Starting a software company

[hadley]

There's a good article by Eric Sink over on the MSDN site: "Getting Started with Your Own Software Company." (http://msdn.microsoft.com/library/default.asp?url=/library/en-us/dnsoftware/html/software01262004.asp)

It's pretty general, as it has to be in a nine-page online format, but it's got some good stuff about knowing who you are before you start, picking markets, etc. Eric isn't a consultant or journalist; he's a coder who founded his own company, SourceGear -- which makes his perspective all the more interesting, imho.

[Cem_Erin]

Do you recommend a good book on this?

Cem Erin

[hadley]

I don't know of a single book that I think does it all; there are at least a dozen books that every software entrepreneur should read, imho, and my personal faves are listed on our Journals and Books page. (http://www.softwareceo.com/pubs.php)

But specifically to the topic of starting a software company, I'd recommend:
"Entrepreneurs Survival Guide," by forums moderator Mark Paul (it's in our Buyers' Club. (http://www.softwareceo.com/member_area/buyers_club.php))
"The E-Myth Revisited," (http://www.amazon.com/exec/obidos/ASIN/0887307280/softwareceo-20) by Michael Gerber
"Making it Big in Software," (http://www.amazon.com/exec/obidos/ASIN/0953548708/softwareceo-20) by Peter McHugh
"Secrets of Software Success," (http://www.amazon.com/exec/obidos/ASIN/B00005BK0O/softwareceo-20) by Detlev Hoch et. al.

[Brian Turchin]

I haven't seen any one book either that really does this subject justice. But, besides those suggested by Bruce, I would suggest another book, "The Business of Software," (http://www.amazon.com/exec/obidos/ASIN/074321580X/softwareceo-20) by Michael Cusumano, which was just published in March, 2004.

[Chanimal]

I would recommend Rick Chapman's book, "The Product Marketing Manager's Handbook," (available via SoftwareCEO for a big discount) for the marketing portion of a start-up (since marketing should be hired first, NOT last (or you may create a start-up with a product nobody wants).

As you are setting it up, I also recommend Rob Adam's book, "A Good Hard Kick in the A_ _, Basic Training for Entrpreneurs (http://www.amazon.com/exec/obidos/ASIN/0609609505/softwareceo-20)." Rob was with Lotus and was a CEO with several software start-ups. He is also a current partner in a large VC firm, so he talks about what has to be put in place first to get financed (helps prioritize your start-up).

[konaka]

Guys, check out this article that argues we should start with nothing, cold call customer until we find out what they want, make a spec sheet for our product, sell it with a 60-90 delivery window, and then build it...

Has anyone here ever used this approach?

note: the founder they showcase in this article used this method after he had his first millions and no day job.

http://www.inc.com/magazine/20020201/23855.html

[dubicki]

If it worked once before for somebody, there must be some merit to this approach. My own personal experiences make me feel otherwise. Here are two examples:

1) When I worked as a Product Manager, we often were approached by our own customers and 3rd party consultants who had developed something which they thought was really nifty, and felt we should buy it from them because it was something absolutely great that our other customers would see tremendous value in. Usually we did not bite ...and thank God for user conferences ...because typically what would happen, is this customer would demonstrate what they had done and perhaps at best two other customers would get excited and the rest would sit on the fence. Moral of the story: two to three customers does not make for a viable business.

2) Over the years, I have seen various IT consulting firms develop something bespoke for a customer and retain rights to what they had developed. Certainly, they would be proud of their baby, but again, what would typically happen is that they would perhaps be able to sell the product to maybe 5 to even as many as 10 other customers. But that would be the best they could do.

I lean to having product marketing managers figure out the viability of the product and spec the product to "market needs" with a roadmap as probably the better approach if you want to be able to sell more than ten.

[Brian Turchin]

The article in Inc, which is an excellent article, is about Greg Gianforte, CEO of Rightnow Technologies, which in August just went public(Its stock price has gone up about 50% since its opening). Greg was an experienced CEO who had already sold a business--sold Brightwork Development to McAffee for $10 million--moved to Montana, and decided to start another business. I believe there are lessons learned in what he did.

Greg is a technical guy who is also a salesman; an unusual combination. Before developing his product, he drew up a list of function and features and called his potential customers offering them the product in 90 days. If they said no, he would ask why and adjust his product sheet--if he could deliver it in 90 days. He called hundreds of potential customers in a strategy he called "sales as a method of market research." Continuing, he said "It allows you to determine very quickly, without much money, if you have a viable business idea." And he did develop a product in two months.

The article continues his story and provides other bootstrapping lessons.

The point, as we all know, is that all too often a technical person develops a product, starts a business, only to discover, often too late, that he built a solution for a problem that didn't exist. Greg has a technique that allows you to discover if your product really solves a problem before building it.

Brian