Smart Software

Leverage in the Software Business

It’s a great time to be in the software business, because are many levers available to quickly produce products.

Open Source.

In recent years, open source has become a true phenomenon. One can find libraries for advanced technologies that are competitive with research offerings from the likes of Google and Microsoft. Even Google relies heavily on open source, which may be a key reason it iterates faster than Microsoft, which develops most of its software in-house. For instance, Chrome, itself based on the WebKit open source project, uses over 80 other open-source libraries credited in it About box. From machine translation to text-to-speech to optical character recognition to computer vision to numerical computing to video processing to GIS, the range of competencies offered from open-source to the new startup is breathtaking. In addition to the traditional source code repositories like SourceForge and CodeProject, many platform and book samples as well as course code offer ready-to-use technology.

Cross-platform languages.

Several cross-platform solutions have emerged C#/Mono, Qt, Air, HTML and Java to allow the products to be built on one platform such as Windows and quickly migrated to others such as mobile devices and the Mac.

Open Data.

Beside source code, data (both raw numbers and media files) is available freely from the government, universities and elsewhere. Natural language information is available from the Linguistic Data Consortium. Data for mapping, demographics and nutrition is freely available from the government. Websites like infochimp.com serve as a portal for these types of data files.

Component Libraries.

For hard to obtain source code and data, there are companies that offer for small sums access to that data. User interface libraries are pervasive. Nuance licenses its speech recognition technology for other companies to use within their products.

Web Services.

Web APIs potentially offer instant access to valuable services on the Web, though tend to be less stable that OS-specific APIS. Nick Bradbury wrote of the long-term failure of Web APIs, because web APIs have to be maintained continuously and any software that relies on them will need to be updated over time and could potentially break in the future.

A software company could provide its own gateway web service to ameliorate this situation, so that the client application should not have to change. Another advantage of this approach is that the company may use GPL code that would otherwise not be commercially viable.

Everyone's a "Vice-President"

MSNBC has a news video called "Title Wave - Everyone's a Vice President." The video points to a 22-year-old Japanese female and recent college graduate, who is a vice-president of HR operations at a US software company (TopCoder). Donald Trump actually says in the video that he gives away vice-president titles in lieu of salary increases to retain top talent.

When I first looked into the "facebook" of classmates of my MBA program, I was stunned to find that perhaps half or more of my classmates have VP titles or equivalent or better. I soon learned about the phenomena of title inflation, especially in the finance industry, where investment bankers two years out of college are commonly handed a VP title. The video above states that Goldman Sachs has 6,500 vice-presidents; in fairness, these junior VPs often have salaries exceeding those of genuine vice-presidents in other industries.

I always thought that the vice-president title may have some legal significance, such as indicating authority of a company officer. I know that it's important to use one's correct legal title in company documents, because the misuse of certain titles (eg, partner, CEO, member, manager, owner, proprietor) may confuse other parties and introduce personal liability in a court case where there would otherwise have been none. Many financial companies are/were limited partnerships, so actually a vice-president title is perhaps legally empty in comparison to a "partner" title.

It is easy to get a VP title by joining a startup; it's even easier to get a CEO title by filing an application for a new company. Some companies even mock the vanity of these titles by coming up with new hilarious ones like "Chief Yahoo." (Pardon me. I can't really recall any better titles, because of their infrequency and uniqueness.)

SBIR (Small Business Innovation Research) Grants

During my MBA program, I investigated government programs for granting money to small business programs to conduct and productize technology research. There are two programs (SBIR and STTR) in which eleven different government agencies provide two billion dollars in grants to small technology companies.

I actually wrote a preliminary proposal, which was modeled on a copy of a successful proposal provided to me from one of my classmates, Holly. The proposal was sent for developing feedback-controlled sports bra for SmartWear, Inc. While she was not the "principal investigator," she wrote the proposal, which led to a National Institute of Health grant in 2001 of $100,000 for six months to a year of work.

I never sent in my proposal, since, at the time, I missed the proposal deadline which was infrequent (once a year) and estimated my chances of success at being low, since it involved natural language. The large companies (IBM, Google, Microsoft) have hundreds of researchers, developers, and linguists, compile massive amounts of data and pour millions of dollars into research. With me, my credentials and my product ideas are in doubt; I am not going to convince anyone reading my proposal that I have a better way especially with a $100K grant.

The couple, who developed the Dragon Software speech-recognition technology, subsisted for seven years during the 1980s through government grants, before they were able to release version 1.0 of their software.

I have been thinking that my static analysis tool could actually fare better. I have working technology right now as well as demonstrated commitment using my own time and funds. My background (schooling and prior work experience) is very good. There is still quite a bit of work that I need to do to take it to the next level.

The government agencies examine proposals more frequently, four times a month, with DoD solicitations arriving in Nov 1 and the next proposal deadline in January. However, proposal writing and benchmarks are a time sink, and I could probably just do better organically by keeping focus on my development and funding my research through internal cash flows. I do wish that I had submitted a proposal last year.

Release Early and Often

Below is the blue theme that NStatic applications uses.

I just went through removing a number of nonessential features from my product in order to focus on timely delivery of the first version. These features will appear in a later free update, but their presence in the initial version is simply delaying my revenue stream. 

This issue of “release early and often” arises frequently in blog posts; some of the more memorable posts I have read on the topic include the following:

Eric Sink answers through his Business of Software series post “Finding Product Ideas” on how long it should take to build the product.

You also want to get to market as quickly as possible. How many months will you need to build version 1.0 of your product? It is usually better to keep the 1.0 feature set as small as possible so you can get your product out in the market sooner. If you can't get a sellable 1.0 out the door within six months or so, look carefully before you leap.

One of my own personal favorite product ideas has this problem. The market position is good, and I know the product would sell. But it would probably require around two years of full-time effort before I could release version 1.0. That's a long time to wait for the first dollar of revenue and the first real customer feedback.

Aaron has a contrarian post on Release Late, Release Rarely, supported by Don Dodge’s own view of the evolution of software companies in SaaS delivers functionality faster and cheaper.

 

Crowdsourcing

I used to think about the day (ever so closer) when I release a product, amass more money than I could deal with, and start hiring my first employee.

However, my thoughts over the past year have leaned towards building a virtual company, built on outsourcing and personal offshoring, as I have written in the past. This I think is the model for future business in general… It also offers great opportunities for the individual, would-be entrepreneur, not just for “greedy” megacorporations, salivating at the prospects for more layoffs.

Wired now talks about crowdsourcing as an emerging new approach to business.

Technological advances in everything from product design software to digital video cameras are breaking down the cost barriers that once separated amateurs from professionals. Hobbyists, part-timers, and dabblers suddenly have a market for their efforts, as smart companies in industries as disparate as pharmaceuticals and television discover ways to tap the latent talent of the crowd. The labor isn't always free, but it costs a lot less than paying traditional employees. It's not outsourcing; it's crowdsourcing.

 

Software Industry Directory

I previous wrote about a directory of software companies back in 2004, which I found very useful for market research, listing various company information such as revenues, employees, products, etc. The original directory seems to be out of print, but I found another one called the “2006 Software Industry Directory” by Software Business Online.

I haven’t look inside the new directory. While it doesn’t appear at first glance to be as comprehensive and organized as the original, it should be more current.

ComponentFactory

A new MicroISV, ComponentFactory, has just released its first and free (?!) product, Krypton Toolkit. You might want to grab the toolkit before the owner figures out a sustainable business model. The company develops user interface component libraries (google juice) for Visual Studio 2005 and .NET 2.0.

The founder, Phil Wright, maintains a blog (old blog), which I have been following since inception when it was listed in MicroIsv.com, detailing his entrepreneurial endeavors from initial startup such as designing his website and logo. His blog description says it all:

Join me as I take a journey from concept to real world business. Is it possible to create a viable microISV on a shoe string budget and working only in your spare time? Let's try...

Almost as a continuation of my prior posts on High-Tech Outsourcing and Personal Offshoring, he talks about the choices that he made as to whether to make or buy such things as a blogging package. He also mentions his experience with auctioning his website and logo design through www.RentACoder.com, www.Guru.com and www.DesignOutpost.com.

(Speaking of outsourcing, I found an interesting new website, www.TechStudents.net, that mines college campuses for low-cost tech-savvy labor to connect with small businesses. It’s a more politically correct option to promote domestic rather than foreign labor.) 

Phil is also engaged in some viral marketing by offering a free copy of DotNetMagic user interface library via a marketing tie-up with Crownwood Software until December to any preexisting .NET blogger that mentions the new toolkit on his blog. Personally, I am already satisfied with the SyncFusion libraries I already own, but the library, which normally costs $399, may be valuable to other bloggers.

 

Get Your Butt Outta Bed and Build Something

In one of my entrepreneurial posts, a reader chastises me for not delivering any product so far,

OMG! You've been talking about starting this business forever! You have a penchant to just talk talk talk. How about do do do? Stop wasting e-ink and start hauling your e-ass outta bed everyday and build something... or maybe I misread you for something else than a part time pundit

The reality is that my product and libraries run only on the Whidbey runtime and Whidbey had been delayed a year and a half late. I am also not allowed to ship a product based on a beta runtime, small or large.

So, I spent my time developing my product with little regard for delivery dates. Since the product is the first version, the schedule is feature-driven, not date-driven; there’s also a significant research aspect to it as well, so making scheduling by dates difficult.

Now, that Whidbey has shipped, I no longer have an external excuse for not shipping. My original product concept is still quite a bit away. Because of the product’s size, I face considerable testing work and the prospect of a buggy first version.

The release of Whidbey provides more options. In order to get money coming in sooner and earlier external testing and feedback, my current strategy is to deliver a number of useful “subproducts” based on various portions of my main product. I aiming to deliver the first such subproduct in a month and a half time.

So, when the Big One does go into beta, much of the product will already have been tested and used by customers. This strategy of parallel development and testing is more organic and iterative.

 

That's Impossible

I developed my software idea and worked on my business plan for over a year during my MBA program. As I was explaining my ideas, I had a number of students who expressed doubts based on “common sense” heuristics about my ability to produce the technology my business is based on. The doubts were centered on two things:

• The technical difficulty and “millions of dollars” in costs of creating a new desktop application.
  • If it were so easy, Microsoft would squash you like a bug…
• The heavy reliance of AI technologies such as natural language processing, coupled with the difficulty that people have in comprehending that computers can actually “understand” natural language.
  • Japanese companies spent and lost billions during the artificial intelligence craze in the 1980s.
  • Companies and universities have research labs and tons of resources that you can’t compete with. Why haven’t they come up with anything yet?

One student remarked that if you can pull this product of, the fact that potential competitors do not even believe that the product is possible to build is a major competitive advantage.

Rather than follow common sense and empty generalities, I repeatedly question assumptions and investigate the issues involved. I come up with proof of concepts and shoot down impossibility arguments by offering counterexamples.

One of the early pioneers of computer technology remarked that his supervisor asserted that computers would never be able to perform mathematical calculations. Everyone would agree that computers can perform calculations today, but most still probably believe that computers will never acquire language ability because such activity would seem fundamentally human and conflict with notions of consciousness.

In assessing the technical difficulty of delivering software, people forget that I was once a software developer at a very big company. Microsoft has a much higher bar to pass than all other software vendors—internationalization, compatibility, accessibility, etc. I know that in the two and half years that I spent to add a few PivotTable features to Excel 97, I could have developed a serious application. I should also point out that I am licensing decades of work from various institutions.

As for the failed Japanese experiment of the 1980s, AI is such a broad term, anyway, and the Japanese appeared to have been focused on unrelated areas like fuzzy logic. There’s also the impact of Moore’s law—more computer processing power and memory, better and more productive tools and languages. My machine readable dictionary, which takes several megabytes of memory, would not be able to fit inside either the high-end RAM or external storage of the time.

There’s also the efficiencies of a focused development process and a holistic application design. By “holistic,” I mean that any weaknesses in the AI can be ameliorated by the design of the user interface—something that I will talk about in a later post.

I have noticed that researchers often try to obtain the general solution and don’t think about creating commercially viable software. In particular, I look at the OpenCyc project with its massive knowledge database, and wonder if they even know what their goals are. Companies like Microsoft and Google have limited vision and apply their research narrowly to search engine queries and command and control.

Zombie

Part of my desire to be an entrepreneur is driven by fear—the fear of becoming some kind of zombie, working without passion, living on a treadmill. Some people use other terms like “rat race,” “wage slave,” and “mid-life crisis.”

Growing up, I was afraid of acquiring the overhead of a stay-at-home mom with kids and a mortgage and working for a job, I didn’t enjoy, with the highlight of my day being, figuratively speaking, to “punch the clock” at the end of the shift, only to come home to additional pressures and count the days till I retire.

Anand Vishwanath blog (I might die soon) includes a post “Does everyone’s life start and end like this?” 

… Late 30s… No sooner, you are all of a sudden just another person around the block, with all the cool ideas you had buried way down in a pile of responsibilities. You look back and see, if only you would not have taken that one decision, how different your life would have been today. But alas, it’s too late! It’s just another life now!

One commenter remarks:

Life is suffering my friend. You have to make the most of it before it's over. You have to spend your time wisely and doing what's count. According to Buddhism, you have been doing this in a countless life before. Talking about endless cycle.