Programmer To CEO How to Start Your Own Software Business by Scott Hodson [email_address]

How to Start Your Own Software Business

by Scott Hodson

[email_address]

Who am I? President, Ubero, Inc. 15Years enterprise s/w experience ISVs: Plaid, Starbase, loadtesting Internet: Buy.com, Digital River (DRIV) Consulting: Ubero, founded 2000 Community: OCJava, OCPatterns, OCRuby, CSUF and UCI Pedigree: BS CS, BYU - MS ICS, UCI Temporary millionaire

President, Ubero, Inc.

15Years enterprise s/w experience

ISVs: Plaid, Starbase, loadtesting

Internet: Buy.com, Digital River (DRIV)

Consulting: Ubero, founded 2000

Community: OCJava, OCPatterns, OCRuby, CSUF and UCI

Pedigree: BS CS, BYU - MS ICS, UCI

Temporary millionaire

Why are you here? Scott is cool Don’t like college football Make more money Have independence Be “the decider” Have the “CEO” title

Scott is cool

Don’t like college football

Make more money

Have independence

Be “the decider”

Have the “CEO” title

Who is this?

And this?

And this?

And this?

And this?

And this?

And this?

And this?

And this?

And this?

And this?

And this?

What is this?

It’s this...

Entrepreneur Patterns Very smart Macro vs. Micro Energetic Willing to take measured risks Inspires others to join their cause Leverages strength, outsource weaknesses Focused, yet able to adapt Idea vs. Execution

Very smart

Macro vs. Micro

Energetic

Willing to take measured risks

Inspires others to join their cause

Leverages strength, outsource weaknesses

Focused, yet able to adapt

Idea vs. Execution

Ready To Jump? Have a plan - model, idea, mitigation Business experience Cash - poverty, 2nd mortgage, angel People - experts, contacts Customers - early adopters Demo - code, specs, comps, part-time The power of being in the game Passion - sleep, youth, support

Have a plan - model, idea, mitigation

Business experience

Cash - poverty, 2nd mortgage, angel

People - experts, contacts

Customers - early adopters

Demo - code, specs, comps, part-time

The power of being in the game

Passion - sleep, youth, support

Before you jump... Good with people, networking Understand business domain Delegate, trust others Work at least 12 hours a day Love business Prepared to fail, “fail fast” and fail often Youth is your friend

Good with people, networking

Understand business domain

Delegate, trust others

Work at least 12 hours a day

Love business

Prepared to fail, “fail fast” and fail often

Youth is your friend

Business Models ISV - shareware, micro ISV, OSS Web – online community, SaaS Consulting - services, custom, niche VAR, integrator Guru – author, blogger, speaker Use software to be good at a non-software business Hybrid

ISV - shareware, micro ISV, OSS

Web – online community, SaaS

Consulting - services, custom, niche

VAR, integrator

Guru – author, blogger, speaker

Use software to be good at a non-software business

Hybrid

I Have an Idea Good What sucks? ClassMates.com What can be better? What’s too expensive? Load testing s/w What takes too much time? Not as good What has never been done? What would my friends like to see? “ You can’t build a business based on a feature”

Good

What sucks? ClassMates.com

What can be better?

What’s too expensive? Load testing s/w

What takes too much time?

Not as good

What has never been done?

What would my friends like to see?

“ You can’t build a business based on a feature”

Competition Mimic and improve - Gmail, Jobster, Flickr, Eventbrite No “Missionary Selling”, competition is good Don’t compete with your employer! Recent CA non-compete judgment Get to know them

Mimic and improve - Gmail, Jobster, Flickr, Eventbrite

No “Missionary Selling”, competition is good

Don’t compete with your employer!

Recent CA non-compete judgment

Get to know them

Cash Prepare to be poor Angels are heavenly Don’t go on a shopping spree Office, car, employees Stick with what you need, be nimble Laptop, phone, s/w tools

Prepare to be poor

Angels are heavenly

Don’t go on a shopping spree

Office, car, employees

Stick with what you need, be nimble

Laptop, phone, s/w tools

Angel Investors Friends, network, individuals People and ideas Beta, proof of concept $100K - $1M, 1%-5%, passive, diverse Lawyers, accountants, colleagues No NDA Tech Coast Angels

Friends, network, individuals

People and ideas

Beta, proof of concept

$100K - $1M, 1%-5%, passive, diverse

Lawyers, accountants, colleagues

No NDA

Tech Coast Angels

Venture Capitalists Good to have a contact Board members, angels An introduction, 15 second pitch Executive summary Much more thorough “due diligence” Beta, paying customers, users $1M-$100M, 20%-40% equity, board seat

Good to have a contact

Board members, angels

An introduction, 15 second pitch

Executive summary

Much more thorough “due diligence”

Beta, paying customers, users

$1M-$100M, 20%-40% equity, board seat

What VCs Want Barriers to entry Intellectual property Switching costs Exclusive partnerships Scale Management team Exit strategy – 10x Business plan Customers, cash flow Offshore, OSS

Barriers to entry

Intellectual property

Switching costs

Exclusive partnerships

Scale

Management team

Exit strategy – 10x

Business plan

Customers, cash flow

Offshore, OSS

What VCs Give You A marriage Customers, partners, “keiretsu” Money that you have to spend for owners pockets Headaches ditch the founders force you onto other portfolio companies string you along, “show me the money”

A marriage

Customers, partners, “keiretsu”

Money

that you have to spend

for owners pockets

Headaches

ditch the founders

force you onto other portfolio companies

string you along, “show me the money”

Don’t Screw Around Get a lawyer Get an accountant Get insurance Get business license Incorporate File your paperwork, taxes Separate business and personal expenses Get things in writing Prepare for the worse

Get a lawyer

Get an accountant

Get insurance

Get business license

Incorporate

File your paperwork, taxes

Separate business and personal expenses

Get things in writing

Prepare for the worse

Selling Your Wares Community of Users - forums, wikis Free Version, upgrade to “pro” Open source As a marketing strategy Provide value in support Support extensions, APIs Turn customers into developers Downloadable - eSellerate, DigiBuy, RegNow, ShareIt, App Store

Community of Users - forums, wikis

Free Version, upgrade to “pro”

Open source

As a marketing strategy

Provide value in support

Support extensions, APIs

Turn customers into developers

Downloadable - eSellerate, DigiBuy, RegNow, ShareIt, App Store

Launching an Online Business Coming soon mailing list – “closed beta” PR, News wires Google Ads Forums, groups, blogs, mailing lists Live and breathe Web 2.0 Encourage referrals, giveaways Direct marketing - buy lists Free trial Web, desktop, mobile

Coming soon mailing list – “closed beta”

PR, News wires

Google Ads

Forums, groups, blogs, mailing lists

Live and breathe Web 2.0

Encourage referrals, giveaways

Direct marketing - buy lists

Free trial

Web, desktop, mobile

Consulting Breadth is king Deliver solutions, not code You’re easy to fire and blame Make fame – write, speak, teach, cast, meet Reasons people hire consultants The side project The next version Lack of in-house expertise on newer platforms Clean up the mess, behind schedule No benefits, no strings attached Wall St. likes it, accounting trickery

Breadth is king

Deliver solutions, not code

You’re easy to fire and blame

Make fame – write, speak, teach, cast, meet

Reasons people hire consultants

The side project

The next version

Lack of in-house expertise on newer platforms

Clean up the mess, behind schedule

No benefits, no strings attached

Wall St. likes it, accounting trickery

Hiring/Staffing Test your programmers Spoil employees with what matters to them Coders – gear, chair, LAN parties Marketing – awards, golf, recognition Offshoring Seek a high-bandwidth relationship Manage mediocrity Elance, oDesk, find referrals

Test your programmers

Spoil employees with what matters to them

Coders – gear, chair, LAN parties

Marketing – awards, golf, recognition

Offshoring

Seek a high-bandwidth relationship

Manage mediocrity

Elance, oDesk, find referrals

My Favorite Magazines Wired Business 2.0 Fortune Business Week Harvard Business Review

Wired

Business 2.0

Fortune

Business Week

Harvard Business Review

Web Resources http://freelanceswitch.com/ http ://www.softwareceo.com http://www.empowerforisv.com http ://www.venturebeat.com

http://freelanceswitch.com/

http ://www.softwareceo.com

http://www.empowerforisv.com

http ://www.venturebeat.com

Q&A

Thanks Scott Hodson [email_address] 949/709-4496

Scott Hodson [email_address] 949/709-4496