Skype – used constantly to keep in touch across multiple countries Basecamp – simple project management Highrise – simple contact management Salesforce – might drop it and solely use HighRise WebEx – might switch to CampFire Twitter – 140 characters of conversation Google Apps – Gmail, docs Google Chrome – quick, simple browser Thunderbird – plays well with Gmail Dropbox – simple way to share large files Blackberry – best email/sms/phone/gps on the go. Slacker Radio – Pandora is getting too pushy WordPress – simple blogging software Subversion – version control for our apps
There is allure for a young software company to use a software publisher to springboard in to retail. They’ve got connections, a distribution network, and deep pockets.
All you have to do is give them a gold master, some content and you can sit back and collect royalties every month. Publishers generally negotiate a 15% – 20% royalty to you. Their costs are artwork, boxes, marketing, travel, advertising, etc.
The idea is that you’ll negotiate a decent cut to collect enough royalties, build cash and then take over and enter retail across the board on your own. The stakes are larger, but it takes more money to play and the competition is fierce.
Without a strong online presence what makes you think you can handle retail on your own? It is important to do customer development and build a base of success if you chose this route. Unless you have a popular product, software publishing hardly ever works out in your favor.
Giving a publisher non-exclusive rights to your brand is dangerous. They can hurt previous relationships, take over your social media presence and you never know what is going on with revenue and box counts without an audit.
A better use of your money is to focus on how your customer finds and buys your product. Maybe it is only through organic search? Maybe your customer only shops at a Fry’s or MicroCenter? Maybe your customer is an iPod owner and you do biz dev with an iPod accessory company?
Where I DO think software publishing makes sense is in International markets. Using a publisher from another country is a great way to get access to new customers without having to have the relationships (especially Japan), the localization experience and you probably don’t have the means to do the constant traveling needed to set up the operation.
It is too often that all of us as consumers take for granted the effort and cost that goes into any given product we may purchase or use. In regard to software, it is something we may feel that we need but shouldn’t pay much for, in fact many times the question is asked, why pay for it at all?
In today’s economy, there is little money to go around and something free is appealing, but if it could mean loss and further cost to cover the loss, it is surely something to think more about rather than making a quick decision.
Ultimately, a good percentage of the same people that ask why pay for it, end up doing exactly that, they pay for it in loss of their time, loss of their files, the computer stops working, the computer becomes very slow, they get a virus or some other malware, etc…
On the other hand, there is a good percentage of freeware out there that has the makings of great software and could potentially be great one day once they get enough resources and money to take the next steps needed to grow. Many great companies started in their garage or school dorm room with one person and grew their software to be some of the most recognizable names in the software industry.
The truly greatest companies may not be the largest or the most recognized, they just do the absolute best they can to fill the needs of the customer and sell their product for the best deal possible so that it is affordable to everyone.
Talk by David Heinemeier Hansson of 37signals about keeping products simple, starting small, pricing, identifying a market and getting the most out of your time.
With the rush of starting and trying to grow a business, overzealous people can get caught up in which direction to go. The options are endless, there is a lot going on. Promotion, marketing, measuring, analytics, trade shows, blogging, social media tools Twitter and Facebook, hiring, office space, etc.
None of this matters until you identify a problem that (a lot of) people will pay money to solve.
That should be almost 100% of your focus starting out. You need to get out there and talk to people, call them on the phone, email them and pick their brain about what their pain is and how to mold your solution to alleviate their pain.
If you don’t solve the problem with a great solution first your efforts in marketing, promotion, trade shows, etc will simply not be as effective. With a mediocre solution, you can’t survive and eventually you’ll have to come around to the first step of solving the problem with a great solution.
I read this advice the other day on a forum. A guy had a dead hard drive and the suggestion was to go on Ebay and buy a same model drive and swap the board. At one time that would work but those days are long gone.
It used to be that when a board failed that you could just buy another drive with the same firmware and swap the board and maybe your drive would work. The chances of this working on current drives is about zero. Modern drives are calibrated to extremely fine tolerances. The manufacturers are squeezing every last bit of performance out of the hardware. One way they do this is by calibrating each head and drive and platter at the factory. You see not all heads read and write with the same sensitivity. Platters do not have the same magnetic coercivity evenly everywhere. So the manufactures build the drives and then they run a bunch of tests to determine how much voltage each head needs for each part of the platter to write and read. All this information is stored in tables and saved in the drives firmware. These values are called ‘adaptives’ and are unique to each drive – so swapping a board won’t work. In order to swap a board you have to reprogram it or fix it. This requires special expensive equipment and knowledge.
Oh… and the other problem is finding a board with a matching firmware revision. Manufacturers change their firmware constantly. It even differs by country and head amplifier chip.
hmmm... fried brain.... Marvel chip on a Western Digital
Every retail software company started in a dorm or garage dreams of making it big. This vision generally means having rows of your product on the store shelves of Best Buy, Office Depot, Staples, Wal-Mart, Costco etc. Who doesn’t want access to millions of shoppers and the ability to leverage your brand from retail?
Stop and think it through.
Retail costs A LOT of money. Tens of thousands to do it right when starting out.
Boxes + shipping – $1-5/unit (depending on volume)
Marketing development funds (MDF)
Ad dollars for flyers
Costs to distributors
Costs to retailers
Return costs if your product doesn’t sell
It is survival of the fittest in retail, especially in 2010. Starting small and conquering your niche on the web is better than trying to jump straight to retail with no running history, no understanding of your customer and low odds of success.
You need to solve a pain with your software, be Advil. There is a very natural process to it. Start simple, solve a problem and build cash. Jumping the chasm from a niche to a mass market product is the next step. Once you are making very solid profit, test the market with a regional retailer that has 50-100 stores, find success and then finally move up to the mass market retailers.
We are changing the focus of our blog from the standard, boring pitch about our company you’ve seen on almost every other company blog. We’ll still cover some company news, product releases, product features that we think you may like.
What we really want to talk about is what we’ve learned since 2001 growing our company, getting in to retail, working with large OEM companies and international resellers. We want to talk about the ins and outs of the what we see in the software and technical service business. Building software, doing deals, positioning and beating the competition.
There seems to be a lack of traditional software companies talking and engaging their customers. We hit a point where we felt like we were always asking something of our customer base and not giving enough back. We hope we can give you some useful insight and encourage you to engage with us if you agree or disagree.
Wednesday, March 31st, 2010 
Posted by Korey
View Comments - Filed under Products 
