Business of Software Blog

The Red Gate million dollar challenge

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Are you a micro ISV or do you have a software product you want to sell? We’re setting aside a million dollars to buy the right desktop and web apps. Here’s why, and what you have to do if you want to sell.

In November 2006, Red Gate purchased SQLServerCentral. In the two and half years since then, we’ve invested several hundred thousand dollars in the site, quadrupled its traffic and continued, with Steve Jones, the great work that Steve and the other original founders - Andy Warren and Brian Knight – started. Everybody - Red Gate, SQLServerCentral users current and future, and the original founders – was a winner.

Over the past decade we’ve purchased a number of technologies from third parties and brought them into the Red Gate fold: SQL Server Central, Lutz Roeder’s Reflector, PromptSQL (now SQL Prompt), pInvoke.net and Mini SQL Backup (now SQL Backup). In all cases, we’ve tried to do the same thing: introduce the products to a wider audience, and help them fulfil their potential beyond the means or ambition of their original creators.

We’d like to do this some more, and now seems like a good time. So we’re going to run a competition.

We’re setting aside a million dollars to purchase third party technologies. We might buy a single thing for a million dollars, or ten for a hundred thousand, or any other variation. We might decide to spend more, or less, but a million dollars is our target.

Interested? Here’s what we’re looking for:

• You’ve got to have a product. We’re not interested in prototypes. You must have customers. Happy customers, who – ideally - are happy to give you money for what you’ve built.
• If you’re giving away, not selling, your product then we’re looking for high numbers (10,000+) of users.
• It’s got to be software aimed at software developers or sysadmins. We specialise in Microsoft platforms, but will consider others too.
• The product might be a desktop app or a web-based app. We don’t mind.
• if you’re selling your product then it must have at least a 10% conversion rate. In other words, if ten people download it, or trial it, then, on average, one person should buy it. For us, this is a sign that you’ve got a product that works. We don’t care how many customers you’ve got – the fewer the better, in fact. It’s the ratio of trials to purchases that counts. If you’re not charging for it then we’ll look for a sign that a significant proportion of your users are actually using it regularly.
• Now is a good time for you to sell. Maybe you’re struggling with marketing your product, or maybe you’re worried about the recession we’re in. Or maybe you just need the cash, or are bored.

If you’re interested, here’s what you have to do:

• Send me an e-mail at neil.davidson@red-gate.com explaining what your product is and why it fits what we’re looking for.

The closing dates for entries is May 31st 2009.

Here are some questions you might have:

Will Red Gate invest in my company?

No. We’re interested either in buying your company, or buying the product you’ve built. We won’t take a stake in your business.

Why should I sell?

You might have a number of reasons. The emotional ones might involve fear, boredom and excitement. Maybe you’ve taken the product as far as you can, or want, to and would like somebody else to continue to make it succeed.

Rationally, if your product is worth more to somebody else than to you, then it’s economically sensible to sell. Say you're making $10,000 a month profit with your product. That’s a decent salary. It means that, over your product’s lifetime, it might generate you $300,000 - $400,000 profit, but with a high risk (since competitive products might emerge, you might fail, and so on). If somebody offers you $400,001 with no risk, tomorrow, then you should sell.

Why should I sell to Red Gate?

We’ve got a track record of buying products and, frankly, not screwing up.

Who is Red Gate?

Here’s Red Gate’s web site

What’s the process?

Send me an e-mail at neil.davidson@red-gate.com explaining what your product is and why it fits what we’re looking for. The closing date for entries is May 31st 2009. We’ll get back to you shortly after, either to let you know we’re not interested or to ask for more information. At some point, we’ll meet up with you, make a yes or no decision, and sort out the details. It will probably take a month or two to go through the process.

Will you sign an NDA?

Not at this stage. If we decide to take things further, and start asking for sensitive information, then we might do.

Will I be able to carry on working on my product?

Maybe, maybe not. It depends a lot on you – why you’re selling, and what you want to do long term. Sometimes we’ve bought technologies and people have carried on working on them, but sometimes they prefer not to.

Why is Red Gate doing this?

We’re always looking for new ideas. We get e-mailed them occasionally, and stumble across them sometimes, but we figured it’s better to be systematic. If buying technologies is a good thing to do, then let’s do it well.

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The story behind the Hudson River plane crash reconstruction

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If you’re one of the 1.8 million people who’ve viewed the youtube 3D reconstruction of the Hudson River plane crash then you probably think it was a straightforward, runaway viral success. But the truth is different: it’s an illustration of how luck, time, hard work and old media are all needed to create an overnight sensation. Here I talk with Dan Nunan, the CEO of Scene Systems, the company that produced the video.

Neil Davidson: Tell me the background of the reconstruction

Dan Nunan: It all started at Legal Tech – a big tradeshow held once a year at the New York Hilton. We were new to the industry, and initially were only going to window-shop. But I got offered a price for a booth that I couldn’t refuse. I felt pretty smug with my bargaining until I remembered that we only had four days to put something together. It wasn’t enough time to get a fancy stand built, and one look at the dust gathering on the office laser printer told me that we would be at the mercy of Kinkos for anything printed. T-Shirts weren’t really the style for lawyers – so what could we do? One of my team – Steve Breeze - was watching the news, and saw an animated reconstruction of the US Airways Hudson river crash – you know, the one where the pilot glides in and lands the plane on the Hudson without any engines. And everyone survives. Now Steve just happened to have a background of producing high-end animations for TV, and thought that he could do a much better job. So we thought we would see if we could hire a big screen, and just show this animation.

There were three hundred and fifty other companies at the show, and we wanted to do something that would stand out. The Hudson plane crash had happened a couple of weeks earlier. It was a great candidate – plenty of drama, and it had a happy ending. Everyone in New York was still talking about it. It took two people two days to put the animation together, working from the information we mostly got from the Wall Street Journal and other newspapers. Because we thought it was just for the show Steve decided to use his TV production skills to edit some sections and increase the dramatic effect.

Neil: So everybody came over to your stand to see the crash reconstruction, and it took off from there?

Dan: Yes, but it wasn’t as straightforward as that. The tradeshow started on February 2^nd. When we arrived in New York we realised we didn’t know anyone going to the show. February 1^st was Superbowl Sunday. So we decided to have a Superbowl party. The only catch would be how we actually got people to turn up, not knowing anyone being something of a stumbling block for throwing good parties. I got the member of the team who was the football fanatic to join Twitter and mention and put the conference tag into the ‘tweet’ There were a lot of people at the conference using Twitter, and searching for traffic about the conference, so a few people picked up on the party.

We were staying in a lousy hotel with a great lobby, so even if no-one turned up it was a short trip back to our rooms. In the end about fifteen people turned up, but these were some high-end influencers. Between them, they had thousands of Twitter followers. We bought them some beer, and then they started buying us beer. In the end, the whole thing only cost us fifty dollars.

Neil: Did you show them the animation at this party?

Dan: No – we just said that we had done one, and that they should come and see us at the tradeshow the next day. We hadn’t even gotten round to putting it on youtube at this point.

So we had lots of people come to see the animation – we probably spoke to 900 people, which was hard work as there were only three of us on the booth at a time. We become very good at running two or three conversations at the same time. They were all twittering about it: stuff like this conference is really boring, but check out the plane crash reconstruction at Scene Systems’ stand. A few people blogged about it too, and then the pro journalists started getting in touch wondering what the fuss was about. After the conference finished, we put it up on youtube and e-mailed some contacts we had about it.

Neil: Then they told all their friends and it snowballed from there?

No, not yet. About fifteen thousand people had viewed it on YouTube at this point. People were starting to pirate our video too – they were downloading it from youtube, editing it, and then putting it back up onto youtube. At the start these pirated videos were getting many more views than our original one.

Neil: How did you react to that?

My first instinct was to send them a legal threat asking them to cease and desist. But Virgil – he’s a recent graduate who’s just started working for us – told us that that isn’t the way it works on youtube. I started to feel really old. He wrote to the pirates and gave them higher quality videos to work with. We copied their idea of overlaying the audio onto the animation – we pirated the pirates – and put them into our video too. They linked back to our original video, so that drove even more traffic.

Neil: Was that the point it took off?

No, not yet. One of the people I’d met at the conference was Jim Haggerty. He’s a lawyer who runs a PR firm that specialises in crisis PR. He called me and said that he knows lots of journalists and could get us some really good press. I was sceptical - every PR guy claims to know journalists - but he was as good as his word – a couple of days later we had consecutive pieces in the Wall Street Journal.

That’s the point it started to take off. It was interesting watching it spread. We were tracking people’s IP addresses so we could see where the internet traffic was coming from. One day we’d notice that someone at Boeing had watched the video, then, within hours, two or three thousand people from Boeing would have watched it. The same thing happened with other big firms and government departments in the US, the Federal Aviation Authority and lots of big law firms too.

Neil: So it spread via e-mail and twitter?

Dan: Yes, but that’s not how it went mainstream. Most people, most normal people, don’t have twitter, or watch youtube. But journalists do. So we started getting calls from journalists asking if they could cover us. That’s where having a PR agency really helps. We tried to cope ourselves, but failed. In the heat of the moment we forgot that we had a PR agency. We had three national TV channels all asking us for information on the same day – they all wanted the video, but in slightly different formats. We screwed up, and lost the story on one of the channels. But it still went onto ABC that night, on the Rachel Maddow show, and was repeated on about a dozen channels after that.

And that’s when it really went mainstream. That caused the second wave. People saw it on television and then went on to the Internet and watched it. Pretty much every online publication had covered it in some way. Two weeks after we put the video online over a million people had watched it.

Neil: But did this actually generate any new business for you?

Dan: It’s too early to tell. We don’t specialise in crash reconstructions - we provide graphics and visuals for the legal system. One problem with the legal system is that it’s based on verbal argument. But this is often a bad way of presenting complex information to both judges and juries. Take a complex car crash - how do you explain what each person saw so as to establish what happened? You can have experts presenting reams of data, or you can show it visually. We use our own animation software to quickly create 3D reconstructions that explain complex evidence to an audience who aren't technical experts, such as juries. For example, we can quickly switch between different points of view, or focus in on a specific detail - such a pot-hole in the road or a part of the car that failed. The link between this and plane crash reconstructions is only tangential.

So, to come back to your question, although about two million people have now viewed the video, we’ve only had a dozen or so serious leads. It’s the difference between publicity and PR. A lot of eyeballs, but you aren’t after 1% of any old audience but 100% of the market that is right for you. But we’re hopeful they’ll be fruitful.

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