The Birth, Life, And Dying Of A Software Company
Clint Lewis, CI Editor
The Birth
All companies live under a bell-curve of a beginning, middle, and an end. I've
been fortunate in my IT career to witness nearly the complete life cycle of a
software company. I'm not talking about a company that was born and died an
internet pure-play in a year or two, but a company that started as Mac's and
PC's began their ascendance - a company that is just now well along the gentle
slope down the other side of the curve.
The company found it's early niche creating software for businesses running
hardware on the PICK operating system, a relatively inexpensive, multi-user OS
for small to large businesses, which was much less expensive than mainframes of
the time. The OS was actually named after its creator, Dick Pick.
The company got off the ground when the founder, a PICK database programmer,
wrote the first electronic spreadsheet software for the PICK OS. He got the
idea after seeing Apple's VisiCalc, the world's first electronic spreadsheet if
I'm not mistaken. In his off-hours, and with help from his friends, he coded an
electronic spreadsheet for PICK, and then placed a few ads in a relevant magazine.
The spreadsheet software was an instant success and soon his mailbox was
stuffed daily with orders. Though others had been working on a similar idea, it
turned out the founder, in addition to being a decent programmer, was also an
astute marketer, and so was able to position his product above the competition
before they could get a foothold.
Beginning Lessons:
1.
If you are a programmer who is working on a first-mover idea, be
aware that at a certain point, marketing effort will quickly become more
important than additional coding effort.
2.
If you prefer to remain a programmer at this point, rather than
become a marketer/manager, you've already blown it. The problem is that it's
unlikely anyone else will have nearly the enthusiasm for your product as you,
and it's enthusiastic, effective marketing that sells stuff, not elegant code.
However, as we'll discuss next, there is a way out if you want to remain
primarily a programmer and still find the road to riches.
The Life
While the spreadsheet software provided a strong foundation for the company's
growth, the software product that really launched the company was a product
written by a lone wolf programmer out of England. His new product was a
terminal emulator built to run as a PC DOS .exe, and that also had facilities
to transfer and convert data between the PICK and DOS file formats.
While the programmer could have started his own company perhaps, I believe he
wanted to remain a programmer first and foremost. So what he did was rent a
small vendor table at the next annual PICK software convention and touted his
stuff as best as a non-marketer programming geek could.
The spreadsheet company founder, being an astute marketer, was on the lookout
for a product that could grow his business. The founder and programmer cut a
deal and the company quickly tripled its software sales because of the new
software. The company handled all the support and marketing, and the programmer
got a cut of each sale and agreed to support the code and enhance the product over
time. At the peak, the programmer was pulling in $30K - $40K per month, while
living in a small village in England working on the product on his own
schedule. This went on for years.
Middle Lessons:
1.
Once a company has market share and customers, they can quickly
increase software revenue by introducing new products that don't have to be
written in-house.
2.
It is probably most effective for lone wolf or small shop
programmers who are not marketers to find an established, successful marketing
partner from the beginning rather than attempt to start their own business.
(One wonders if more small internet companies might have survived if they had
used this strategy instead of just burning through venture capital.)
The Dying
The company is still in business, though slowly fading away. In part, that is
because the PICK operating system is slowly fading away. The company's products
were built for PICK, which was good for focus, but bad from an evolutionary
perspective.
The company made attempts, as it came over the top of the bell-curve, to branch
out into various services such as consulting and education. However, since good
people tend to leave a dying company, it was difficult to sustain the effort to
change.
The company was, itself, eventually bought by a larger company suffering a
similar fate. As a result, in this case, the combined companies could outlast
competitors dying around them. They even had a surge in business when what was
left of their competitor's customers came to them for solutions. While I have
since moved on from the company, life is rather good in many respects for the
few people who are left . For them, it's almost like working for a small
company again.
End Lessons:
1.
If they can outlast competitors, a company can often continue to
exist for much longer than might be intuitive. Merging with another related
company is one method of doing this.
2.
Customers are the lifeblood of any company, and it is likely many
will stay with a dying company for much longer than one would think; Especially
if the customer's business depends on the company's software.
3.
For die-hard programmers who stick around at dying companies, life
can get better in some ways.
4.
Most dying companies can't reinvent themselves in order to
survive, but the people in them can.