April 2008


What is the point in running a business if we dont want to become a billion-dollar company? This was the conversation I had a couple of weeks ago, and the person that I was talking to asked me this question. I felt that it is a great motivation to run a business but beyond that, what are the compromises and the challenges that typically get associated with running a billion-dollar game?

The question that cropped up in my mind was, why do you need to be a billion-dollar company when you can easily be a million-dollar company? I mean it and especially when you look at this from an ISVs point of view, this talks more about realism than being obsessed with projections and CAGR.

To become a billion-dollar game, you need to be either seeking investments or go public before you can eventually get there (this generally is the case!). From the ISVs perspective, this primarily depends on the nature of the idea and the approach you have towards making your business profitable. Plus, all the biggies are not going to be running after you to acquire with their purse strings open, till you make them really interested (it is a tough call to sell anyway!).

More of ten than not, many ISVs operate in a niche market and not necessarily world changing businesses and it is easier to build million-dollar companies as opposed to building billion-dollar ones. This would allow you to run your shops profitably with the products that you enjoy building and servicing your customers.

Many an ISV fail due to their inability to raise funds as they find it difficult to convince a VC on the business potential of their ideas. Even engineering takes a hit and the product never enters the market and remains at the prototype stage itself. A large percentage of these in my mind, are not ideas that require funding for evolution, and I would suggest that you put together version 1.0 of the product in $100K or thereabouts and take it to the market. They (market) are the best judges of validating your business ideas.

All said and done, there are some ideas that definitely require the VCs; not just their funding, but their ability to suggest the direction as well. Though, a majority of ISVs need not necessarily need VCs to be with them, to get themselves to profitability. The most important thing is to identify where your ideas lie.

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I have been thinking quite long and hard over the past days on how producteering can be tangibly represented with respect to the business of making software products. Before I get into it, let me define what Producteering is.

Producteering is a set of principles and practices, driven by the right people and supported by the right platform. Producteering, when applied rigorously, enables products to be built better and faster (Quite simple!, isn’t it?)

Coming back to the original purpose of this post, here are my thoughts on the business of software products and its relationship to producteering:

1. You are better-off producting great software as opposed to mediocre software

2. Producteers have not been, and will never be commodities, and they are the ones who can make great software

3. Premium model Vs. freemium model (Many biggies have killed out-of-the-box startups quite easily through this model, though this is not the intention behind this point! Google is a great example though).

4. Be agile and release working software frequently as opposed to incubating and keeping your software in stealth mode for too long.

5. Product innovation Vs. business innovation. This is what differentiates a successful software business as this is what is bought into as opposed to just engineering superiority

6. These are good times for software product companies as the capital costs are low, and engineering processes have matured

I have done my half-a-dozen and I am expecting to hear from people who can add more to this.

It has been quite sometime since I wrote any posts in my blog, though I have a huge list of topics identified about which I have been thinking of writing. It has been pretty hectic of late and I don’t find the time to write consistently. I have decided to change this and I am hoping that I will be able to post at least one post per week.

There has been a lot of talk about Product Development Vs. Application Development and what exactly are the differences between them, and I believe that this is a topic that has been pretty well understood by people. When we think of successful products, it becomes imperative that principles of product engineering needs to be applied as opposed to process engineering.

What exactly is process engineering?

Identifying and performing a set of requirements, design and development activities, validating to inspect if the desired product has been obtained, and relying on process optimization to help us in defining the right set of activities.

In contrast, product engineering is all about systematically engineering in desired qualities through successive stages of development. Process engineering is then applied to this fundamental structure to optimize process performance parameters.  Though, this sounds the most logical way of developing software products, there are still some unanswered questions.

1. How are the quality concerns of the products addressed?

2. How do we validate the designs?

These are questions that I would be answering in some of the posts that I intend to write in the near future (1-3 months).