Tag Archives: microISV

ESWC 2011 registration is now open

Registration is now open for the European Software Conference 2011. It is on 19th-20th November in London, with informal drinks the evening before. This is the top European event for microISVs and other small software businesses. It is always good to meet up with other microISVs and London is a great city to visit, even if only to remind yourself how glad you are you don’t live in a big city. The early bird rates are just 55 Euros (with no meals) and 155 Euros (including 2 networking dinners). The schedule is still being fleshed out. I will be doing a talk, provisionally titled “Promoting your software”. Watch this space for more details. There are still some spare speaking slots. It would be nice to see some new faces doing talks, so why not volunteer?

Sadly there might not be a Software Industry Conference this year. But if you are based in the USA you might want to consider MicroConf 2011 in Vegas 6th-7th June. There is also Business of Software 2011 in Boston 24th-26th October, but I think this is aimed more at larger software companies (or those that want to be larger software companies).

Is it possible to run a successful software business with a 4 hour work week?

Tim Ferriss’ ‘Four Hour Work Week’ is a thought provoking, but controversial, book. One of the central ideas he promotes is that you should be able to use outsourcing to create a money making business (‘muse’) that you can run in only a few hours per week. Leaving you with enough free time and income to travel the world, learn to tango or otherwise amuse yourself. But I am highly sceptical that anyone can sustain, let alone grow, a software business long term, working only 4 hours per week. I have run my own business working less than 10 hours week for a month or two at a time while travelling or doing house renovations. But it only gave me enough time to keep things ticking over. I wasn’t able to improve my product or marketing. I am sure my business would decline in the face of technological changes and hungrier competitors if I kept this up for too long. I have spoken to other owners of small software businesses and they were of a similar opinion.

So I was interested to see a case study on the Four Hour Work Week blog from someone running a software business. Brandon Pearce owns musicsteachershelper.com, a slick-looking web based app for music teachers.

He says that after 5 years he is making $25k in sales per month with $10-12k in expenses per month[1] and no employees[2]. So that is a net profit of around $168k per year. That’s not too shabby, especially when you consider that he lives in Costa Rica and says he works just 5 hours per week. That’s nearly $650 per hour!

But he doesn’t say how many hours per week he worked to build the business. He also says in the case study:

With a complex web application, you can’t write it once and be done; you need to continue making enhancements and listen to user feedback in order to have a successful product.

I couldn’t see how this squared with working only 5 hours per week. Even if you are outsourcing everything you still need to manage the outsourcing, which can be time consuming in itself. I emailed him for some clarification and he was kind enough to give some more details:

It’s hard to give an average time worked over the past five years, since it’s changed so much. The first two years I was also working full-time as a programmer, but spent most of my free time working on the site – probably 10-20 hours per week. Once I quit my job (years 3-4) I worked probably 40 hours per week on the site. The past year or two, it varies from week to week. Some weeks I’ll only work 2 hours on it, some I’ll work more like 15, if I’m preparing for a new feature, special offer, or doing a big launch of some kind. But these days I’m averaging about 5 hours per week, and it’s been that way for well over a year.

Yes, I can definitely sustain and improve profit levels at this number of hours. The business is a well-oiled machine, and I have teams that are working to help continue to improve and grow the business in various ways, largely without my constant supervision. The business continues to grow every month, regardless of how much I work.

What do I spend these 5 hours doing? Mainly reviewing the new features or bug fixes the programmers have been working on, the requests from customers that the support team has submitted, and determining which items I want the programmers working on next. I also spend a little time handling some of the more difficult support or billing issues, paying my workers, managing a few PPC campaigns, answering e-mails, and checking stats. Recently, I’ve also been writing the scripts for some new video tutorials, and finding people to help produce the videos, too.

So, pretty much everything I do at this point could also be outsourced, allowing me to work even less, but at this point, I still enjoy this work, and it allows me to keep some important aspect of control on the business. Some day I may decide to work even less, but I’m pretty happy with 5 hours at the moment. :)

So, unsurprisingly, it took a lot more than 5 hours per week to reach this point. And only time will tell whether he can continue to maintain (let alone grow) this business with such minimal input. It will be an impressive achievement if he can. But I think Brandon is the exception rather than the rule. Perhaps he is particularly talented or lucky. Very few of the successful software business owners I know work short hours for extended periods. Also I have no way to verify Brandon’s numbers. So I would recommend viewing Brandon’s case study as something to aspire to, rather than a likely outcome.

Brandon has a blog and is writing a book about his experiences creating MusicTeachersHelper.com “in the hopes that it will help others who want to do something similar”. It should be an interesting read. Given all the spare time he has it shouldn’t take him long to finish it!

Further reading:

http://brandonpearce.com/2009/02/i-lived-a-4-hour-work-week/

http://brandonpearce.com/2009/04/how-i-spend-my-time/

[1] He mentions the expenses in the comments.

[2] He does use several contractors, some of whom work full time.

Does the world *really* need yet another Twitter client, RSS reader, ToDo list or backup application?

My heart sinks every time I hear a would-be-entrepreneur announcing they have written yet another Twitter client, RSS reader, ToDo list or backup application. Haven’t we got enough of those already? There are more than 1,900 Twitter apps already (possibly a lot more). Somebody probably released another one while I was writing this post. We have passed the Twitter app event horizon, where it is probably quicker to write your own custom app than it is to try and work out if any of the existing apps fulfils your requirements.

Even if you have done something radically new, interesting and different in one of these markets, how are you ever going to get noticed amongst thousands of more established competitors? Wouldn’t it be better to find a market that is currently under-served by software? It may be less fashionable than writing software for other techies, but it will probably contribute more to the sum of human happiness and be a lot more profitable.

There must be thousands of niches where there is a real need for software, but limited competition. You just need to open your eyes to the bigger world around you. It may mean having to learn about an unfamiliar domain. But it is generally much easier for a software developer to learn some domain knowledge about, say, butterfly collecting, than it is for the average butterfly collector to learn to create a software product. Next time you are talking to a non-techie about their job or hobbies, just ask them “Do you use software for that?” and “Is it any good?”. The ideal answers you are looking for are “Yes” (if there are existing software packages, there is probably a market) and “No” (maybe you can do better).

How to remove software cracks and keygens from file hosting sites

Software piracy is a real issue for every software company, large and small, and it isn’t going away any time soon. So when I heard that fellow microISV owner Nikos Bozinis had created a tool to help software vendors fight  piracy, I asked him to write a guest post. He kindly agreed to write this post about software piracy, the Digital Millennium Copyright Act and his CrackTracker product.

Why buy something when you can download it ‘for free’? Billions of dollars are lost every year from illegal downloads of music, movies and software. People around the world seem to have very lax morals when it comes to abusing digital content. Downloading the latest movie or windows software from rapidshare.com somehow doesn’t strike them as theft — it’s not like stealing a loaf of bread! The traditional music industry is already down on its knees as a result, and software may be the next to follow.

Software authors and music enterprises are fighting back by tightening the DRM (Digital Rights Management) of their products in a futile effort to stop online piracy. But usually crackers have no problem circumventing any protection system that we can dream up. To add insult to injury legitimate customers are usually hurt by such reinforced software protection and activation systems. A little bit like the war on terror, isn’t it?

A different line of defense for ailing copyright owners is the Digital Millennium Copyright Act (DMCA), a US law with global reach for copyright protection (the european EUCD equivalent is not as broadly known). This law is very broad, and not without controversy, but it works – closing down websites that distribute illegal content and removing copyright infringing downloads from file-hosting websites with summary procedures, among other things. So if you discover your software illegally distributed in some warez website, you can send a so called “DMCA section 512 takedown notice” to the website host and they are expected to remove that particular file from circulation — or risk the wrath of the law.

Software Piracy

I have been a microISV for over 10 years so lets forget about the entertainment industry and concentrate on my field, software. There are over 200,000 programs listed on download.com and that’s just for Windows. Many are created by very small to medium sized companies — many even run by a single programmer/webmaster/marketer/entrepreneur. I bet that all these programs are cracked in one way or another — at least those popular enough for crackers to care about them. If you search for warez or torrents you will find the software you want for free, either the latest or an older working version.

Piracy statistics from Business Software Alliance report 2009 (click image to enlarge).

I sell a file manager called xplorer². I track how many people install the program every day and also I have a good guesstimate for the number of people using cracked versions of xplorer². I estimate over 70% of the regular users use one of the known keygens. Imagine if this 70% didn’t exist or it was converted to regular paying customers!

How is it done?

Downloadable software falls into 2 categories: those that run in trial mode until you buy a key to unlock the full functionality; and those that are special downloads for customers that pay the registration fee. In all cases some sort of unlocking takes place using a plain key, or a license file, or online activation, or some combination thereof. Many ISVs write their own licensing code, while others rely on off-the-shelf protection and licensing products (Armadillo, WinLicense etc).

Imagine you shipped your source code along with your program, then it would be trivial for even amateur crackers to bypass your protection and run the program without paying. Very few vendors supply source code, but people in the know can read off your licensing logic like an open book using specialized reverse engineering tools (softICE, IDA and other debuggers and disassemblers). Then they can create a ‘patch’ or modification to your executable that bypasses the protection.

An even worse type of compromise is a keygen. When the cracker uncovers the logic of your unlock keys, he can create a program to generate such keys which look and behave exactly like the legitimate ones you sell to your customers. Then he doesn’t need to patch your program, he just supplies this keygen to the warez community and everyone can help themselves to your program. You can guard yourself against such attacks using asymmetric encryption algorithms for your keys.

Is there a perfect protection system?

In short, no. If you consider that your program is presenting its logic to anyone with moderate experience in machine language, then sooner or later any protection can be circumvented. Professional protection schemes utilize encryption to protect sensitive parts of your code, but even they won’t withstand the cracker test. And remember the harder your DRM the more likely your program will be mistaken for malware (!) as many viruses and trojans use encryption tricks.

Even if there was a perfect system, your sales would still be at risk. All that’s required is some of your customers to post their unlock key in a warez site, and the game is lost. You would then blacklist that serial, until another one was leaked and so on.

The warez scene

There are people who don’t spend any time in Facebook or YouTube. They surf the internet for free stuff. Cracked versions of commercial software (aka warez) circulate in some shady forums that bring together the crackers with the downloaders e.g. http://www.warez-bb.org.  Browse a warez site and you will find any software, movie or music you fancy, with an assortment of popups and dodgy advertisements of the usual internet 3P products (Pills, Poker and Girls [sic]). For your convenience there are even specialized search engines that search a number of such forums simultaneously, e.g. http://www.warez.com.

These forums do not host the actual files. They refer the traffic to specialized file hosting services like rapidshare.com. To make the most of warez you need to buy a subscription to access such file hosting sites (e.g. unlimited downloads from $9/month). Incurable cheapskates could get away without paying anything though, as you can download for free after a forced (nag) waiting of a minute or two.

A bit more up-market are download sites where to gain access you need to purchase a subscription, e.g. http://www.nowdownloadall.com. I have never paid to enter such a site, but they promise access to any download you can imagine. So you pay a monthly fee to download as much as you like. Note that this is different from paid-for hosting mentioned above. I suppose that you need a file hosting subscription on top to get the actual files downloaded. With so much stuff available for free I don’t know if this approach makes economic sense.

Finally there are traditional peer-to-peer file sharing networks, where people share their software music and video through torrents. After the demise of Napster torrents are still strong, with completely decentralized databases immune to legal intervention. The downside of torrents is their inherent unreliability, so people in a hurry will prefer the immediate gratification of a full download from rapidshare.com and the like.

Why do they do it?

It is easy to understand why someone will prefer ‘free’ software instead of paying up. But what about the crackers, the people who circumvent the DRM and distribute these warez. Why do they do it? Here are a few plausible motives:

  • For kicks. The traditional hacker stereotype is a geeky person whose pastime is breaking into computer networks. Cracking into a software’s protection and stripping it clean must be a pleasure in itself, a ritual destruction of the evil Death Star.
  • For glory. Marxist theory claims that private property is theft. This concept has struggled with real tangible property, but digital property is the ideal trophy. Many groups feel that software and music should be free (!) so taking down the big media and software corporations is a noble cause for them. But many small ISVs fall victims too, and the real motives are far less revolutionary…
  • For profit. Marx is dead; long live Das Kapital. Warez downloads are big business in a number of ways:
    • Direct subscriptions charges to access the downloads
    • Selling password unlockers (e.g. you download something in a ZIP archive which is locked and you need to buy some software to unlock it)
    • Distributing malware. Many downloads are packed with malware (sample report for a keygen), from straightforward scams and ransomware to trojans that turn your computer to a zombie, waiting for instructions to launch a DDoS attack or send spam.

You *can* remove illegal downloads

If your software is available to download from warez sites, either compromised (patched or keygened) or simply accompanied by a simple serial number to unlock it, you will definitely lose sales. The good news is that, using DMCA provisions, you can have these unauthorized downloads removed. Without these downloads prospective users will have no choice but to buy your software — or move on to your competitor’s cracked software.

Here is how to remove illegal downloads:

  1. Find your download links. All illegal downloads end up in a host like rapidshare.com or megaupload.com (I know of more than 100, but there are 10-20 big player websites). A standard Google search for your software name plus ‘crack’, ‘keygen’ or ‘rapidshare’ will find some hits, especially if you search in groups or blogs. Even better use specialized warez search engines like http://www.filestube.com with just your software name as a keyword — the results will be just downloads.
  2. Validate download URLs. Some of the download links you discover may be dead (e.g. very old). Click on each one to see if they are valid or 404.
  3. Send DCMA notices. Group the download links by provider (rapidshare, hotfile, etc), and send a DMCA notice to the abuse email address of each website. Usually this is abuse@website.com (e.g. abuse@rapidshare.com). Each website lists the steps for filing DMCA notices for file removal.

This sounds like a lot of hard work, and it can be, but it works. File sharing websites like rapidshare.com run a legitimate business — they are not responsible for cracks — so if you send them a polite DMCA takedown notice they will remove the copyright infringing downloads.

The DCMA takedown notice

Strictly speaking when you send a DMCA notice you are making allegations of copyright infringement, which is a serious crime. You would imagine that a formal complaint should be launched under the guidance of a solicitor/lawyer. Given the amount of copyright infringement that goes on, the red tape would bring everything to a standstill. The beauty of the DMCA law is that it simplifies the procedure. Sometimes a plain English email explaining the situation to the download site, along with a list of your download locations is all that’s required to have the links removed.

A few websites require a more formal DMCA email including details such as your company address, contact telephone numbers, and some boilerplate statements like “I swear, under penalty of perjury, that the information in the notification is accurate…”. You can find many sample DMCA notices online so I won’t repeat them here. The general idea is that you present yourself as the copyright owner and declare the download URLs as unauthorized, and therefore infringing your copyright.

Torrents slip by

DMCA is very good for removing illegal downloads hosted in popular file sharing websites, but it is powerless against torrents. There is no single source for the download, as the files are kept in many computers. You would have to contact each and every person who shares illegal copies of your software in the peer-to-peer network. This would be hopeless and a waste of effort. Thankfully for the ISV, torrent use is on the decline. People prefer direct downloads of the full package instead of slower peer-to-peer downloads.

The sales pitch

Anyone can search and remove illegal downloads manually. I was doing it the hard way for quite some time, each time I released a new version of my software tool (there’s a lot of cracker activity for each release as they need to update their patches and keygens). However this is very tedious, as you must:

  • enter shady warez forums to search for your keyword, facing annoying popups and adverts you wouldn’t want your wife to see
  • search many locations to ensure you get as many download URLs as possible
  • validate each download URL to see if it is still alive or dead
  • organize download URLs and write DMCA takedown emails for each file hosting website

Even if one wipes all the illegal downloads, new ones will appear over time. So the locate-report-remove cycle must be repeated regularly. This was the motivation for writing Crack Tracker, a tool that simplifies the removal of illegal downloads.

Crack Tracker is a desktop tool, with a meta search engine that securely scans warez databases for your downloads. You supply the search keyword (e.g. your software title or company name) then crack tracker will do an exhaustive search, collect a list of suspect download locations and verify the links with robotic efficiency. After you examine the results you just hit a button and the relevant DMCA emails are sent automatically. It doesn’t get any easier than that.

Crack Tracker doesn’t have a fancy user interface but it is very easy to use. It knows of more than 120 file hosting websites and works with 6 major warez search engines (the list is expanding). It is free to try as a search engine; to send the actual DMCA emails you need a registration, but I believe the price is very reasonable, especially if you consider the money you lose in pirated versions of your software.

Why don’t you try it for free and see how many cracks of your software it finds?

Download CrackTracker for Windows (318KB)

Nikos Bozinis ditched his Process Systems Engineering PhD to run his own microISV ZABKAT since 1999. He also writes a weekly blog focusing on file management and occasionally on programming, debugging and running a software business.

An interview with Terrell Miller of CattleMax

Software developers are usually so busy writing software for other techies, that they often forget there is a bigger world out there. Terrell Miller has a successful herd management software product for cattle ranchers. He generously agreed to share his experiences on what it has been like building a software business in a non-techie niche market.

Can you tell us a bit about CattleMax?

CattleMax is herd management software designed specifically for beef (meat) cattle, and helps ranchers keep track of their cattle records including births, purchases, sales, breeding history, measurements, lineage, and more. Having the records in one location enables producers to stay organized and helps them make better decisions – which in turn helps them be more efficient and profitable in their operation.

What was your background before CattleMax?

My wife Penny and I met at Texas A&M University while we were both in Undergraduate programs. My degree in Information Systems in the College of Business and family member’s involvement in cattle, along with Penny’s degree in Agricultural Leadership and years of showing cattle, proved to be a great compliment for us to start a business where we could work together.

How long have you been working on CattleMax?

I started working on the first version of CattleMax, which started out as a custom application for a local ranch, in July 1999 right after I graduated and have worked for Cattlesoft ever since. Penny worked at the local university on a full and then part time basis for 18 months before joining the business on a full-time basis.

What technologies and languages do you use to develop CattleMax?

CattleMax is developed in Microsoft Access 2007. Access has been a key ingredient to our desktop software’s success. A lot of developers don’t give Access the credit it deserves as a powerful and rapid development tool. We have done extensive customizations to our interface to differentiate from the Access default templates and many customers don’t realize we are even using Access.

If you were starting CattleMax from scratch today would you go for a web based solution? Or would you stick with a desktop solution?

That’s a hard choice to make right now in January 2011 because I think we are in a transitionary period.  Developers want to embrace the latest technology because it’s clearly the future. However, you don’t want to create a product that cannot be utilized by all of your customers (Internet in rural areas can still be spotty).  Though we are in the process of developing a web-based version of our CattleMax, I expect the desktop version to continue selling well for years to come.
While a desktop software offers a larger revenue up front to cover customer acquisition costs, a web app can potentially offer more revenue in the long run assuming you have good customer retention.  I think it’s easier to get started with a desktop app because you can use the up-front revenue to reinvest in marketing.
Why did you choose this market? How confident were you that it was a commercially viable market?

You could say the market chose us. Initially, we wanted to create a side project that involved both of our interests. Being students at Texas A&M helped open doors to talk with professors and experts about our product and ideas. Through these talks, we were introduced to a nearby ranch who needed an easy-to-use cattle record keeping system. They became our first customer and continue to use our software today.

How long did it take you you to get CattleMax to v1.0?

It took about 9 months to get CattleMax marketable and stable. Our first public release date was at a local trade show where we received great response. Being a student, we didn’t really have any income to replace – it was the ideal time for us to have started Cattlesoft and the software. We had little to lose and the rest of our life to recover from any business or financial mistakes made.

How technically proficient are your customers? Can you reach them with online marketing?

Our average customer is in the 45 – 65 age range. Over the years, cattle ranchers have become much more knowledgeable with technology. Our marketing is primarily online (PPC, SEO, direct website advertising) along with some print advertising.

The CattleMax user interface looks very slick and intuitive. Do you do any usability testing? Did you find the switch to a ribbon bar difficult for you or your customers?

In the beginning, I would go to a customer’s ranch and watch them use the software. By listening and watching how they interacted with the software, I was able to identify areas of confusion and see ways that we could make processes and areas easier to work with.

The ribbon was mandatory when we switched to Access 2007. While I was initially apprehensive about the change, I now see that the ribbon has made CattleMax easier to use, since it allows priority of certain menu items/common areas by giving them larger icons and visibility.

I see you have a Facebook widget on your home page. Have you found Facebook to be a useful marketing tool?

We use Facebook to post upcoming events, interesting articles and ask our customers for their feedback, plus it’s another way for customers to ask us questions. While advertising on Facebook allows for laser targeting based on interests, our in-house email list is larger than the number of ranchers on Facebook according to their PPC platform. Therefore most of our communications efforts are through our email newsletter and Cattle Management blog.

How did you choose the price of the product?

In the beginning, we chose prices that were comparable to other cattle software programs. We have two editions of our software, one for the commercial/beef producer and another for the purebred/seedstock producer. Each of these editions is available in a Small Herd (50 cow limit) and Standard (no record limit). We chose two editions so that it would be easy for a rancher to confidently choose the edition right for their herd. The two herd size options are so we can offer a solution to small herd producers while providing additional value for larger herds that may require additional support. See Camels and Rubber Duckies.

You have a generous 60-day money back guarantee. Do you have to give many refunds?

We may have one customer, at most, per year return the software because of dissatisfaction. We may have 5 returns a year from people who bought without downloading our trial and wanted a refund – a few of those reasons are receiving it as a gift and not wanting it, software not working on their computer (Windows 95 anyone?), or lacking a key feature. I highly recommend a satisfaction guarantee as it does help customers buy with confidence, knowing that you will stand by your product. No software company wants a dissatisfied customer who feels you “took their money.”

Do you charge for upgrades? Is this a significant source of income?

Our upgrades have been on about a 2-3 year schedule, and current customers can purchase them at half the price of the full version. While upgrade purchases are a double-digit percent of our business, we focus more on new sales. One of the challenges of making a good product is it takes an even better product for customers to understand the value in upgrading.

Do you outsource much work?

We work frequently with independent contractors and freelancers. While we’ve had 6 or more full and part-time employees over the years, I find employee management and “keeping people busy” to be too distracting from working on the big picture. Having people working from their own locations gives us more flexibility, plus we are not limited to just our physical location/city for finding experienced workers.

Do you have any products besides CattleMax?

We adapted CattleMax into LonghornMax, a software for Texas Longhorn cattle that enables breeders to record horn measurements in addition. LonghornMax primarily arose from our connections with the Texas Longhorn Breeders Association where we were previously their official software program. We also raise Texas Longhorn cattle on our ranch near College Station, which is about 90 miles west of Houston. Another spinoff is EquineMax, a software program for horse owners to keep track of their horse records.

Stepping beyond software in 2010, we launched CattleTags.com which is a website for purchasing cattle ear tags. In 2011 we launched LivestockSupplies.com which includes additional equipment and supplies for the ranch. Selling livestock supplies has proven to be a nice complement to our software as it helps us offer additional services and value to customers by offering them convenience and variety of selections, without them even needing to leave the ranch!

Would you recommend others to start a business straight out of college? Or should they work for other people first to gain experience?

The younger you are and the less commitments you have, the easier it is to get started, because your opportunity cost on your time is lower than it will ever be.  Also if your business fails, you have the rest of your life to recover.  I think entrepreneurs can have the best of both: starting their own business while gaining experience.  I’ve learned a lot through in-person networking as well as online communities like Business of Software, Hacker News, SEOBook.

Given that you started the business straight out of college, how did you learn all the business and marketing skills you needed? Did you make a lot of mistakes?

I learned much of my business & marketing skills through three sources: formal academic learning, informal discussions with other entrepreneurs and mentors, and of course personal experience.  Several years out of college, I realized that my business skills and not technology skills were holding me back, so I decided to return to school and pursue my Masters of Business Administration (MBA).
As far as mistakes, I asked one of my mentors about his biggest mistake and he replied “I’ve not made any mistakes, but I’ve bought a lot of expensive learning lessons”.  Many of my learning lessons have been as a result of losing focus and could have been avoided by asking myself “is this the highest priority and best use of my time?”.

Any advice you would like to give to aspiring software entrepreneurs?

I’ve visited with many software entrepreneurs over the years and frequently find an imbalance of priorities.  As programmers we tend to gravitate towards technology and automation.  However, once you’ve built a great product, often times the best return on your time and money is in marketing (blogs, PPC, SEO, print advertising, talking with customers).
Another bit of advice would be to embrace the lifestyle aspect of your business.  Owning your own business helps you be in control of when you work, where you work, how you work, and what you work on.  I consider it a good day when I can wake up in my house, walk down the hall to my office, work for a while, and then spend time outside on our ranch with my family.

Terrell and “Dude”, an 80 inch (200cm) tip-to-tip 2,000 pound (900kg) Texas Longhorn steer.

microISV pub meetup in Wiltshire

I am organizing an informal pub meetup in Swindon for anyone interested in talking about the business of software in general, and microISVs in particular.

Date: Thursday 27th January

Time: From 7:30 pm.

Location: The Sun Inn, Swindon, Wiltshire, England. The pub is not far off the M4, Jn 15 and has plenty of parking. The food is usually quite good. Post code: SN3 6AA (note it isn’t the only pub along this road, it is the one opposite the petrol station). Map .

If you are intending to come I suggest you email me, just in case of any last minute changes of plan.

Start Small, Stay Small: A Developer’s Guide To Launching a Startup

I recently read ‘Start small, stay small: A developer’s guide to launching a startup’ by Rob Walling. The preface states:

“This book is aimed at developers who want to launch their startup with no outside funding. It’s for companies started by real developers solving real pain points using desktop, web and mobile applications.”

Many of you are probably already familiar with Rob’s work, including: a blog, a podcast and the micropreneur academy. Rob’s approach has been to develop a portfolio of niche websites as a solo founder (for example ApprenticeLinemanJobs.com), funding it with his own capital and outsourcing work where appropriate. The intention being to have a business that produces a decent income, but allows the founder a flexible lifestyle. He uses the portmanteau ‘micropreneur’ to refer to this approach. It is not a term I care for, with its awkward shunting together of Greek and French. But I guess it is no worse than ‘microISV’. He develops on these themes in the book, with a particular emphasis on the early phases (as implied by the title).

The chapter headings are:

  1. The chasm between developer and entrepreneur
  2. Why niches are the name of the game
  3. Your product
  4. Bulding a killer sales website
  5. Startup marketing
  6. Virtual assistants and outsourcing
  7. Grow it or start over

As with Rob’s blog and podcast, there is plenty of insight and actionable information based on real experience. Some of the writing is taken straight from the blog, but I believe most of it is new. There are links to useful online tools, some of which I hadn’t come across before. It even includes some of that rarest of commodities – real data. He also dispells a few myths – for example: that creating a software product is a quick and easy way to riches and that Facebook and Twitter are all the marketing you need.

The book is particularly strong on market research – a subject I haven’t seen covered much in the context of small software companies. He includes a step-by-step methodology for measuring market size. It also covers other useful subjects such as: pricing, choosing web vs desktop vs mobile vs plug-in, website design, SEO, mailing lists and buying and selling websites. The paper version of the book is 202 pages long. There isn’t a lot of unecessary waffling or padding, so you are getting a fair amount of information for your money. An index might have been useful. Perhaps for the next edition?

While the book will have most benefit for those first starting out, I think even experienced software entrepreneurs will probably find some of it useful. The book is available in paper, electronic and audio formats from $19 at www.startupbook.net. Given its niche market, I think this is good value.

Full disclosure: I recieved a free (paper) copy of the book from the author.

2010 microISV Pain Point Survey

Russell Thackston is running a survey to try and find out which tasks cause microISVs the most pain. He is then going to use the results of this survey to guide further research at the microISV Research Alliance at Auburn University. I have completed the survey and will be interested to see what the results are. You can take the survey here. You could win an iPod touch or an iPod shuffle. The survey will run until 21st August.

Lessons learned from 13 failed software products

“No physician is really good before he has killed one or two patients.” – Proverb

Software entrepreneur culture is full of stories of the products that succeeded. But what about the products that failed? We rarely hear much about them. This can lead to a very skewed perspective on what works and what doesn’t (survivor bias). But I believe that failure can teach us as much as success. So I asked other software entrepreneurs to share their stories of failure in the hope that we might save others from making the same mistakes. To my surprise I got 12 excellent responses, which I include below along with one of my own. It is a small sample and biased by self selection, but I think it contains a lot of useful insights. It is an unashamedly a long post, as I didn’t want to lose any of these insights by editing it down.

Case #1: DRAMA

Contributor

Andy Brice.

The product

DRAMA (Design RAtionale MAnagement) was a commercialization of a University prototype for recording the decision-making process during the design of complex and long-lived artefacts, for example nuclear reactors and chemical plants. By recording it in a structured database this information would still be available long after the original engineers had forgotten it, retired or been run over by buses. This information was believed to be incredibly valuable to later maintainers of the system, engineers creating similar designs and industry regulators. The development was part funded by 4 big process engineering companies.

Why it was judged a commercial failure

Everyone told us what a great idea it was, but no-one bought it. despite some early funding from some big process engineering companies, none of them put it into use properly and we never sold any licences to anyone else.

What went wrong

  • Lack of support from the people who would actually have to use it. There are lots of social factors that work against engineers wanting to record their design rationale, including:
    • The person taking the time to record the rationale probably isn’t the person getting the benefit from it.
    • Extra work for people who are already under a lot of time pressure.
    • It might make it easier for others to question decisions and hold companies and engineers accountable for mistakes.
    • Engineers may see giving away this knowledge as undermining their job security.
  • Problems integrating with the other software tools that engineers spend most of their time in (e.g. CAD packages). This would probably be easier with modern web-based technology.
  • It is difficult to capture the subtleties of the design process in a structured form.
  • A bad hire. If you hire the wrong person, you should face up to it and get rid of them. Rather than keep moving them around in a vain attempt to find something they are good at.
  • We took a phased approach, starting with a single-user proof of concept and then creating a client-server version. In hindsight it should have been obvious that not enough people were actively using the single-user system and we should have killed it then.

Time/money invested

At least 3 man years of work went into this product, with me doing most of it. Thankfully I was a salaried employee. But the lack of success of this product contributed to the demise of the part of the company I was in.

Current product status

The product is long dead.

Any regrets?

It was a fairly painful experience. I would rather have spent all that money, time and energy on something that someone actually used. But at least I learnt some expensive lessons without using my own money.

Lessons learned

  • Creating a new market is difficult and risky.
  • Changing people’s working habits is hard.
  • Social factors can make or break a product. The end-users didn’t see anything in it for them.
  • If the end-users don’t like a product, they will find a way not to use it, even if their bosses appear to be enthusiastic about it.
  • Talk is cheap. Lots of people telling you how great your product is doesn’t mean much. You only really find out if your product is commercially viable when you start asking people to buy it.

Case #2: CleanChief

Contributor

Sam Howley.

The product

CleanChief was to be ‘The easy management solution for cleaning organisations’. Managing assets, employee schedules, ordering supplies, you name it CleanChief handled it. Essentially it was light weight accounting software for cleaning companies.

Why it was judged a commercial failure

A small number of copies were sold. No one is actively using it at present. Once I realised that it wasn’t a complete product and that additional development was required I moved on to other product ideas. I had basically run out of enthusiasm for the product.

What went wrong

  • I am not an accountant.
  • I have never run a cleaning company.
  • I developed it for more than two years without getting feedback from real cleaning companies. I was arrogant enough to think that I knew what they wanted (or could work it out on my own). Or maybe it was that I was just where I was most happy and comfortable – writing software. Talking to real users was new and to be honest a bit scary for me.
  • A successful cleaning company operator, a friend of a friend, offered to become involved for a 30% share. This was a gift from the heavens, exactly what I needed. I refused.
  • In a way, even though I spent so long on the product, I gave in too soon, I was just getting feedback from real users, just getting my first batch of sales when I decided to move on.
  • I developed the application in VB6 even though I knew it was outdated technology when I started the project.This meant there was no ‘cool factor’ when discussing it with other developers, I told myself it didn’t bother me, but it probably did.

Time/money invested

I worked on it at night and weekends for about 2 1/2 years. I paid for graphic design work, purchased stock icons and images. I probably spent a couple of thousand Australian dollars in total and an awful lot of time.

Current product status

I moved on to other products that have gone much better. My newer products were released in months rather than years and I looked for real feedback from real users from day one. they are:

I do occasionally ponder returning to CleanChief and trying to raise it from the ashes.

Any regrets?

No. Looking back I learned a few lessons from a huge amount of time and work, it was a very inefficient way to learn those lessons. But when you are new to something like starting a business or creating useful software being inefficient at learning lessons is the best you can do, it’s a thousand times better than not learning lessons at all.

I learned so much more in my two and a half years of trying to develop CleanChief than I did in the two and a half years prior to that, during which time I really wanted to start a software business but didn’t take any action.

Lessons learned

Hearing or reading some piece of advice is totally different to living it. Here are some of the ideas that I always agreed were true but didn’t fully understand the implications of until I had lived them out:

  • Force yourself to get out and talk to people. Ask their advice. Almost everyone will help if you ask them for feedback.
  • Force yourself to cold call a few businesses in your target market.
  • Create a plan of how to market your product.
  • Try and use your product as much as possible as you build it.
  • Get out of your comfort zone from day one
  • Do not have the mind set that the day you release version 1.0 is the finish line, it’s the starting line, so hurry up and get there.

Case #3: Chimsoft

Contributor

Phil Anderson.

The product

ChimSoft – Software for Chimney Sweeps.

Why it was judged a commercial failure

I believe this failed for two reasons:

  • Focusing on too small of a niche
  • Me not being able to work full time on it.

I don’t consider it a complete failure because I sold two copies when it retailed for $2k, and maybe 10-15 more copies when I lowered the price to $200. Those sales proved that I wasn’t completely off base in thinking there was a market for the software, but the cost of customer acquisition and the size of the market were too small. Customers wanted to have a bunch of phone calls, face-to-face etc… the type of stuff you only see with much more expensive software. The problem was that for a niche this small we had to charge a lot of money to make it worthwhile for us, but the customers were small businesses where this is a major investment, so the fit was never right. The other issue was the people that did buy it were not super tech savvy, so there was a high cost of support that made even a $200 product not worth it.

What went wrong

  • Having all partners who were not full-time, and had equal equity.  I ended up doing most of the work and this is the main reason I didn’t force success is I felt I was in it alone.
  • Focusing on too narrow of a niche.  The plan all along was to expand for all service industries, but it was much harder to make that move than we expected.
  • Not researching pricing more, we knew small businesses made major purchases for things that really helped their business, but I think it would have been better to have a cheaper product with wider appeal than an expensive product with narrow appeal.

Time/money invested

I invested maybe a year of time and $3k into the company. I did not take any huge risks on it, so there were no big negative outcomes.

Current product status

The company folded in 2007, I refocused my efforts on my existing companies (AUsedCar.com and BudgetSimple.com) and both have been doing well enough that I quit my day job.

Any regrets?

I don’t regret it entirely, I think I learned several valuable lessons about working with other people, small business sales, trade-shows and software development.

Lessons learned

  • Pick partners wisely. Don’t try to be even-steven with equity. Use restricted stock to ensure everyone does their part.
  • Know what your customers expect (24/7 phone support?) to determine if you can do this while working a day job.

Case #4: PC Desktop Cleaner

Contributor

Javier Rojas Goñi.

The product

PC Desktop Cleaner. Simple software that cleans your desktop and archives your files.

Why it was judged a commercial failure

My goal was to sell 10 units per month. I’ve sold less than 1 unit per month.

What went wrong

  • I think that the product concept is not useful enough. It’s not a thing that people would pay for.
  • The market exists (some people buy) but it’s too little or difficult to reach.
  • I didn’t do any market research. I just got in love with the idea and did it. Later, I’ve learnt to use “lazy instantiation marketing” and have trashed a lot of embryo projects. :-)

Time/money invested

I think I wasted near $500 in development tools and some freelancers. Not too much.

Current product status

I’m still selling it. I’ve thought about others products, but not really decided yet.

Any regrets?

No, it was a lot of fun and I learnt lot of things. In my “day job” I own a small firm that sells software for production scheduling. I’ve learn a lot of SEO and AdWords in the DesktopCleaner project that now I’m using with great results.

Lessons learned

Go for it, maybe you win, maybe you fail, but you will grow and get tons of useful knowledge on the way.

Case #5: Smart Diary Suite

Contributor

Dennis Volodomanov.

The product

Smart Diary Suite.

Why it was judged a commercial failure

It sells and the profits cover current investments in the product, but there is little left over on top of that.

What went wrong

If I had a chance to do anything differently:

  • Take it seriously from day one.
  • Never stop developing and supporting.
  • Invest as much as possible in marketing early on.
  • Don’t stop believing in your creation.

Time/money invested

Up to this point, I have spent 13 years on Smart Diary Suite and a lot of money went into buying hardware, software, hosting, marketing, etc… All of that money came from my day job, but at this point SDS has recovered all of that back and is now making a small profit. The actual amount is hard to calculate (over the 13 year span), but we would be talking in tens of thousands of US dollars.

Current product status

For a while it may have seemed like SDS is not going to be successful, but that’s probably my fault – I stopped believing for a little while. Now I am back, starting again and this time I’ll make sure it doesn’t fail.

Any regrets?

I do not regret doing it. I regret allowing myself to stop working on it, basically bailing out on it for a while – that is my biggest mistake.

Lessons learned

If you want a successful product – believe in it and let others know that you believe in it.

Case #6: Highlighter

Contributor

Mike Sutton.

The product

Highlighter. A utility to print neatly formatted, syntax highlighted source code listings.

Why it was judged a commercial failure

I earnt a grand total of £442.52 (about $700 in todays money) in just over two years, so I guess it paid for itself if you exclude my time.

What went wrong

Since it was my first product and I was very green about both marketing and product development. I would suggest the following would have made things better:

  • Get feedback from potential users about the product (eg from the ASP forums). Some parts of the program where probably too option heavy and geeky.
  • Diversify. If people didn’t want to print fancy listings, maybe they would have wanted them formatted in HTML.
  • Better marketing. I’m not sure this would have saved it, but all I knew in those days was uploading to shareware sites. I never even sent a press release.

I figure it failed simply because it was a product nobody wanted. Actually, more importantly than that,, it was a product *I* didn’t want to use, but it developed from a larger product I was working on, on the assumption I could earn some money on the side from part of the code.  Since then I’ve stuck to products which I’ve actually wanted to use myself. There’s a lot to be said for dogfooding, not just for debugging, but for knowing where the pain points are and what extra features could be added.

Time/money invested

I would guess a couple of months of evening/weekend development time. Financially there was little spent, except that I offered the option of a printed manual and CD for an extra charge. One customer took me up on the offer, so I had to get 100 manuals printed and 99 of them went in the bin.

Current product status

I moved on to another product which has sold over £50,000 and a third which has earnt even more than that. Not enough to retire on but considering I only do this part time it must work out at a great hourly rate. There’s a lot to be said for not giving up…

Any regrets?

Nope. I figure every failure in life teaches you valuable lessons. Of course if I’d made a large financial investment I may feel differently, but that’s one of the big advantages of software over physical product sales.

Lessons learned

Just to reiterate – develop something which you find useful, instead of second guessing others.

Case #7: R10Clean

Contributor

Steve Cholerton.

The product

R10Clean. A data cleaning and manipulation tool.

Why it was judged a commercial failure

In the 18 months or so it’s been on the market I have sold 6. It has been £199, £99 and £19 – with no effect on sales !

What went wrong

Not sure what I did wrong ?  The product is maybe too techie ?

Time/money invested

No effect financially as at the time I was in a strong financial position.

Current product status

I still have it for sale but do not market it at all. I have other products.

Any regrets?

I don’t regret it as it saved me a ton of time when I was working with legacy databases a lot, as a commercial product it has been raved about (once!) and received a good review from the Kleper report, but has failed totally.

Lessons learned

Advice to others ?  Just because you need it personally, don’t assume the rest of the world does too. :-)

Case #8: nBinder

Contributor

Boghiu Andrei.

The product

nBinder, packs multiple files into a stand alone executable with over 50 advanced output and file unpack options, conditional run and commands.

Why it was judged a commercial failure

It was the first product I began selling. It sold to 300+ customers in 4 years. But for about a year the sales began to go down and have finally stopped completely.

What went wrong

  • The biggest problem was that because it was a packer intended for people that wanted to pack their products (software or games) into a single package (compressed and encrypted) many have used it for creating malware by binding malware files to legit files and then distributing the output so it isn’t detected by antivrus software (although it would be detected at runtime). Because of this I had lots of problems with antivirus companies that flagged files create with nBinder as malware. This was of course affecting legit users as their files would be falsely marked as malware. I used virustotal.com to see which antivirus detected it and contacted the antivirus manufacturer as soon as I detected the problem. In most cases they would remove it from their definitions. But it was an uphill battle because it would appear again in a matter of weeks. Some small AV companies didn’t event bother to reply to my emails to fix the problem. Others were using heuristics to flag files create with my applications and AV developers were reluctant to whitelist files created with nBinder. You can imagine it that it was enough for an AV such as Kaspersky or Norton to pick my files as malware for a day and customers would be affected and not use my product any more, especially that it took about 3 days for AVs to remove the false positive.
  • Infrequent updates. Due to lack of time I only updated the product once or twice a year and this affected the product a lot.
  • No marketing. I decided that I didn’t want to invest money in marketing so, except for a short AdWords campaign, I invested no money in marketing.
  • My decision to develop 3 products instead of concentrating on one or two affected development time and quality. I have worked on 3 products simultaneously instead of concentrating on making a single good one. The reason I worked on 3 is because I enjoyed developing different software in different categories. I didn’t start this for money but for the fun of development.

Time/money invested

I invested almost no money (except for hosting costs). Time invested I can’t really say exactly, but not too much as I only worked on nBinder in short bursts like 6 hours a day for a week or so before releases.

Current product status

Still for sale. My other products are:

Any regrets?

It’s not a total failure as I did make some money out of it with no investment, so I don’t regret starting it, but it could have been much better.

Lessons learned

Words of advice for others trying to make money from software development:

  • Study the market and the current trends very well.
  • Before deciding to take on large competition make sure you have something better (at least from one point of view) than the competition ( for example you might not have the same features but you have a better GUI and general presentation).
  • Do not get scared of an overly populated market segment. For example with nBinder I picked a segment with very little competition but also few possible users and the results were not so great (I didn’t have many users). With nCleaner I went head-to-head with lots of already established products but also the market is very big. Although nCleaner is free it has had the most success because there are so many potential users (anyone with a PC actually), so it had over 2 millions downloads and I still receive lots of mails regarding it, even if the last update was in 2007. So it is possible to have success in a market with lots of competition with no investment but it’s hard to reach the level of more established products.

Case #9: Net-Herald

Contributor

Torsten Uhlmann.

The product

Net-Herald – a monitoring application for water supply companies. It was a complex client server application that would receive monitoring data from specialized hardware and store that data inside a SQL database.  The client displays that data in different graphs, provides printable reports or sends alarm messages via SMS if a monitored value is not within its specified limits.

I developed Net-Herald as a perfect fit for that specialized hardware that is provided by a local manufacturer. That way, so I hoped, I could profit from their sales leads and would find a smoother way into these water supply companies. The downside of course, was that my software would only work with their hardware.

Why it was judged a commercial failure

I sold a first license fairly soon after I had a sellable product, although it took the customer nearly a year until they finally bought. But since then I sold only one more license within the last 4 years or so.

What went wrong

  • I didn’t do my own marketing and the hardware guys weren’t really concerned with selling my software.
  • Water management companies have a terribly long sales cycle. Other vendors monitoring applications usually cost tens of thousands and are geared toward large suppliers. Whenever a supplier buys into such a product he is unlikely to change within the next decade or more. I tried to position my software towards small suppliers but even then most of them were already locked into another vendor’s solution.
  • My software only worked with a specific hardware. That narrowed the marked down substantially.
  • In the end the software became too complex for one poor mortal to maintain. Because the software didn’t produce any substantial income I had to stop adding new features which would make it attractive for more prospective clients.
  • This kind of software is not sold over the Internet. Rather it needs very active sales people that nurture clients over a rather long period of time.
  • All these facts indicate that software like this should not be developed by a one man show.

Time/money invested

The development time for the first sellable version was maybe about 9 months. I didn’t have a job income at that time, but got funding due to government support for small start-up businesses. So I didn’t drain our family’s personal finances. But I did of course invest a great deal of time and sweat.

Current product status

Now, I have drawn a line and stopped active development of Net-Herald. I still do some custom extensions for my first clients. But I no longer market the software. I have instead focused on my consulting services. I also try to learn developing and selling software with my cross-platform drag and drop product Simidude.

Any regrets?

I didn’t succeed yet selling my own software (which is still my goal) but I do not regret doing it. I developed Net-Herald using (Java) technologies that now give me leverage at my consulting gigs. All in all it was a heavy ride. But it was fun and I would do it again.

Lessons learned

  • My biggest mistake was the lack of market analysis. I trusted the word of the hardware manufacturer without verification.
  • I have written more about the above and some other failures on my blog.

Case #10: HabitShaper

Contributor

Adriano Ferrari.

The product

HabitShaper – set and track daily targets for your goals (weight loss, quit smoking, jogging, writing, etc…).

Why it was judged a commercial failure

I sold a few copies, but not enough to make back the time I invested in it and my conversion numbers and traffic are below average.

What went wrong

  • Did not do enough pre-production research (talking to customers, etc).
  • Did not do a large enough beta to make up for lack of initial research.
  • Ignored gut-feeling that my product is better suited to being web-based and multi-platform (incl. mobile).
  • Did EVERYTHING myself (logo, web design, video, software, AdWords, etc).

Time/money invested

I worked on it two years, part-time, while doing Masters/PhD in Physics. It had no impact on my finances (very little money invested) or circumstances.

Current product status

I am relaunching as a web-based product this summer.

Any regrets?

Not in the least! I learned about as much from making HabitShaper as I have from my MSc thesis and PhD work.

Lessons learned

  • Most important: PAPER prototypes, minimum viable product, and iterate.
  • Don’t be afraid to launch early.
  • Launch a little bigger than you’d expect (it’s harder to find those initial customers than you think).
  • Don’t be afraid to change directions, especially early on.
  • Doing things yourself is a great learning experience, but if you want to get your product out to customers as fast as possible, don’t be afraid to invest money and outsource your weaknesses.

Case #11: BPL

Contributor

Jim Lawless.

The product

BPL – Batch Programming Language Interpreter.

Why it was judged a commercial failure

I sold about 10 copies.

What went wrong

  • I didn’t really do enough research to find out if the target market was in existence. I was hoping that network admins and support staff members would find it easier to use than batch files and less complicated than any of the free scripting language options available. So, I just rushed to get the MVP (Minimum Viable Product) out the door.
  • I never did provide a compiler that would build a stand-alone EXE. I think that might have met with more success.
  • I didn’t do much as far as advertising the existence of the product.

Time/money invested

I only spent a few weeks coding and documenting it in my spare time. Support issues sometimes took a whole evening, but nothing major. It did not have any impact on my finances as I had invested nothing but my time.

Current product status

I will still address support issues with this product for registered users, but I don’t actively sell it. I’ve open-sourced the program and it still really isn’t seeing heavy use.

I was more successful with other products. I have a few retired products that saw some good bulk-purchase deals ( command-line DUN HangUp, command-line scheduler ) and I still sell the following (for Windows):

All of the above still bring in a modest passive income.

Any regrets?

Not at all. “Nothing ventured,…”.

Lessons learned

Had I not attempted to bring the BPL product to life, I might still be sitting here wondering “what if?” I think it was very beneficial for me to invest the time to try out this idea.

Case #12: Anonymous

Contributor

Anonymous.

The product

A time tracker.

Why it was judged a commercial failure

Because it is not my primary income. I have about 150 customers in one year.

What went wrong

  • No marketing.
  • No real thought into features.
  • I don’t spend any time on it.

In my defense, the reason I do not spend much time on it is that the market became saturated with ‘me toos’ right after I released, which was quite expected. In fact, as I was looking for users, I got an email from a competitor suggesting that I don’t enter the market because they are working on the same thing! I don’t know what I would do differently. Maybe spend more time on it? I think the law of diminishing returns applies quite early in this space so I am not sure.

Time/money invested

Since inception (Nov 2008), I’ve spent close to 250 hours total. Total cash outlay was something like $500.

Current product status

I never tried to make it succeed, to be honest. It was only a learning experience for me. What I probably need now is to go all in. Quite frankly, if I double the sales for this product, I can quit all consulting work. But I really do not think it is a good idea to work on this app full time as it is too simple.

Any regrets?

Definitely not.

Lessons learned

  • Do it!
  • Solve a problem people know they have.
  • Don’t invest too much time and money at the beginning.
  • Don’t be wedded to a particular idea.
  • Don’t only listen to your customers. Listen to yourself. After all, you created the idea which attracted the customers.
  • Never promise a feature for a sale. I’ve never done it but the pressure is really great. My stock response is always: “While such a feature may be available in the future, I recommend that you only use current features when deciding on your purchase.”
  • Do use Google to your advantage.

Case #13: ScreenRest

Contributor

Derek Pollard.

The product

ScreenRest – a consumer software product that reminds users to take regular rest breaks while using their computer.

Why it was judged a commercial failure

ScreenRest failed commercially because we built a product without having a clearly defined market.  This was compounded by it offering prevention, not a solution. ScreenRest continues to regularly sell a small number of licences but not in sufficient quantity to justify further enhancements.  The conversion rates are good, but there are simply not enough visitors to the website.

What went wrong

  • Not doing market research first.
  • Creating a prevention rather than solution product – people generally wait until they have a problem and then look for a solution.
  • Creating a product with medical associations – the SEO and PPC competition for related keywords is prohibitive for a product with a low purchase price.

Time/money invested

At least £2000 was spent on the project, including software licences and additional hardware.  The product and website were created over roughly 12 months by myself and my wife Lindsay, some during spare time, then part-time and finally full-time so it is difficult to determine the total number of hours.  Working part-time and then full-time on ScreenRest caused a significant impact on our finances.  Although right from the beginning we saw this as in investment for building a business.

Current product status

Once the product was complete and we started learning SEO it became all too apparent that organic search traffic for related keywords was going to be insufficient.  Research into PPC then revealed that the price point was too low to support purchasing medical terms. Planned features for ScreenRest have been put on hold and no further marketing is planned.  We continue to support new and existing ScreenRest customers and plan to do so for the foreseeable future. Rather than create another software product we chose to use what we had learned about marketing, copywriting and SEO to create a series of websites targeting a range of topics (often known as niche sites).  The most successful of these sites we are expanding in value and functionality to fill gaps not serviced by the competition.

Any regrets?

No.  ScreenRest succeeded in every way intended, other than commercially.  Creating it was a rewarding learning exercise that started us down a path to finding the intersection of our skills, experience and market opportunities.

Lessons learned

  • Start with market research – creating a high-quality product you believe in is not enough on its own.
  • Make sure you can identify a specific target market, that you can reach that market and that it is large enough to support your financial goals.

Conclusion

Analysing the above (admittedly small and self-selected sample) it is clear that by far the commonest cause of failure were:

  • lack of market research
  • lack of marketing

With the benefitof 20/20 hindsight it seems blindingly obvious that we should:

  • spend a few days researching if a product is commercially viable before we spend months or years creating it
  • put considerable effort into letting people know about the products we create

Yet, by my count, a whopping 6 out of 13 of us admitted to failing to do each of these adequately. Probably we were too busy obsessing over the features and technical issues so beloved of developers, which actually contributed to far fewer failures.

It is also noticeable that, despite the failure of these products, there are few regrets. Important lessons were learned and no-one lost their house. Many of us have gone on to develop successful products and the others will be in a much stronger position if they do decide to try again.

A big thank you to everyone who ate a large slice of humble pie and submitted the above. I hope we can prevent other budding software entrepreneurs making the same mistakes. Even if you don’t succeed, you will learn a lot.

Feel free to add your own hard-won lessons from failure in the comments below.

“No physician is really good before he has killed one or two patients.” – Hindu proverb

Social factors can make or break a product.