09 January 2011 ~ 6 Comments

Defining Goals for a New Software Business

As I wrote in my last blog post, I’m going to create my company and travel for the next 5 months, and people have been surprised I have no final, well-defined idea of what to do for the business side of the equation. People expect that you should know what you’re going to do (no surprise here). However, I think the precise product idea should come last in a 3-step process:

  1. figuring out what I really want out of it
  2. figuring out what market to target
  3. figuring out what product to make

Indeed, steps 2 and step 3 depend on what you really want. If what you want is location independence, then it’s probably better not to implement this great idea you have for Luxemburg government agencies, because, well, you will then be stuck in Luxemburg. There go your dreams of this epic road trip through America.

So, addressing the first step: what is my goal, exactly?

To create a company that enables me to create great software that solves a problem I am interested in, for people that want to pay money for it, all while allowing me to have greater freedom than going to the same office day after day.

Okay, that might sound a tad abstract, so let’s go through the different aspects of that goal:

  1. Start Small

    Even though I have plans to disrupt the online transport search, the real estate market and the recruiting industry, I know I cannot compete head-to-head with companies with millions of dollars in funding and a head count by the dozens. Better to pick a small problem, relentlessly cutting scope so it’s doable by a one-man shop, implement a Minimal Viable Product and iterate from there.

  2. Selling to businesses rather than selling to consumers

    It’s funny how people think you can make a killing developing the next Facebook or a crap Iphone application. Media like stories like Facebook or the random Iphone fart application making a million dollars in one month, but truth is these are real outliers (plus I don’t really want to write an Iphone fart app anyway). Most Facebook-like companies end up nowhere and most Iphone applications sell exactly 0 copies. But of course, this doesn’t sell magazines, so people end up perceiving the only hurdle to create great software companies is to have the next Facebook or Iphone fart idea, and it’s all downhill from there. No no no. Execution matters far more than ideas.

    So, I favor for now developing for the business market. Of course, some consumers are willing to pay for certain types of software, but it’s not so common. And the most common thing I hear being “you just need one million users and then you can place ads”, but how many software businesses in the world have one million users? An abysmal number. Most successful software companies focus on providing value to paying customers.

  3. Vertical markets rather than horizontal ones

    Horizontal market refers to needs existing accross a wide range of industries, for e.g project management, invoicing, etc. Vertical market refers to needs specific of a same niche, for e.g people playing tennis or professionals in the timber industry. It’s better because it’s much easier to reach them: people playing tennis are easily findable (they hang out on tennis forums, for example) but people needing accounting software are not (they don’t necessarily hang out on accounting forums). Plus, needs of tennis clubs will likely be similar, but needs for accounting software will vary depending on the business, the company size, the country etc. Unless you make accounting software for tennis clubs, that is.

  4. Lifestyle business rather than shooting-for-the-stars business

    My immediate goal is not to go from employee to multi-millionaire successful startup owner, but rather to develop a business that could sustain myself for a few years. This is categorized as lifestyle business, and is often being mocked by startup types, especially Silicon Valley ones, who consider startups successful only when they go public or when they are acquired by Google or Amazon. But people owning lifestyle businesses do have what I would call rather happy and successful lives: Bingo Card Creator and 37 Signals can be considered lifestyle business, in that their focus is not to grow as much as possible to sell to bigger companies, but rather to enjoy the advantages of being a small structure while doing something you love and getting a healthy compensation for it.

  5. Location independence

    That’s a big one. Ideally, I would like to be able to work from anywhere. So, making software for French city councils (what my friend Nicolas does) might not fit that case, since customers would expect you to come to their office to sell them the software, to train them, to give on-site support … That means we need to look mainly into writing software for small business, or at least, that would be cheap enough not to go through complicated sales process.

Defining goals for your new company enforces you to embrace constraints, and this is a Good Thing. As for me, I’m looking to start small, creating a product for businesses preferably in a vertical market, that could enable me to work from anywhere and make a lifestyle business flourish, while doing something I love.

Congrats! You made it until the end. You can follow me on Twitter.

6 Responses to “Defining Goals for a New Software Business”

  1. Ben 10 January 2011 at 12:10 am Permalink

    Hi Tommy,
    Ca me fait marrer de te lire car j’ai l’impression d’être passé par là y’a quelques temps (un an très exactement).
    Encore félicitations !!
    Ca fait biiiiien plus longtemps qu’on s’est pas vus, mais les fondamentaux sont toujours là : “for e.g people playing tennis” lol
    Ca serait cool qu’on se capte.

    Ben

  2. qna 10 January 2011 at 12:33 am Permalink

    Nice points and good luck with your new startup company!

  3. Thomas Vilarinho 10 January 2011 at 8:40 am Permalink

    Dont forget to think about the business model! By the way, Im not sure if youve seen this ppt: http://techcrunch.com/2011/01/07/10-business-models-that-rocked-2010/ It is good food for thought

  4. tommy 10 January 2011 at 10:18 pm Permalink

    Thomas, cool link. These are mostly about big new startups though – Groupon, Kickstarter etc

    I don’t forget to think about business models, I promise ;-)


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