and omissions insurance is either unavailable or so costly as to not be economically viable. Starting a software company today, considering the patent portfolios of most companies and the litigious environment, is simply negligence.
Second -- if I had a micro-payment for every person who thought that he or she could "do better on their own," I would make Microsoft look like the corner grocery store. Frankly,it is not that there are no good ideas nor that there are no goiod people. The current legal environment practically limits any innovation. Until software "patents" are struck down, this issue will not change. If you think you have a "hot idea," you would be best served, and probably save yourself a lot of litigation costs, by keeping it to yourself.
Third, many people starting a company naively think "gee, I earn $60,000 per year" so I can just charge that to the customer myself and make a killing. However, to "earn" $60,000 in salary, you would need to bill, on average with very low overhead, $150,000 to $180,000 of work. Are you prepared to do that (including working three times your current work week)? Most new entrepeneurs fail because they underprice services. Undercutting rarely works unless you have a true commodity. And even then, you better have reserves to survive when your competitor undercuts you simply to make a point.
Frankly, I would councel people to make use of there time for something worthwhile and not waste time on software. The patent environment makes it almost impossible to innovate without paying license fees. It simply is not worth it.
If you are serious about starting a company. Read (Score:4, Informative)
Advice from a successful s/w entrepreneur... (Score:4, Funny)
Hey, if you can't beat 'em, join em.
You got to start with outsourcing just to stay competitive.
Make a basic interpreter for a new computer (Score:2, Funny)
Re:He forgot to mention file a copyright (Score:3, Funny)
Dear Sir,
We are terribly sorry to inform you that as of 2:20 PM EST, your license to post comments on Slashdot has been indefinitely suspended.
We have taken this action in response to your severe misuderstanding of copyright law and its applicability in the United States (and international) legal system(s).
You are hereby notified that copyright covers specific works authored by an individual or other legally defined entity. As such, copyright law has no bearing on products bearing a substantial similarity i
Re:POST YOUR REAL NAME AND THE TRUTH- I DARE YOU (Score:2)
From your original post:
you imply that copyright somehow stops/prevents someone developing a competitive piece of software, and that just isn't true.
It *does* stop someone from taking your source code & publishing it (outside of established fair use), or blatantly taking your executable and "competing" with you by selling it, but that *is not* what you imply in your original post.