The next meetup is on the evening of Tuesday, October 20, 2015 in Swindon. You can find out more and RSVP at meetup.com/South-West-Bootstrappers/. Hope to see you there!
Those of us who own software product businesses sometimes grumble about what a difficult business it is. Although its indoor work with no heavy lifting, it has it’s frustrations: software piracy, customers who moan about paying a whole $0.99 for thousands of hours of work, buggy third party software, RSI, chargebacks and the catastrophic consequence of accidentally offending the great god Google, to name but a few.
But reading Kitchen Confidential brought home to me just what a hard business it is to run a restaurant. You have to make a major financial outlay to fit out the restaurant and kitchen. You have rent and staff salaries to pay every month, regardless of whether customers come or not. Staff turnover is generally very high in the catering business, so you are continually having to hire new staff. You have to deal with drunken, unreasonable and dishonest customers. Possibly also drunken, unreasonable and dishonest staff, who have ready access to sharp knives and boiling liquids. Theft by staff can be a real problem. You have highly perishable stock. If you don’t order enough, you have to turn people away. If you order too much, you have to throw away the excess or risk poisoning your customers. You have endless deliveries from suppliers, which you have to check to ensure they are the correct amount and quality. You have to keep the restaurant clean. Extremely long hours are standard. Even if you are doing well, you can’t seat more people than the restaurant can physically hold. A restaurant that has to turn people away Fridays and Saturdays might be empty on Monday. And success brings its own problems as you can only increase the scale of the operation by expensive and disruptive measures such as opening a new restaurant or moving venue. The relentless overheads of staff, rent and stock mean that cash flow is a huge issue. It’s no wonder that restaurants fail so frequently.
Running a software product business is pretty cushy by comparison. You can start your own software product business with just a PC and a generous dollop of time. Nearly all the issues related to manufacturing, suppliers, stock and shipping go away when you are dealing with electrons rather than atoms. If you do make a mistake, you can usually put it right just by making another release. The worst a disgruntled customer is likely to do is post a snarky comment on a forum or send you a nasty email. High margins and low overheads means that cash flow is much less of an issue than for most other businesses. Software businesses also scale much more easily than other businesses. You aren’t tied to a particular location and don’t even need to rent an office building (billion dollar company Automattic has a fully distributed workforce and no company office).
The software business is a great business to be in!
1. Improved career prospects
The intersection of people with development skills and marketing skills is pretty small. Being in this intersection can only help your career prospects.
2. It’s not rocket science
The basics of marketing boil down to:
- Find out what people want/need/will pay for.
- Get people’s attention cost effectively.
- Communicate what your product does.
- Choose the right price.
None of these things are as simple as you might think, if you haven’t tried them. But its not rocket science to become competent at them. Hey, if the average marketing person can do it, how hard can it be? ;0)
3. Less reliance on marketing people
If you don’t have any marketing skills then you are completely reliant on your marketing people to do a good job at marketing the software you have poured your soul into. Are you comfortable with that? How do you even know if they’re doing a good job?
4. Number crunching
Developers tends to be well above average in their analytical and mathematical skills. Online marketing tools such as Analytics, AdWords and A/B testing generate vast amounts of data. Being good at crunching numbers is a big bonus for some aspects of marketing.
5. It’s interesting
When I started out as a professional developer some 30 ago, the thought of being involved in the sordid business of marketing would have appalled me. But, as I have got more and more involved in the marketing side of things, I have found it really rather interesting and creative. There is a lot to learn, including: pricing, positioning, customer development, segmentation, partnerships, email marketing, SEO, AdWords, social media and conversion optimization. I think of development as hacking computers and marketing as hacking humans.
6. Diminishing returns on development skills
The more time you spend as a developer, the better you are going to get at it. But you will run into diminishing returns. E.g. you won’t improve as much between your 9th and 10th year of programming as you did between your 1st and 2nd year. Learning a completely new skill avoids diminishing returns.
7. You’ll need it if you ever start your own software business
If you ever start your own software business you will quickly find that marketing skills are at least as important as development skills. So it’s a huge plus if you already have some marketing chops. Even if you have a VC sugar daddy who is going to give you enough money to hire marketing staff, you’ll still need some marketing skills to know who to hire.
If you are employed as a developer full time, I recommend you jump at any chance to get involved in marketing or go on a marketing course. I also run a training course for people wanting to start their own software business that includes a lot of material on marketing.
I am organizing a regular meetup in Swindon (UK) for people who are running (or are interested in running) their own bootstrapped (i.e. not VC funded) software product business. Come along and talk shop with other aspiring and experienced bootstrappers. It doesn’t matter if you are developing for web, Windows, Mac or mobile.
The first meetup is on the evening of Tuesday 16th June 2015. You can find out more and RSVP at meetup.com/South-West-Bootstrappers/.
I am planning to run my ‘Start your own software business’ training course again this year, probably in September. It is an intensive weekend course, at a hotel in my home town of Swindon (in the UK). It is aimed at people who want to start (or at an early stage of starting) a software company selling desktop or web software. It builds on my 10 years of experience running my own software company and consulting to other software companies. It’s the course I wish I had attended when I started my business.
I know a lot of courses are online now. But I think you get more from face-to-face training. More intensive. More interactive. Less distractions. Also you get to meet other people in the same boat. I have run the course twice before and the feedback was very positive. You find out more and read comments from previous attendees here.
I have been running my own one-man software company for 10 years today. Coincidentally it is also my 49th birthday, so it is perhaps a good time for a bit of reflection.
I did a physics degree and then worked full-time as an employee for nearly 20 years. I developed systems in FORTRAN, C and then C++ for operational research, satellite image processing, printed circuit board design, environmental modelling and distributed systems. I learnt a lot and met some great people, but I yearned to strike out on my own.
I set up my own company in January 2005. I was a techie and had very little experience on the business, sales and marketing side of things. It was quite scary.
I released v1 of my table planner software PerfectTablePlan at the end of February 2005. It was very rough and ready, but I sold my first licence in less than 24 hours. PerfectTablePlan has exceeded all my expectations and is still selling well. I have sold over 40,000 licences with revenue well into 7 figures (£) to date.
I started this blog in April 2007. It has had over 2 million hits to date and has been helpful for promoting my consulting. But mostly I do it because I like writing, when I can find the time.
I started offering a consulting service in January 2008. I have provided consulting to lots of other software businesses, mostly 1 day engagements concentrating on marketing. That has been very interesting and has added some variety to my work. It has also been helpful to find out what works and doesn’t in other businesses.
I ran a weekend face-to-face training course for people wanting to start their own software business in November 2013 and March 2014 in the UK. The course is 460 slides + various exercises. I enjoyed doing it and the feedback was very positive. But it was hard work to get enough people in one place at one time to make it viable. I could do it online, but I think it would lose a lot of the interactivity that made it work so well. I would like to run it again in 2015. Email me if you’re interested.
I released v1 of my AdWords keyword tool Keyword Funnel in March 2014. This was a commercial quality re-implementation of various tools I had written to help myself run my long tail AdWords campaign for PerfectTablePlan. The plan was to produce v1 within a couple of months, part-time. But it ended up taking nearer to 6 months. Feedback became more patchy and ambivalent as I got closer to v1. But, having got that far, I decided to push it out anyway. It didn’t sell well, for various reasons which I might go into in a future post. I also decided I didn’t want to spend all day thinking about AdWords. So I stopped selling it and took the site down. But it seems a shame to have wasted that work, so I may resurrect it later this year as a free product.
I am just about to release v1 of my visual planning software Hyper Plan. I have worked on this part time since September 2014. I am very pleased with how it has turned out. But I have no idea how successful it will be (as was the case with PerfectTablePlan and Keyword Funnel). I think a lot of people could benefit from it, but it is in a crowded market. Watch this space.
I have attended various conferences for small software businesses and spoken at MicroConf (Europe), ESWC and SIC. It is always great to meet other people in the business.
All sorts of strange and wonderful things have happened, including:
- PerfectTablePlan has been used for some very famous organizations for some very famous events (which I sadly don’t have permission to mention). It has seated royalty, celebrities and heads of state.
- PerfectTablePlan was used as part of a demonstration of the (controversial) first commercial quantum computer by D-Wave.
- A mock-up of PerfectTablePlan, including icons I did myself, was used without my permission by Sony in their ‘Big day’ TV comedy series.
- I got to grapple with some interesting problems, including the mathematics of large combinatorial problems and elliptical tables. Some of my customers are now seating 4,000 guests and 4000! (4000x3999x3998 .. x 1) is a mind-bogglingly huge number.
- A well known wedding magazine ran a promotion with a valid licence key clearly visible in a photograph of a PerfectTablePlan CD. I worked through the night to release a new version of PerfectTablePlan that didn’t work with this key.
- I found out that CDs are edible.
- An early article I wrote for the blog generated 56k hits in a day and got me a mention in the Guardian newspaper.
I employed my wife as bookkeeper a few years back. But decided I didn’t want to take on any other employees. I outsource a few things that I can’t do, but I still do most things myself.
It has been hard work and a bit of a roller coaster ride. But overall, it has been great! I wonder what the next 10 years will bring?
If you go to Amazon and browse watches, you will suddenly notice a preponderance of watch ads everywhere you go on the Internet. This is ‘remarketing’ (also known as ‘retargeting’ or, more colloquially, ‘cyber stalking’). Wikipedia defines it as:
a form of online targeted advertising by which online advertising is targeted to consumers based on their previous Internet actions, in situations where these actions did not result in a sale or conversion.
a) It is hard work to get potential purchasers to visit your website
It seems to make sense to spend some time and money reminding non-purchasers to come back to your website in the hope that they will eventually purchase.
The basic mechanics of remarketing are:
- Sign up with a remarketing publisher such as Google, Perfect Audience or Adroll.
- Upload some graphical ads.
- Bid to show these ads on other sites.
- Add a script on your site which cookies visitors for remarketing.
- When your visitor leaves your site and goes to another site in the remarketing publisher’s network, the remarketing cookie is read and an ad is shown (or not, depending on how much you and other advertisers are bidding per impression).
- Hopefully people will see your ad, click through and buy your product. Or they may just be reminded to continue the trial, without clicking the ad.
A number of people I have spoken to told me it was very cost-effective. But when I asked how they knew that these remarketing conversions wouldn’t have purchased anyway, I didn’t get a satisfactory answer. It seems straightforward enough to test this: run an A/B test, showing remarketing ads to 50% of your visitors and see what difference it makes to conversions. But an online search and some asking around turned up very little data. The one decent study I found quoted an 18% increase in conversions (yes please!), but was for an ‘e-commerce website’. So, dear reader, I have done the experiment using Perfect Audience for remarketing, Visual Website Optimizer for A/B testing and my table planner software as the subject. Here are my results:
So the remarketing showed an increase in sales of 1.6% over 21,676 visits and 336 sales. However it is noticeable that the 95 percentile error bars are rather large compared with the conversion rates. I am only 95% sure that the conversion rates are in the range 1.69% to 1.39% (control) and 1.71% to 1.41% (remarketing). Which means the change in conversion rate could be anything from +23% to -19% (but given normal distribution curves, most likely somewhere in the middle). According to Visual Website Optimizer, we can only be 56% sure that the increase in conversions is a real effect, and not just a statistical anomaly. The graph below shows the convergence of the conversion rates over time (blue is the control, orange is with remarketing).
It gets worse when you factor in the cost of the remarketing. I know the value of the sales and the cost of the ads over the period of the experiment. So I can work out that for every $1 I spent on remarketing I was getting around $0.95 back in extra sales. It isn’t looking like a winner for me, especially when you factor in the time taken to set-up and administer it.
Some points to note:
- Remarketing resulted in 1.8% less installs than the control. This is probably just a statistical anomaly (67% chance of being statistically significant).
- I choose Perfect Audience based on the recommendation of Rob Walling, who has experimented with Google, Adroll, remarketer.com and Perfect Audience. Unlike Google, Perfect Audience allows remarketing across a wide range of platforms and websites, including Facebook and Twitter. I found their system to be relatively flexible and easy to set-up. But being billed weekly is a bit tedious for my bookkeeper.
- I showed my ads on Facebook and various websites. I didn’t show them on Twitter as my previous experiences with advertising on Twitter haven’t been great.
- With remarketing you pay per impression, not per click. I set my CPM (cost per thousand impressions) relatively low. I ended up averaging $1.55 for web ads and $1.14 for Facebook ads.
- Click through rates were miserable, averaging just 0.051% for both web and Facebook ads.
- The average cost per click was $2.58. This is a lot more than I pay per click on Adwords.
- I remarketed to people that arrived on my home page. I stopped targeting them after 30 days or after they had purchased.
- I didn’t remarket to visitors from developing countries, as they very rarely buy my software. Had I remarketed to visitors from every country the remarketing conversion rate would probably have been slightly higher, but the ad costs would have been significantly higher.
- I didn’t get any complaints from customers about being ‘stalked’.
- I just knocked up some ad graphics myself (examples below). I got the idea for an attention-grabbing ugly ad here. It didn’t perform well though.
- Trying professionally designed ads.
- Trying different bids.
- Experimenting with only showing ads to people who have installed the trial vs only showing ads to people who haven’t installed the trial.
But it doesn’t really seem worth the opportunity cost given the results to date.
Of course, my experiment is just one data point. Remarketing might work better for you if you have a higher average lifetime value for a customer (many of my customers buy the $30 version of PerfectTablePlan for their wedding and never purchase from me again). If you have a B2B product with an average lifetime value in the hundreds or thousands of dollars, it is probably worth a try. You will have to run your own A/B test to find out. If you do, please let me know what the results are.
I have just launched a new product. First some back story. A few years ago, my wife and I were renovating the house we live in now. Trying to schedule and track all the different tasks, tradesmen and quotes was a real pain. We stuck Post-it® notes onto a whiteboard to try to keep on top of it all. The Post-it notes represented the various jobs that need doing. We placed them in columns (representing what stage they were at: needs quote, accepted quote, scheduled, doing, done) and rows (representing the various trades: plumbing, roofing, electrical etc). It worked, but it was far from ideal:
- I wanted to see status vs trade, status vs room and room vs trade. But changing the layout was a pain, so I had to pick one layout and stick with it.
- Colours were useful for extra information. But we were limited to just the few colours that Post-it notes come in.
- There was only limited space to write on the note.
- My wife couldn’t read my handwriting.
- We had to use a separate spreadsheet to track the budget.
- Post-it notes would fall off and get lost after being moved a few times.
- I ran out of Post-it notes.
That is when the idea of Hyper Plan first occurred to me. It has been burning a hole in my brain for the last 5 years. Now I have finally got around to implementing it.
Hyper Plan is Post-it note style planning, implemented in software. In software you are no-longer limited by the number of Post-it notes you can afford, the amount of wall space you have or the number of colours Post-it notes come in. You can even change the layout and colours with a mouse click. All with animation and easing curve loveliness.
The sorts of planning you can use it for include:
- project planning
- planning what is going into your next software release
- event planning
- Kanban / Scrum / Agile
- planning a holiday
- to do list (I know!)
Anything where you have discrete tasks that you want to be able to categorize (e.g. by person, status or type), schedule or track in a visual form.
Here is a 2:42 minute overview in video form (with audio):
Can’t see the video? Try this mp4 version (10.7 MB).
Hyper Plan is quite different to anything else I have seen. That could be a good thing or bad thing. I am putting out an early beta to try to find out.
Hyper Plan is not currently for sale. I don’t want to take the time to set up all the payment processing and licensing until I am confident someone might actually buy it. The current beta version will run completely unrestricted until 17-Jan-2015. There are Windows and Mac versions. Hopefully a commercial version will be available for sale by the time the beta expires. If not, I will release another free version.
Currently it is very much an MVP (minimum viable product).
- The UI is a bit rough around the edges.
- The logo was done in 5 minutes in Word.
- The documentation is just a quick start guide.
- Some important features are not implemented yet (e.g. printing, exporting and undo).
But I have tried to follow my own advice and resist foul urges to spend months polishing it (which is hard!). What is there is pretty robust though, and I think it demonstrates the concepts. Hopefully I will know in a few weeks whether it is worth taking the time to polish it to commercial levels.
I would love to know what you think. Particularly how useful you find it for ‘real’ planning tasks. Even responses of the form “I wouldn’t use this because…” are helpful. Please also email a link to anyone else you think might be interested. Particularly if you have ever seen them sticking Post-it notes to a wall or swearing at Microsoft Project! My contact details are here.
Q: Why is it desktop, rather than SaaS/mobile?
- I can build a minimum viable product much quicker for desktop.
- Differentiation. Some people prefer desktop apps, e.g. because they don’t have reliable Internet or don’t want to store their data on third party servers.
- Less competition. Everyone else seems to be doing SaaS/mobile.
I might add SaaS and/or mobile versions later, if there is enough demand. Note that DropBox (or the Google, Microsoft or Apple equivalents) allow you to easily sync a Hyper Plan file across multiple computers.
Q: So it’s Trello for desktop?
A. Not really. I had the basic idea before I ever saw Trello. And I’m not stupid enough to compete with a free tool from the great Joel Spolsky! Trello is great at what it does. But Hyper Plan is different in quite a few ways. In Trello the emphasis is on collaboration and workflow. In Hyper Plan the emphasis is on visualization and planning. Hyper Plan allows you to present your information in lots of different ways with a few mouse clicks. It also has a built in ‘pivot table’ type feature that is much easier to use than Excel pivot tables. This is really useful for totalling effort and expenditure by different categories.
Post-it is a registered trademark of 3M.
The scrum photo is licensed under creative common by Logan Ingalls.
If you spend as much time as I do hanging around forums for independent developers, you will often see questions of the form “I only made X sales today/this week/this month, has something gone wrong?”. There are two distinct possibilities:
- Something has changed (e.g. your website is broken); or
- It’s a statistical fluctuation.
Rather than guessing, we can use some stats to work out the probability that a drop in sales is just a random fluctuation.
The Poisson distribution gives us the probability of a given number of discrete events occurring in a fixed interval of time (or space), if these events occur with a known average rate and independently of each other. It can be used to investigate the accuracy of v1 flying bombs, the number of 19th century Prussian soldiers kicked to death by horses and the number of South Africans attacked by sharks. It can also be used to calculate the probability of getting <= n sales per day/week/month, if we average N sales per day/week/month.
Using this online Poisson distribution calculator we can work out some example probabilities:
number of sales over period
|Probability of drop in sales of:||5||10||50||100|
(0% = too small for the calculator to display)
- If we average 5 sales per week, the chance of a 40% or more drop in sales (i.e. a week with 3 or less sales) is 26.5%.
- If we average 50 sales per week, the chance of a 40% or more drop in sales (i.e. a week with 30 or less sales) is 0.2%.
So the less sales we make (or the shorter the period we look at), the bigger the random fluctuations we can expect. If I was averaging 5 sales per week, I wouldn’t be too worried about a drop of 40% in sales for one week. In fact, I would expect it to happen approximately one week in every 4 (running a business that averages 5 big B2B sales a year, must be very stressful!). But if I was making 50 sales per week, a 40% drop in sales should only happen by chance approximately once every 10 years. I would definitely check for other causes.
Assuming it isn’t just a statistical blip, the most likely cause of non-random change is an issue with your website. Rather than waiting for a problem, I suggest you set up continuous monitoring that emails or SMSs you if a problem occurs. There are various services for this. I use free pingdom.com and siteuptime.com accounts. Using 2 different services protects you against one of them silently failing.
If your website is up, what else have you changed recently? Check your analytics for changes and your Google webmaster tools account for warnings. Has traffic dropped (perhaps you been slapped by Google)? Has the number of downloads/trials dropped while the traffic stayed the same (perhaps there is a problem with downloading/signing up)? If you have made a new release, double check there are no major bugs in the installer or software. “It works on my development machine” doesn’t cut it with customers, so check it on a non-development machine or a clean VM.
Don’t assume that random strangers on the Internet will email you to tell you that something is broken. Perhaps 1 in a hundred or a thousand will. The rest will just click the back button. You can improve your odds by having loyal and engaged customers and a clearly displayed email address and/or phone number. But still don’t depend on it. When is the last time you noticed an issue on a website and took the time to report it?
Also some seasonal variation in sales is likely. The pattern depends on your market. Many businesses see a drop in sales in the northern hemisphere summer. But my wedding table plan software sells better in the summer. Hopefully you will know the pattern for your product after a year or two.
Random fluctuations and the lack of visitors to report issues means that it is hardest to tell whether a drop in sales is real when you start out. This is when you need the sales most, both financially and emotionally. It gets easier as your traffic and sales improves. No one said that life was fair.
I ran my second ‘Start your own software business’ course over the weekend of 22/23 March. Here is what some of the attendees had to say:
“I thought I knew most things about setting up and running an ISV but Andy filled in all the gaps and taught me stuff I hadn’t even thought about! I would, without hesitation, recommend this course (which is great value) to anyone thinking of starting a small software company or even an existing company that wants to ensure they give their business the best chance for success. Well done Andy!”
Anonymous (gainfully employed)
“PC Pro magazine (not easy to impress) gave PerfectTablePlan a glowing review. That gives you some idea of Andy’s talent for programming and marketing. His weekend training program allows the attendees to garner his expertise for themselves and their software projects. Andy knows his subject – his experience is extensive, practical and hard-earned. I have run 2 successful small software business in the past. By attending his course I wanted to find out from someone who was actually doing it today, how I could apply techniques and best practice to my next software project. Did I succeed? Without a doubt. Andy was meticulous in his planning of the event and thorough in his presentation. I couldn’t ask for more. Top marks. I recommend Andy’s course to anyone venturing into the world of running a small software business.”
“I recently attended Andy Brice’s “Start your own software business” course. Andy teaches some very practical skills to evaluate your idea, find if there is a market and launch your product. Behind most of the topics Andy had a story of how this particular lesson was learnt and how he has successfully implemented it. I now feel I am equipped with some practical knowledge of how to launch a software product. Thanks Andy.”
I will be following all their progress with interest.
I hope to run the course again in 2014. If you are interested in attending, please fill in the form on the training page.