Business of Software Blog

BoS digest: the China Syndrome

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The Business of Software social network now has 679 members. I was chuffed with that, until I thought about the potential audience. Joel Spolsky’s blog has around 100,000 RSS subscribers and, scaling up from what I know about my own blog, his best posts probably get read by about a million people. And even Joel doesn’t have 100% coverage - there are probably another million people who should read Joel’s blog who don’t. So the social network has a total potential market of roughly 2 million people. So it has roughly 0.035% market penetration. And I’ve worked damn hard to get it there.

Simon Galbraith, the other founder of Red Gate, set up a Ning network a week or so after I set up the BoS one - AIGVictims.org. It’s aimed at people who lost money through AIG. They’d invested in what they were told was a government-guaranteed insurance fund. As safe as houses, apparently. Which turned out to be true - AIG went bust, the government guarantees were worthless, and around 5,000 members lost a lot of their money.

AIGVictims.org has 1,168 members. That’s roughly 25% market share. And all Simon did was set it up, attend a meeting and then go on holiday.

There are all sorts of interesting points here about tension between the coherence and passion of a group, and its size, most of which are covered in Tribes, by Seth Godin.

The other interesting thing is that the size of your potential market is often irrelevant. Market size is often not the limiting factor. Whether there are one million, two million or ten million potential members of the BoS social network is not what’s preventing it from growing. What matters is whether it’s possible to reach those people (do they hang out in the same places and read the same magazines) and how quickly I can do it (do I have a channel to them, and can I afford to use it).

People often fall for the so-called China Syndrome: if only I could get 1% of a 1 billion person market to pay me $1 each. In the real world, this rarely works. It’s much better to focus on a smaller audience - one that you can reach - and then dominate it.

Which leads me on to my question of the week. Does your business plan rely on getting 1% of a billion dollar market? And if so, how’s it going for you? The best answer will get $20 of Amazon vouchers.

Last week’s QOTW was have you seen good assumptions go bad? The $20 goes to David Locke, but there were strong entries from Steve Jones, Jeff Celander, Peter Degen-Portnoy, Chris and Anon too.

Elsewhere on the forums, Constantine Goulimis asks how do you raise competence in product management? and Mark Dalgarno wonders how you should price subscription-based software versus perpetual licences. Should the total overall cost to the customer be the same, or do you price in the added convenience and lower risk?

Ryan Leslie has two things to do, but only development team to do them. How should he choose between the two?

Paul Kenny will be holding an online chat about software sales on February 11th. Paul is one of the UK’s top sales trainers, consultants and speakers. You can sign up, and watch the video of Paul speaking at Business of Software 2008, online.

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BoS digest - when good assumptions go bad

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Last year, the Zimbabwean division of Barclays bank made one hundred quadrillion Zimbabwe dollars profit. With inflation at 231 million percent and rising, the numbers will soon breach the magic threshold of Z$ 922,337,203,685,477.5807. Why magic? The true geeks among you will instantly recognise 9,223,372,036,854,775,807 as 2^63 - 1, or the maximum value that the 8 byte SQL Server money data type can store.

Software is at its best when it's specific, and it's assumptions that provide the constraints that make it so. We've all seen software that makes bad assumptions - the web site that assumes you have a US phone number; the application that only installs to the C:\ drive and the banking site that assumes nobody is ever called O'Neill or Geneviève or wants a password with - heaven forbid - punctu@ti0n.

These are just plain bad assumptions.

But what about when good assumptions turn bad? In hindsight, they might seem dumb, but they were sensible at the time. Assumptions that $922 quadrillion was the most currency anybody would ever need, or that programs written in the 1970s would be obsolete by the year 2000, or that 64kb would be plenty, or that screen sizes would never be the size of buildings with resolution better than paper? Is there any way to mitigate against the very good assumptions you are making today turning evil tomorrow?

Like the punchline to the how many philosophers does it take to change a light-bulb joke, I have no answers, only questions. But I'd like to hear what you think.

So this week's QOTW is "Have you seen good assumptions go bad? And what can you do about it?". As always, $20 of Amazon vouchers will go to the best answer.

Last week's QOTW was "Have you ever been to a remarkable networking session at a conference?" Thank you Ken Hughes, Matt Lacey, Ed Loessi, David Locke, Steve Jones, Mark Dalgarno, Bob Cramblitt, Erietta Sapounakis and Sean Murphy for your excellent answers, and Cliff McCollum wins the $20 for his World Café idea. Send me an e-mail Cliff and I'll send you the $20 vouchers.

On the social network, Mark Dalgarno asks when should you retire a software product? and Phil Factor has some excellent, seasoned, and characteristically weird advice about how to survive the recession in his clinging to the flotsam blog post. Make sure you check out the other forum posts too.

If you're in Cambridge then make sure you come to Software East next week.

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BoS digest: an idea for large-scale, real-life networking

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How do you take a group of 400 and introduce each person to a handful of relevant people? And get them to know each other, to discuss a mutual topic of interest, and form a bond that will last more than the hour they spend in each other's company?

That's the problem I'm facing with Business of Software 2009. I've tried a couple of things in previous years. In 2007, we had a handful of break out sessions. That didn't really work: there were too few sessions so each session had too many people and by the time introductions were done we'd run out of time. In 2008, we had table sessions. People signed up in advance to one of a series of topics and then sat at pre-allocated tables of 10, each with a moderator. This worked for some people, but failed for others, depending on the topic, the people at the table and the skill of the moderator.

Inspired in part by Open Space Technology, I'm contemplating moving away from a structured session in favour of a marketplace metaphor. Maybe I'd let people loose over the venue and tell them to self organise for an hour. I'd encourage them to set up topics in advance through the Business of Social network site, use Twitter to communicate locations and organise impromptu groups, and provide helium balloons,  large pieces of card and marker pens for anybody passionate enough about a topic to broadcast their interest. It could be an interesting experiment.

All of which leads me on to this week's question of the week: have you ever been to a remarkable networking session at a conference? The best answer will get $20 of Amazon vouchers. Post here.

Networking in smaller groups is much easier: food and alcohol normally do the trick. Over several centuries, the ancient Greeks perfected it to an art form. They gathered in private symposia, one or two to a couch, and the symposiarch watered down the wine to an appropriate level (usually three parts water to one part wine) and made sure that everybody got the correct level of alcohol calibrated to his (and it was always his) personal level of tolerance and reaction to alcohol. They then discussed poetry and philosophy, with the symposiarch guiding and regulating the talk. I can't promise anything like that, and there's certainly no requirement to drink, at next week's London BoS dinner. But it should be a good chance to talk about the business of software with like-minded people. It's open to all, and you can sign up at http://network.businessofsoftware.org/events/london-bos-dinner-1

The two previous QOTWs (What are your predictions for 2009?  and Who would you like to hear speak at Business of Software 2009?) have been won by Dave Collins and John Hsu.

Paul Graham has tentatively agreed to speak at BoS 2009. He joins the current line-up of Joel Spolsky, Don Norman and Geoffrey Moore. If you want to keep up to date as I announce new speakers then follow me on twitter.

On the forums, Sam Ng asks how do you price SaaS, Scott Cote would like to know how product managers fit into the sales process and Mark Dalgarno asks about rental models vs perpetual licences for software. Answer these questions, and more, on the forums.

How important is integrity in business? Read Phil Factor's opinion in his A chilling prophesy blog post, and I have a guest post on interruption marketing (is it really dead?) on Avangate's blog.

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Interruption Marketing: Rumors of its Death have been Greatly Exaggerated

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I've got a guest post on the Avangate blog where I talk about Napoleon, hemorrhoid treatment, toilet paper and why interruption marketing isn't dead:

"As Seth Godin says, you should create purple cows: products that are remarkable. Products that people want to talk about. But no matter how hard you try, your cow doesn’t always end up purple. Sometimes you’re stuck with a product that is merely good, or a product that people simply don’t want to talk about. Like hemorrhoid treatment. What do you do then?"

You can read the full blog post here:

http://blog.avangate.com/interruption-marketing/

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