Why is selling software so weird?
zeptonaut.com
zeptonaut.com
I disagree very strongly with this based on my experience so far.
Being in the business of low volume software is fantastic if your customers are other businesses.
The advantages of low-volume/complex B2B software biz are incredible to me. Contract terms are measured in half-decades. Your users can actually be trained and held accountable in many cases. You don't have to plan for nightmare public cloud scenarios. Your software will usually be running in some firewalled bunker with a guarantee of <10k concurrent users. When operating under these constraints, there are lots of fun ways to manipulate the engineering to your advantage (i.e. SQLite vs nightmare distributed abominations).
Granted, low volume B2B software is just as worthless as any other kind if it doesn't deliver profitable value proposition to the customer. We currently sell software licenses measured in the 6/7 figure cost range (and get away with it because of the complexity of the business and value proposition). This means our little startup can hand-craft each customer relationship and carefully manage the sales funnel for optimal outcomes all around.
Custom in-house development follows much the same principle as B2B products: the very high marginal cost are considered worth it by the business because of the degree of specialization they need or the advantage they gain over the competition.
Of course I won't become billionaire off it but it's not for the lack of "value" I'm creating.
I've seen several times smaller organizations attempting to adopt this model (because Google does it or whatever), with the result of the tools team being an enormous bottleneck for the organization.
I've run into like "the build system team", where the build system was some patchwork of hacks that never quite worked, and was also completely opaque to those who used it. The cycle was
1. Try to do something
2. Encounter a build problem
3. Talk to the build system guys, they promise to look into it fast
4. Twiddle your thumbs for a week while the entire team is blocked
5. Goto 1
For example one tool took about 3 weeks to get to a usable state but it sped up a production task that previously took one person 15 minutes to the same task being done in parallel over 5 units and taking a total of 3 minutes and still only required one person. At our typical sales volumes, it was a no-brainer: my time was paid for by the end of the next month.
In pretty much any small manufacturing/processing shop there are lots of little wins like this.
What does it mean to hold a user accountable?
B2B software with figures like the OP means you're building a professional relationship with a customer (as opposed to a transactional one), and can push back when they're complaining about something, for example.
> "Your software isn't giving us the numbers you said it would!"
> "It will, if you use it as you were instructed, we're happy to review that with you again, but you have to have the internal SOP that you'll use it in the way it was intended if you want the numbers it can provide."
And I'm saying this a developer, where we would (and have) gladly sometimes fixed the bug during the 1h call with the customer, but until it was being rolled out... weeks, maybe months.
At some level, it is still our responsibility to provide a reasonable UX (and we have weekly meetings with our customers about this). But, our customers are also fully aware of the various contractual obligations and take ownership of problems caused by poor training or hires on their end.
For B2C you cannot have any expectations, even if user knows how to use computer or understands basic English or has good enough eyesight to read any text on your site.
Well what we see for B2C companies is usually that they just don't care and you don't get any real support but that is a different discussion :)
(1) This is a footnote. You don't need any fancy software to write a footnote.
The beautiful / fun part about having a blog is that it's your own little garden: you can adjust things just like how you see fit, and footnotes were just a case where I figured I'd do without until I could implement it in a way I was happy with.
I'm 99% sure Hugo can do this, I've just learned to be wary of putting things in between myself and actually hitting the damn publish button.
With link to syntax: https://www.markdownguide.org/extended-syntax/#footnotes
Your suggestion is noted, though!
I'm currently developing a very specialized desktop application for a laboratory and it has been an amazing experience. Working closely together with your users means you get to prioritize what really matters and that you can clearly see the effect of your software in people's lives (in this case, at least 5x increase in productivity and a more healthy distribution of work). I especially enjoy demo time, because I see the enthusiasm in the faces of my customers. It can be tough, though, establishing your reputation at the beginning.
Don't see the benefit of using SQLite over a RDMS like MySQL or Postgres, especially if users are still in the tens of thousands.
I've got unit tests over business methods backed by SQLite that say otherwise.
The biggest benefit with SQLite is being able to ship your customers 1 self-contained binary distribution that "just works". Anything beyond this and we are talking about nasty customer-owned database instances or us shipping docker containers and hoping the gigantic abstraction bubble doesnt pop on us.
It has made it incredibly simple to downgrade and delete customer data when they request. The application kills the billing profile, and emails the administrative email for the organization a link to download and delete their data.
1 x $1,000,000
10 x $100,000
100 x $10,000
And so on
It's why you don't see any trillion dollar company who does custom software.
The competitive advantage we exercise today is an architecture/process which allows for us to deliver a customized product experience to all of our customers. We de-skilled a vast majority of the implementation & support activities around our product so that domain experts can operate much more directly with the configuration throughout.
The stand-alone software for DNA analysis has been mostly replaced by free open-source Python packages written by researchers who didn't want to pay the high fees or deal with things like distributing HASP dongles etc.
On the other hand, writing the software that comes packaged with expensive instrumentation, and that's optimized for that instrumentation, remains a viable business. The cost is bundled into the overall cost of the instrumentation setup. A research group/university that buys such instrumentation expects it to be supported over time, and so that's where low volume high end software production is not really going to change. The software is so closely integrated with the hardware, and software failure has such serious consequences, that there's no way FOSS could ever work in that situation. This is as you say a more business-to-business situation.
Yes, academics will rewrite proprietary software. Collaborating is what they do, and Free Software is done basically the same way they do everything. They would rewrite it if it was free too.
Business will have a harder time doing the same.
What I am trying to say is that even these software business model tied to the instruments are no a guarantee anymore.
And governments ( local, state, federal ). Security software ( network, dbs, servers, etc ) along with support can be quite expensive. Niche software to meet regulations ( especially in finance but I'm sure in other industries as well ) can be quite lucrative. Not everything has to be bulk or ads.
The "only" major problem is this space is that you need to be "connected" in ways that the most anonymous mass-market products not.
Also, is easier to get into nasty competition, corruption and all that stuff.
Is not always, and you can get good customers being decent, but are problems more prevalents on the space, and is VERY important you NAIL your contracts.
The first time the gorilla (like government!) come for you, is nerve cracking! And you can't shield behind "social media" to get out!
Yes it is hard to break into a space that is dominated by large established companies. Yes you need a lot of up front capital. Yes you will need to differentiate yourself. None of this makes software a "weird anomaly", this is how business works.
I interviewed for a team at <Big Co> that was part of a 100 person org. They generated about $1B for the company by creating a portal to (essentially) sell access to the company's existing data. They said most of what they spent that 100 people on was building integrations into existing b2b enterprise apps so other companies could ingest it easier. The per-person value created (extracted?) at this org is astonishing, especially since most of those 100 people didn't actually add value to the root product, beyond making it easier to use.
How do you figure? Surely you know the magnitude of ad spend on software products, not to mention hosting and scaling infrastructure. We're not shipping cd's to every mailbox anymore but a typical marketing budget + Heroku/AWS cost is likely far higher for a typical growth SAAS startup than AOL was dumping on their physical distribution methods in the early 2000s right?
Any major company that owns data centers, they have large contracts with peering for networking, which is pay-per-bandwidth not pay-per-byte.
I invite you to switch sectors to the pharma world. I worked on a program for a drug planned to be sold at $2,000/dose with a projected cost of $0.0025/dose. That figure included amortization for all the manufacturing equipment, QC etc and raw materials.
Honestly, the idealist in me says healthcare/pharma/research should be publicly owned and operated.
The biggest problem of pharma is IMHO lack of competition. The field is over regulated - some of it is for good reasons, but perhaps it went too far.
here in Austria we had several companies that were state owned. Problem was, that then there is politics coming into play and hiring is not about business facts but politics.
This resulted in highly inefficient companies as the objectives did not align any more...
But cynic in me tells me that this is not possible - too many people who know how to build and operate things dreams about having always more stuff and power and is too afraid of loosing it. The consumption treadmill is always hungry for more. I personally am guilty of this - I always calculate how I can accumulate more value so I have a freedom (a kind of power over my fate) and can provide more unnecessary consumption for my family.
And that one successful medication has to pay for all the trials of all the other candidates that didn't make it... and all the low hanging fruits have long been picked. What is remaining now is stuff for rare viral diseases (not just Covid vaccines that work effectively against mutations, but also HIV, Ebola and similars), cancers and multi-resistant bacteria. All of this has been going on for decades and news of actual marketable products are much rarer than news about promising cancer or whatever treatment ideas.
Everyone loves to dunk on pharma (with reasons, see e.g. Skhreli or the bullshit regarding insulin patents), but the core problem is the sheer cost associated with developing pharmaceuticals.
Cures are not profitable, treatments that don't cure are.
So yes, everyone loves to dunk on pharma and should.
I think something like that the government side is more akin to good accounting practices than heavy handed regulatory oversight.
That's an immoral way to shape demand, one that keeps human beings in states of illness rather than providing cures.
Research into cures isn't funded as much as research into treatments that keep "customers" on the hook for their lifetime.
What a peculiar thing to say. A product that is too difficult for anyone to use has zero value in the market, no matter how valuable it would be if it could be operated. Making a product easier to use increases the amount of people it can be sold to, directly adding value.
Imagine if the only way anyone could use a browser was to write your their compiler first, the web would never have taken off. There is tremendous value in making things easier to use.
You are completely discounting the cost of creating and maintaining the underlying data. You can't just write that off as zero. It also doesn't matter if the data generates other sources of revenue, that's great but you still don't get to write the cost off against one revenue stream and not another, the only fair way to account for it is to split the cost across all revenue streams.
Whether other streams succeed, fail, or don’t exist doesn’t change the cost to make the n+1 unit.
OP was implying that this product was insanely profitable because you can ignore the cost of the underlying data set. I'm saying that makes no economic sense because marginal costs aren't the only costs.
To see how absurd it is, consider that the marginal cost of an n+1 visitor to Disneyworld is probably significantly negative, because they will buy things at concession stands and eat at the restaurant thus generating revenue even if the ticket is free. What are the implications of that for the ticket price you should charge for that visitor? Pretty much nothing because the fixed costs utterly dominate. Yet Disneyworld will run promotions and discounts and bundle deals with hotel stays and even flights. None of that will make any sense whatsoever if all you fixate on is the marginal cost of printing the ticket.
When deciding “should we make the incremental effort to expose an already existing dataset as a new product?” you are quite reasonably going to look at different data than if you want to know “overall, how profitable were our data products in aggregate last year?”
That’s the main point of the article we’re discussing: how things get weird when marginal costs are very close to zero.
The sale of data was essentially "free" to the business as a revenue stream, it cost them almost nothing extra to sell the data (again, beyond building a portal and integrations). You CAN discount the cost of data maintenance, from the sale business since the core business (also profitable) is already factoring in the cost. You can't double-count the costs, and accounting DOES let you pick-and-choose where to apply those costs.
I own a big pile of great free games from Epic, just from clicking a couple buttons every week or so. And yet I still buy games.
All of these industries are difficult, but that's just the reality of making stuff and selling it. I've spent quite a lot of time listening to indie game developers whine about how hard it is to make games, but the vast majority of what they complain about is just how any kind of big project works.
It is "a" problem, I'll even admit a major one, but it's not the main problem. The main problem is the expectation of continual customization and improvement at the input of the customer. Imagine if houses were built by you contracting with the developer, and after the initial blueprint and plans were agreed to, every two or 4 weeks you came back with requests to do new things like "add a basement bathroom", or "push out the back another 5 feet and add a glass skylight there for a sunroom", or "change the roof tiling to something 30% heavier".
Even without the regulatory hurdles and permits, nothing would get built as a sheer matter of physics. Blueprints and architecturally sound structures take some basic customer requests at the outset, and then make dozens of important, non-easily reversible technical decisions known to an expert to be required to support those requests. You can't just add on new customer-desired trappings without vastly compromising the quality of those assumptions for the original design.
But that is the situation in modern "agile" software development, and why selling it is so weird - because nothing else we'd say requires professional skill is built this way, and the real profit comes from annual recurring revenue - not a one time sale. Even wedding cakes have limits to change after the initial tiers are baked.
I work primarily on B2C software, whereas it sounds like you probably work on the B2B software. It seems like consumers tend to mostly accept the platforms as they are whereas businesses feel (perhaps rightfully) entitled to ask for changes in the software they use.
Each have pros and cons, but the marginal cost of B2C software does seem a lot lower than B2B due to the expectations in service.
Also, that relationship is pretty much what you can get for several months when commissioning a house in a subdevelopment or similar. Every month or week, you come by to have another conversation on a different set of customization options.
But, in support of your point, it usually does cause the builds to be over-budget and behind schedule.
We can have that in software too if we want it and work for it. But it requires building a ton of alignment among customer service, sales, design, construction, and executive staff. Everybody who talks to the customer has to know what to say and how to direct requests. Everybody needs to know what they can say yes to easily and what has to get estimated, approved, and charged.
But that in turn requires extremely skilled and disciplined management, something our industry is not oversupplied with. The Agile movement gave us tools to make that work (CI, CD, good testing practices, refactoring), but that only works in a particular envelope of management competence. Outside of that, it's GIGO.
"Hello, I'd like to buy a custom car."
"Ok great, we have many over there."
"Yes but you don't have any pink ones with cool designs"
"Well, we could make you a pink one, but what design would you like to see on it?"
"I don't know, maybe a Nascar design. Oh, no, what about a Harry Potter design?"
"We can do that for you, but it will take a few weeks and you'd have to put a deposit"
And now you aren't selling things off the shelf.
"Who are all these teenagers in robes on my car? I don't see Gandalf or Legolas or Gimli anywhere!"
I sold it as shareware originally, but then a Big Fish came along and said 'we want a licence for 1,000+ users, but can you come in and meet us to discuss'.
Seeing this as a pivotal moment in my entrepreneurial career, I agreed to meet them.
Five minutes into the meeting they started rattling off a long list of features they would like added (for no extra fee). Somewhat shocked, I numbly agreed in principle that I'd look at implementing them for the next release.
Once I had time to think about it, I realised that as a one-man-startup there was no way I could implement their requests, and had to back out of the deal.
And that's the problem. The people with money assume they can ask for whatever they like and have no concept that sometimes it's simply unprofitable for the little-guy to deliver it.
Thats a question of negotiating, isn't it?
They can ask for whatever they like and you can reply with whatever you like.
And then you find a agreement, or not.
The problem in your case seems to have been more lack of confidence and experience on your part, because like you said, selling a licence for a existing product is something very different, from making a contract about new features.
Otherwise a little guy can grow and hire more people to help him with a big contract, if this is what he or she wants.
yeah, I was like 23 at the time, and totally inexperienced. Had it happened now, 20+ years later, the conversation would have been totally different.
How did you even get that Qs coming? For a bootstrapped startup selling to enterprises figuring that out itself is half the battle
Software is largely a service industry operating under the persistent but unfounded delusion that it is a manufacturing industry
Eric's exactly right, you're providing a service and service costs scale up with users. Not all of them linearly, but some for sure.
I feel like the next great revolution will be selling updated software only once a year. No privacy implications, no persistent security concerns, no data hoarding, no advertising, no connectivity issues, no addictive social gamification or micro-payment or subscription service. Just a fully-functioning rock-solid program on your local device, developed by a small team, sold to millions of people. I'd pay premium for that!
It would be nice if they chose to have an option to just buy a version outright without the appearance of a subscription, but I understand why they don’t.
You can copy it indefinitely. It doesn't exist physically. It's much more natural really to buy, say, a painting or a house. You can hang it, see it, use it. You have exactly one house, exactly one of this painting. Software, compared to that, just feel lazy.
One could argue that most software in history did not really improve anything, and that true innovation came from advancements in hardware, which software just took time to adapt to.
Where I live education is mostly free anyway, and artists are heavily subsidized by the state. Greatest artists of the past had benevolent patrons, for a reason.
Actually I'm fairly familiar with Marx, not in a classic leftist way though. Not sure he could have predicted the whole information industry thing but I've always seen the whole GNU/Linx/free software paradigm as the only True Communism™ that exists, and maybe that's why paying for software is a difficult thing.
As for the value in software, I used to work for a software vendor that developed planning software for cellular radio networks. It would load up effectively an image file of terrain data, with each 'pixel' representing a square of terrain giving a height, then there was a database of cell site locations, antenna heights and orientations, etc and it would generate maps of signal strength, interference, etc. Really cool stuff. A lot of the value in that software came from experience, expertise and real-world testing and validation by radio engineers.
A lot of high value software encapsulates a lot of expertise by people other than the programmers. Now I'm in finance, but the software we work with gets huge amounts of input into it's design and specifications and validation from the users and customers who put in a massive investment of time and energy and expertise to ensure the software is fit for purpose. That work absolutely adds value, without it the software couldn't exist or have any value.
The idea that software is some miraculous exception to economic reality is a mirage. Free software purists discount all of that, which is why libre software is irrelevant in so many product categories. All of that input, beyond just programming, has to be paid for somehow and the fact is commercial software is capable of rallying the investment necessary to pay for all of that and create useful products.
The libre movement also completely misunderstands the nature of rights. In principle yes the owner of a computer has the right to determine what software runs on it and how it executes, but equally we routinely give up our rights or accept restrictions on them in return for benefits all the time. When Stallman goes to work in return for being paid he gives up his right to stay at home with his family or go to a bar with his friends. He gives up the right to be intoxicated. In theory he has free speech rights to say whatever he likes, but certain forms of speech in a work place that would otherwise be protected speech will get you fired or prosecuted. Why should we not choose to give up some of our rights over our computers in the same way? Very few rights are absolute like that (not none, but very few), because we can reasonably choose to accept limits on them.
You don't write an album on the computer (unless you're a DJ, which is, one would argue, not real music). My point was that things on a computer all exists in a realm where you can "right-click > copy" things. Like, that's it. Still the initial point of building things in the real world, that you can see and touch, stand.
From the OP:
>Software is a great business because, if you can build something that’s useful and provides $10/month of value to someone, it’ll probably cost you a lot less than $10/month to provide that value to a second person. Multiply that by 1,000 and you’re getting paid to do a full time job, even if you only work 5 hours per week. Multiply that by 10,000 and you can retire in a few years. It’s an extremely high leverage business.
>This makes software a weird anomaly.
Yes, software is a weird anomaly, because everything is scalable, because you can right-click copy. Software is a miraculous exception to reality because internet and the computer space is, frankly, some miraculous exception to reality.
Though I may be biased you know, I work in architecture and the software is absolutely horrendous. The added layers of complexity just brings endless frustration -- although in more theoretical fields (like finance) it may work much better, I see your point.
Now I don't see highly-specialized software having a hard time being sold to customers. Most definitely these things sell like crazy, and make their owners ostentatiously rich, which is not the case of the OP. But maybe he should have talked about centralization and monopolies, a logical consequence of scalability, which is what happens when everything is constantly connected as it is on the internet -- because, again, the computer space is a weird space -- and how it makes it much more difficult for small players to gain traction. I use Blender whenever I can -- it is a fantastic software, capable of doing many things, and it's held up by a global foundation where all the actors of the industry play their part. I'm not saying it's the ideal business model, but it sure is the only software client I respect.
Going to work is not really "giving up rights" as much as it is not having the choice. On the computer space, you have the choice, all the time, that's why it's contradictory. Maybe we need to create a completely locked-down computing environment, maybe that's the solution.
Every new customer (organisation!) that is onboarded must have their own customisations to make it useful for them.
The real business is doing this by charging per hour to do those customisations. The base software is more or less a made up marketing story to be able to get a foothold. The most successful and established companies can charge a large up front fee (license).
Meanwhile Adobe just rakes in 10-50$ per month on Creative Suite plan subscriptions from individuals and small businesses all over the world who are happy just to get access to the software.
Instead it’s an exploration of the marginal cost of software and how that impacts the creators business.
> The digital nature of software makes it extremely easy to ignore pesky distractions like customers right up until the moment you need their money to buy that expensive Icelandic yogurt you love.
This quote comes right after a paragraph about how the closest thing to the near zero marginal cost of software is the publishing business.
I think that book authors are in a similar position. Spend a year or two writing a novel with almost no idea If people wants to read it.
The third downside is that, unless you can differentiate your product from what already exists, it’s going to be hard to find a foothold in the market. Given how many software products already exist, that’s a high hurdle to clear.
It seems to me that, in any particular domain where there are several or many competing solutions, each with small differentiations, each differentiation takes on a disproportionate amount of significance. So it is possible to make a business out of fairly small differentiations from normal. Eg, through integrating with external systems or better UX for common tasks. And even better, it is often the competitors that have done the work for you deciding which external systems need integrating and what the common tasks are.
Where the diffs are the USPs for all your competitors, it almost makes it easier for you to join in.
With such a company, you do not need much to differentiate to get 1000+ paying clients: you just probably will never get to millions of clients, and that is OK.
If you were just selling an API to a voice transcription service, that's great but there's very little economic moat and now you're in a Race To The Bottom with every other voice transcription API service out there. At least with professional services, there's options for customization and the revenue stream becomes more sticky.
These are my recommendations to anyone who's here and not getting the traction they want, or are considering starting a business. The 1-Page Marketing Plan - Alan Dibb. The Right It - Alberto Savoia. Monetizing Innovation - Georg Tacke & Madhavan Ramanujam. Obviously Awesome - April Dunford
The dificulty is mentioned, but probably requires strong emphasis and going into details (having a distribution mechanism before writing any code for instance). I often feel like even VCs and insiders are stuck a bit in the past, since their success came from a different ecosystem.
Distribution is the most underrated, most difficult part of creating a tech company.
In the UK Squarespace peddles the slogan 'a website makes it real'. This is very misleading. Making the website is the easy part, being found if you have no prior audience, no experience with SEO or a lot of money for ads is incredibly hard. In my opinion breaking into the tech world now is much harder than it was 5 years ago regardless of how good your product is.
It can also make customers value your product less
Because it is not, but it should be, sold by the pound.
The KEY distinction between software and house is abundance vs scarcity.
Once software and house both exist, software can be used all at once by every single potential user. But the house can only be lived in by a few people at a time. Everything else about the economic distinctions flows from these facts. The "marginal cost" idea is correct but is a symptom of the fact that houses are *rivalrous* and software is not.
I gave a talk about this recently with further context at LibrePlanet (so it's aimed at software-freedom advocates, keep that angle in mind): https://framatube.org/w/ssYsun1bEXuL1nm5cT9ckw
I spent an entire year, 16 hours a day, grinding on a software project all by myself...and I shipped at the end. Having completed it, or shipped rather, I realized/felt that I now knew what it was like to be an author...working alone building something through discovery and pure creativity.
I have been chasing that feeling again, for years. It doesn't come from building someone else's desired solution as a team member on a project. That is a totally different experience for the developer than building from the heart.
At work, building software is sort of like building a house. In my home office it's like writing a book.
The value is only in what your multitude of trivial parts do together. Maybe that's not weird, but it's peculiar, to software development.
Are the regenerative coolant pipes built into the Raptor’s nozzle a wheel, a lever, or an inclined plane?
> How would you break down a coaxial swirl injector (an important part of the Raptor engine) into “simple machines”?
> Are the regenerative coolant pipes built into the Raptor’s nozzle a wheel, a lever, or an inclined plane?
Surely there's a certified engineer in the HN audience who could chime in.
I suspect that they would tell us that the idea that every machine can be broken down into a series of simple machines was a cute theory in the Renaissance, but is not a usefull model to explain how a Raptor engine works. Maybe the theory of simple machines and compound machines is usefull for purely mechanical constructions, like a bicycle or a clock, but fails to account for the fluid mechanical effects which dominate in a rocket engine.
In fact it is more difficult to create software with simple design than it is to create complicated software. A "hacked" thing becomes very complicated as it evolves. Software is isomorphic to logical proofs, we can think of how it is often possible to simplify mathematical proofs. It is a lot of work however to come up with simple elegant proofs. So it is with programs.
Mechanical devices have to be carefully designed because idea is that once you have the design you will then manufacture many machines having the same design. You need to do that because manufacturing physical devices is expensive. In software you can just start typing.
More and more I'm viewing software as infrastructure, and Free Software as one of the best ways to protect that. But that leaves a big challenge funding development.
Also, you're going to lose me a little if I'm just supposed to accept that your pricing model for your software is $x per month.
By contrast building houses, even at scale, is pretty low risk, but since its low risk the upside is constrained.
In many ways software is a lot more like making movies. You have to do the whole thing before you see any revenue. Risk is high, most lose money, but a few make the big bucks.
This model does favour those who can take on more risk - ie companies with deep pockets. Even there risk is mitigated - formulas are followed, safe casting choices, sequels etc.
Smaller indie movies can still be wildly profitable, just on a smaller budget. Don't make Lord of the Rings, make The Blair Witch Project.
For me, we started out mitigating risk by writing customized software others paid for. When we had no work we worked on our own stuff. Over time our own stuff paid enough so we stopped doing custom stuff.
With every new project though we evaluate risk, try and keep it down, and so on. Mostly we mitigate risk by doing what we know, to our established market, (aka sequels).
5 years ago we had the opportunity and ability to enter a new market space and we discovered something new. 30 years ago we were selling the idea of computerising. We were competing literally with paper and pen. We often had to supply the actual computer - for some Companies it was their first, and only PC. While challenging, the upside to the customer was obvious and very valuable.
Wheras This new product was going into a space with 3 established compeditors. While objectively better, the existing ones were good enough, and as the cost of change is high it has been a long road to get some traction, which we are slowly doing. That we could afford to persist was because the other side of the business was working well enough to pay us. So think day job, and side project (with the side project having 3 full time employees :)).
The lesson - Today software isn't fighting pen and paper, it's fighting other software that is 10,20,or 30 years matured. The path we trod is not going to be the right path now.
There are gaps, but doing the non-software things like marketing, customer analysis etc upfront is now much more important than it used to be.
There are opportunities, but it takes a moment to imagine them, and a Lot of work to validate them, and most imaginations are incorrect. Doing the upfront work well will pay off multiple times later.
Oh and don't give up the day job too early...google may think self-driving-cars are the way of the road future, but they haven't quit search.
[1] huge is a relative term - what is huge for an individual might be trivial for a company.
I think this also underscores that programmers would benefit from some form of regularization. Like instead of a degree followed by a job, a close apprenticeship graduating into a junior membership in a programmer guild or union.
Is anybody offering that?
I have a hard time selling my cool app, now i wanted to go back to my ex-boss. (tear of not yet unemployable)
I am considering a career reboot come June, and sales is one path I am exploring.
Are there certain types of software companies, products, or sales environments that you would recommend with regard to TC, lifestyle, and/or career satisfaction?
Alternatively, red flags to be aware of?
The author really has a gift for great articulation.
> Paging back through history, there have been very few opportunities for near-zero marginal cost goods.
The only way that capitalism allows for the production of non-rival use values is by turning them into "club goods" and excluding access to them by state-enforced monopoly (intellectual property laws in this case). There's no shortage of examples of club goods.
The three "downsides" the author lists as unique to club goods aren't unique to club goods at all. (1) All commodity production requires capital ("up front time"); (2) All new commodity categories are risky and only tested when they hit the market; (3) Breaking into any commodity category is next to impossible without sufficient capital.
Doesn't seem to work. Exactly like people expect everything to be free on the internet. Surveillance capitalism is one way to overcome the paradox. Not that I personally like it, but it seems to work.
It worked very well when it came to do all the foundational work for developing semiconductors, early computers, fiber optic, GPS, GSM, particle physics, CD/DVDs, CCDs, spread spectrum radio, solar panels...
Research benefiting society needs was paid by society. It was paid by taxes.
Ahahah No, It doesn't
Most software exists and can sell because it does things rich people who run corporations want done. That usually means it's good for them and bad for society, since our world is run by people who think in zero-sum terms.
So it's a two-tailed distribution.
Could be good for the buyer, but bad for the neighborhood.
> since our world is run by people who think in zero-sum terms.
Not sure where this is coming from?