Skimming : Eric Sink on the Business of Software

Eric Sink on the Business of Software (Expert's Voice)

Entrepreneurship

• An ISV creates, markets, and sells software products ... If you don’t have a software product, you are not an ISV. (p.3)
• My name is Eric Sink, and I am a code-aholic. ... I like the smell of a freshly killed bug. (p.6)
• Identifying all the opportunities for software products is like filling a barrel with rocks. We start by putting in the really big rocks like office suites and desktop operating systems. Soon the barrel is full and will hold no more large rocks. But smaller rocks can still be added easily. In fact, we have to add a surprising number of small rocks and pebbles before the barrel can be considered full. (p.9)
• We’re geeks. All of our training and experience happens in a world where there are no grays. A digital bit is either one or zero, on or off, nothing in between. This binary thinking tends to pervade the way we look at everything, including business opportunities. But not everything in the business of software actually works that way. (p.11)
• This takes a lot of versatility, and it explains why entrepreneurs are usually generalists, not specialists. We are the type of people who tend to be just a little bit good at everything, rather than very good at just one thing. (p.16)
• The ideal business failure is one that leaves you with the ability to learn from what went wrong and try again. (p.18)
• But as a bootstrapped small ISV, you also need to ask yourself whether the market is small enough. Small companies should stay out of markets that are big enough to be interesting to big competitors. (p.19)
• Horizontal product markets are filled with the wrong kind of competition for you. The competitors you want are in the vertical markets. These markets are safe from the big companies like Microsoft. (p.20)
• My favorite solution to this problem is to start out as a consulting company and evolve into an ISV later. In your first 40 hours per week, build custom software or Web sites for other companies. Charge them enough money to pay your expenses. In your other 40 hours per week, work on building your product. (p.26)
• Like it or not, for many people the word shareware carries connotations of something that is “amateurish” or “unprofessional.” Even as some companies wear this word as a badge of pride, others avoid it for fear that it will scare away corporate customers. (p.43)
• In any software company, it’s important to find a way to keep your 1.0 cycle as short as possible while still building a product that will generate revenue... The purpose of 1.0 is to help pay for the development of 2.0, and so on. (p.46)
• You are an entrepreneur, so by definition, you are somewhat more of a risk taker than most. (p.66)

People

• Instead of programmers (people who specialize in writing code), what you need are developers (people who will contribute in multiple ways to make the product successful)... as a small ISV, what you need are fewer people who are more versatile. (p.78)
• Put your programmers on the phone to help a customer with a tough problem. Your product quality will improve as you expose programmers to the consequences of the bugs they create. (p.80)
• As Joel says, “It is much better to reject a good candidate than to accept a bad candidate. ...If you have any doubts whatsoever, No Hire.” (p.101)
• The “very best” people never stop learning. (p.103)
• I believe that people tend to become better programmers as they write more and more code. I want to know how much code you’ve got behind you. (p.107)
• Twelve years later, I think there is some wisdom in hiring people who have made significant contributions to an open source community project. (p.108)
• I love building software, but SourceGear is not my hobby—it is my profession. We sell products to users. We have learned to value the needs of the users over our own preferences. (p.113)
• Great developers don’t just make the product better—they make everybody around them better. (p.121)
• Quite often, the reason we don’t learn from a mistake is because we’re too busy trying to hide it. (p.128)

Marketing

• Finding a product idea will probably require you to think exactly the opposite of the way you usually think. You need to focus on problems to be solved, not on technologies to be applied. (p.138)
• The basic idea of positioning is that your product occupies a place in the mind of the people in your target market. You are defined by their perceptions of you.(p.148)
• The big problem with avoiding competition is that you are also avoiding customers. The existence of a competitor indicates the existence of paying customers. If you can’t find anyone who is making money with your idea, you really need to wonder if there is any money to be made there at all. (p.156)
• If you want to start a new business, don’t look for an idea that has never been tried. Instead look for someone who is serving real customers but not doing it very well. Find a way to do it better. (p.157)
• The Pragmatists will buy your product only when they see other Pragmatists doing it. If this sounds like a chicken-and-egg paradox, it is. (p.162)
• The Early Adopters like new things, and your product is getting older every day. (p.165)
• Code that was written more quickly runs more slowly. (p.180)

Sales

• I observe that buying software is closer to the “high-trust” end of the spectrum.(p.236)
• Pricing and positioning are inseparable. Don’t bother trying to figure out your price point until you first figure out what position your product will have in the market. (p.249)
• Product -------------------------------- Customer
  In order for the sale to occur, this gap must be closed.(p.265)
• Moving customers is very difficult to do, especially for a small company with very little clout... Moving your product toward the customer is a lot easier. (p.272)