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!
I went to the UK Business of Software conference in Cambridge (England) last week. I hadn’t been previously because I associated it more with VC backed companies that wanted to grow fast, rather than lifestyle software businesses such as mine. But I decided to give it a try this year. I really enjoyed it. The organization was good, the attendees were an interesting, diverse and friendly group, the talks were engaging and varied and it was a great atmosphere. There were people from IBM and Microsoft, right down to other 1 person companies. I made some new contacts and caught up with some old friends.
Redgate are heavily involved in BOS. I got a tour around their offices. They seem very committed to providing a great culture for their staff. This manifests itself in large numbers of Nerf guns and the strangest meeting room decor I have ever seen. I only ever hear positive things about Redgate, so they must be doing something right. I noticed that they are very dedicated to the ‘wall of post-it notes’ approach to planning. I tried to persuade them to try my Hyper Plan product instead, but I don’t think I succeeded.
The talks were very varied, covering topics such as:
- How King.com improve Candy Crush customer retention by analysing 1TB of user generated data per day.
- The origins of the Raspberry Pi project.
- How the founder of Kashflow.com went from convict to owner of a very successful SaaS business.
- Lessons learnt from growing a software product business.
The lightning talks were a highlight and I particularly enjoyed Mark Dalgarno’s talk on anti-problems (getting inspiration by solving the opposite problem, e.g. improving your support by thinking about what you could do to make your support worse).
If you are in a medium to large sized software company (or want to grow one), this is the conference for you with strategic level talks and lots of people who have successfully grown software companies. If you are in a small bootstrapped software company then Microconf is probably more relevant for you, with more tactical level talks. But if you can afford the time and expense to go to both, then I would recommend both conferences unreservedly.
We were set an appropriately geeky puzzle to solve. It took me about 30 minutes to crack it. Sadly I understand that somebody had solved it days before I even started looking at it. Oh well, it was fun.
We finished up the conference having a drink in the sunshine, at a beautiful spot next to the river. Just when I thought things couldn’t get any better, Professor Stephen Hawking trundled through the middle of our group! Thanks to Mark Littlewood and his team for putting on such a great conference.
Neil Davidson of Red Gate Software , Business of Software blog and Business of Software conference has created network.businessofsoftware.org, a social network “For anybody interested in building long term, sustainable, profitable software businesses” (as opposed to burning millions of VC money to ‘buy eyeballs’ and then flipping to Google/Yahoo/Microsoft). It is free to join. They have a Pizza and beer evening in London on 12-Nov-08.
As a regular on FogCreek’s Business of Software forum I see the same questions come up time and again.
- How do I do SEO?
- How do I improve my return on Adwords?
- Which hosting company should I use?
- Which payment processor should I use?
So I have quickly thrown together a BOS FAQ page in an attempt to raise the level of debate. Hopefully other people will add it to it. Even if you don’t read the forum you might find some of the links useful.