1 / 12

Entrepreneurship in the Software Business

Entrepreneurship in the Software Business. Robbie Allen and Dharmesh Shah December 9, 2005. General Rules Of Thumb. Ed Roberts' data show the odds for MIT-based startups are much better than the Nesheim numbers Follow your passion. Don't do it for the money. Try to solve a user problem.

EllenMixel
Download Presentation

Entrepreneurship in the Software Business

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Entrepreneurship in the Software Business Robbie Allen and Dharmesh Shah December 9, 2005

  2. General Rules Of Thumb • Ed Roberts' data show the odds for MIT-based startups are much better than the Nesheim numbers • Follow your passion. Don't do it for the money. Try to solve a user problem. • Determine realistic capital needs and investigate possible VC alternatives including bootstrapping, angel funds, etc. • You have to be adaptable: Flickr went through 3 business models and 3 product ideas in a couple of years • Diversified founding team increases odds of success • Most mistakes are business-related (not technology) • Failure is part of the process • A business plan just gets you started

  3. Product Startups • It is cheaper than ever to start a software company • Software-as-a-service is becoming more attractive • Acquisitions are happening earlier • IPOs are much more difficult (so acquisitions are the primary exit)

  4. Service Startups • Lower risk than product companies, but margins are more modest • Very people-focused; attract, develop, retain, and deploy • From Imran: Very few service companies can justify raising venture money. Not what they’re designed for and difficult to create VC-like returns.

  5. Hybrid Startups • Usually start as a service or product company and become a hybrid over time • Service companies often strive to become a hybrid (or product) company (e.g., FogCreek, 37Signals) • Product companies are often forced to become a hybrid company (Cisco, Oracle, etc.) • Don't let one cannibalize the other

  6. People • The “team” is the most important aspect of a startup • Critical to have clarity around roles, responsibilities and terms • Equity allocation among founders is often challenging – “equally dividing stock” is rarely the right choice • Strive for diversity and ensure complementary skills • Early employees are crucial to success

  7. Development Strategies • Avoid sequential “waterfall” schedules • Agile and XP practices are well suited for a fast-paced small startup • Evolve requirements incrementally • Choose platforms and languages suitable to the business • Synchronize-and-Stabilize!

  8. Marketing and Sales • Startups often fail by not having good sales and marketing vision and people • Advertise the brand, not the technology; but have features that back up the brand • Get customers to try the product, however you can • Get customers onto the upgrade (maintenance) cycle: Provides recurring revenues, and lessens probability that customers will switch • Do what is necessary to get customers to refer other customers – this dramatically lowers customer acquisition cost.

  9. Outsourcing • Good for creating initial prototypes or farming out work of non-critical tasks • Not so good for small startups that need to innovate quickly, grow, and create a tight-nit culture • Outsourcing isn't a panacea - still requires close supervision • Many startups make the mistake of not recognizing the “real cost” of the outsourcing path (fail to factor in risk and co-ordination costs).

  10. Open Source • Using OSS products internally makes a lot of sense • Jury is still out on releasing commercial products as open source • More opportunities for OSS services companies

  11. NetNumina Lessons • Differentiation in services is key • Domain, technology, business process • Quality is extremely important but needs to be tangible • Client references • The right balance is important • Between new and existing clients • Between needs of clients and employees • Between selling and delivering • Between experienced and “high-potential” managers • Hiring & Retention is the single most critical function • Intelligence, attitude, communication, and willingness to travel • Invest in star employees • Timing and luck play a part in every start-up

  12. Q/A

More Related