Tag Archives: tools

dsc_3806

Choosing a market for your software

The efficient market hypothesis states that “asset prices fully reflect all available information”. If the efficient market hypothesis is true, then you would expect actively managed funds (where fund managers pick the stocks) to do no better than index funds. That does seem to be the case:

“Numerous studies have shown that index funds, with their low costs and ability to closely mimic the returns of markets both broad and narrow, steadily outperform the returns of most actively managed funds.” Wall Street Journal

Unless you have some sort of insider knowledge (which it might be illegal to exploit), you might as well invest in index funds or get your cat to pick your stocks as pay someone else to do it.

But I am interested in a different sort of market efficiency. If you have to pick a vertical market to start a software business in, does it matter which vertical market you pick? If the market is perfectly efficient for businesses, then each vertical will have a level of competition proportional to the size of the market. In that case you should have an equal chance of success whether you decide to write a game, a developer tool, an anti-virus product or a CRM system.

From lots of reading and talking to other software business owners I have come to the conclusion that the market is highly inefficient for businesses. The market vertical you pick has a big effect on your chances of success. It seems to me that the three worst verticals are: games, developer tools and consumer mobile apps.

Games are fun! Writing a game sounds like a blast. Much more exciting than writing software for boring businesses. It has also been getting easier to write games due to the ever improving tools. Consequently, the market for games is totally saturated. The outlook for independent games developers looks grim. Today on the Steam platform there are 12,971 games listed. Even some of the big and famous games developers only seem to survive by forcing their staff to work vast amounts of unpaid overtime.

Pretty much every software entrepreneur has considered creating a software development tool at some point. I know I have. It is a market that we all understand (or think we do). But consequently it is saturated. Software developers are also pretty horrible customers. They are used to using lots of free software. And that tool you spent years developing? They think they can write something better over a weekend.

“Thousands of people used RethinkDB, often in business contexts, but most were willing to pay less for the lifetime of usage than the price of a single Starbucks coffee (which is to say, they weren’t willing to pay anything at all). … Developers love building developer tools, often for free. So while there is massive demand, the supply vastly outstrips it. This drives the number of alternatives up, and the prices down to zero.” Why RethinkDB failed

I wrote back in 2010 what a horrible market the iPhone app store is for developers. Since then the number of apps has increased tenfold to 2.2 million, the average paid app price is a measly $1.01 ($0.48 for games) and some 90%+ of apps are free or freemium.

You should be wary of markets with no competition. But the really high levels of competition in these three markets drives down prices and makes it very hard to get noticed. Obviously not everyone in these 3 markets is failing. It is possible to create a product in one of these markets and be wildly successful (Indie game developer Notch of Minecraft fame springs to mind). But I think the odds are very much stacked against you.

So what market should you pick to maximize your chances of commercial success? Aside from the obvious factors (e.g. something you are interested in and knowledgeable about, something that solves a real problem etc) I suggest avoiding anything considered ‘sexy’ by other developers.

Here is a radical idea – create a software product aimed at women. The vast majority of software is written by men and consequently it tends to cater for men. 50% of the world’s population are women and they buy software too!

Just because a product is not in a ‘sexy’ market doesn’t mean that it has to be boring to create. I have found plenty of interesting usability, optimization and visualization problems to solve while developing my own seating planning and visual planning software products.

Here is a thought experiment. Imagine you are talking to another software guy at a conference and explaining what you product does. If your imaginary software guy says “that sounds cool”, then it’s probably a tough market to create a commercial product in. But if they look a bit surprised or their eyes glaze over, then you might be on to something.

80 useful tools and services for software businesses

tools and servicesSome of the most useful nuggets of information I come across in blogs and podcasts are mentions of tools and services used by other people to better run their software businesses. So I have put together my own list of useful tools and services to run a software business.

Feel free to recommend your own favourites in the comments below. Please include your relationship to the tool/service (e.g. customer, user, employee or owner). You can also comment below about your experiences (positive or negative) with any of the tools and services listed. Anonymous comments will be treated with suspicion and may be deleted

Animated GIFs

The human brain and visual system is highly optimised to detect movement. If you don’t believe me, watch what happens to people’s attention when you turn on a TV in a room. Even if the sound is off, the program is dull and the conversation is interesting, people will find it very hard not to stare at the TV. You can exploit this by using animation on your website to grab the user’s attention. Animation is also a useful way of packing a lot of content into a limited space on your web page.

Animated GIFs are a useful low-tech way of adding animation to a website. They work in pretty much any browser, without requiring visitors to download a plug-in or even click a ‘play’ button. I use them on the PerfectTablePlan home page to show rotating testimonials and on adwords landing pages to give a brief visual overview of what PerfectTablePlan can do.

animated gifs

Animated GIFs are quite easy to create. Here is how I created the image above (on Windows):

  1. I used Sizer (freeware) to size the PerfectTablePlan main window to 960×750.
  2. I used SnagIt (commercial) to capture various screenshots, resize them to 320×250 and save them as separate 7-bit GIFs.
  3. I dragged the GIFs onto UnFreez (donationware) and created an animated GIF. (You can also use Adobe Photoshop, if you have it).
  4. I dragged the animated GIF onto SuperGIF (commercial with trial) to reduce the file size (by about 5% in this case).

The final result isn’t a work of art, but it is hopefully enough to grab the visitors attention and whet their appetite for more information.

Animated GIFs can get very large if you aren’t careful. But it rather defeats the object if your website visitor clicks ‘back’ before the image has loaded. I used 7-bit GIFs, small image dimensions, a limited number of frames and GIF optimisation to keep the file above to 72kb.

A word of warning – use animation sparingly or the effect can be quite overwhelming (don’t click this link if have epilepsy or a refined sense of taste).