Issue 12 – Three different ways to success.
Three different ways to success:
Question: Can you please introduce yourselves:
Dirk Paessler:
My name is Dirk Paessler. In 1996 I founded the company that eventually became Paessler AG. We sell network monitoring and testing software for the Windows platform. Customers are small, medium and large companies from all industries and from around the world, e.g. 70% of the fortune 100 are our customers. Currently more than 100,000 installations of our products are active.
Marcus Tettmar:
I’m Marcus Tettmar, founder of MJT Net Ltd, developer of Macro Scheduler, a Windows automation tool. Macro Scheduler was originally launched 10 years ago in May 1997. Since then we have continued to develop Macro Scheduler and accompanying products, specialising in software automation tools for Windows. Macro Scheduler is now at version 9.1 and is selling better than ever. Our aim is to build tools that will let people automate any software process, with minimal skills, and recently launched AppNavigator which allows people to build image recognition based automation routines graphically without writing any code.
Sharon Housley:
My name is Sharon Housley and I manage all the marketing for NotePage, Inc. I am responsible for the marketing and brand development for the NotePage product line, the FeedForAll product line and the RecordForAll product lines. The NotePage product line is focussed on wireless, SMS and text messaging solutions. The FeedForAll product line centers on RSS and podcasting solutions and our newest product line RecordForAll is for audio recording. I have been involved in the computer industry since 1989 and I have been marketing online since 1996.
Question: If you had to point to three factors that were responsible or partly responsible for your company’s success, what would they be?
Dirk:
– The “(Don’t-call-it) Shareware-Concept”. In the early days it was called shareware, today even Microsoft sell software via trial versions and offers purchase through the Web. But most businesses do not use the term anymore, as it is associated with small, non professional companies and products.
The key point, however, is that the concept and companies adopting the model have grown into maturity! The principles are still the same: Don’t ship boxes. Don’t run expensive print-advertising. Offer free versions. Make trial versions so good that people will give you money for the real thing. Offer great value for the money. Stay close to your customers with your sales and support staff, and develop what they are looking for.
– Google Adwords and SEO: They are our main customer acquisition tools.
The perfect solution for niche products in a global marketplace.
– Be professional and be kind: The customer is king. Better to give some customers a little too much than all customers too little.
Marcus:
i) Having a great product that people need, and know they need! Getting the product right is a good start and having one that sells itself, with obvious benefits, makes life easy. We have a product that people come looking for. Macro Scheduler practically sells itself.
In contrast I think many products suffer because until you use them you don’t know you need them. We’ve released products like this too and been unsuccessful with them because you need to educate people into knowing they want them. It’s far easier to sell solutions to problems people know they have already!
ii) A loyal, evangelical customer base. And listening to it. I guess if you get the product right this one will follow. A big strength of ours is our active forum and user community. We just sew the seed with version 1 of Macro Scheduler. Subsequent growth is a direct result of user involvement. A big part of Macro Scheduler is it’s scripting language.
And, as any developer will know, languages and other technical products benefit from end-user discussion and knowledge sharing. So a user forum is both necessary for our product and also extremely beneficial. Our customer base has become a feature of the product, a component of its marketing and a function of our website. It is integral to our success.
iii) Passion and lots and lots of hard work. I gave up the day job almost immediately after launching the product. I don’t understand the philosophy I keep reading in the forums that you can run a software business “on the side” to make some extra cash. As far as I am concerned you’re in it to win it, or not at all. There’s no substitute for hard graft. Most businesses require long hours at the outset, and if you want to be successful you have to keep the momentum going even ten years later. Contrary to what some people believe this business doesn’t run itself!
Sharon:
Wow, there were so many factors that led to our success. I’m not sure which three I should talk about. I think the biggest factor was adaptability. Our initial vision of what the company would be is very different from what the company is today, and along the way we needed to adapt our software, marketing and the way we managed things. If we had been inflexible and unwilling to adapt to the changing marketplace and customer needs I don’t think we would have been as successful.
I think building on a need was critical to our success. We developed software that we needed, this was a good indicator that others might need the same solution. Sprinkle in a little bit of luck and voila, we became a successful software company.
Question: What would you say are your company’s most valuable assets?
Sharon:
That is a difficult question to answer. My first reaction was to say my staff, then I realized in the past 11 years we have developed a strong reputation (brand), quality software, multiple product lines and a large customer base. Each of these are assets, I guess my specific answer would depend on the context of the question.
If we were selling the company, invariably the intellectual property would be the most valuable asset. If I were starting over, I would say my staff is my most valuable asset.
Dirk:
It may not be too nice to call them assets, but it is the people that run this company with me.
Marcus:
Our customers. And me, of course! The intellectual property of our products is worth something too, but that only depends on who wants to buy it and how much it is worth to them at the time. It may sound arrogant, but the product and company wouldn’t be what it is without the guy behind it, so I’d say right now I’m the real value in the company. This is probably the case for most small businesses. Only when a business is a certain, more faceless, size, will this change. Right now, I _am_ the business. But as far as we are concerned, our best asset, in terms of value to us, is our customer base. The product wouldn’t exist without them.
Question: What advice would you offer the small software company thinking about taking the next step, and turning their part-time product/s into a full-time business?
Marcus:
Assuming you already have a product and it is selling well, just go for it.
I’m convinced you will benefit from going full time and having more time to spend on the business. A part time business doesn’t have the room it needs to grow.
Spend every day doing something marketing related. Stop tweaking the product and adding new features for a bit. That’s the easy part.
You need to spend most of your time marketing, be that SEO, managing your Adwords account, writing content for your website, writing press releases, sending newsletters to your customers, working with your marketing company, hanging out in forums related to your software or making partnerships, etc.
Don’t do everything yourself and don’t be cheap. Recognise when you need help with something and find someone skilled in that to do it for you.
If you don’t have a product yet, or it isn’t selling well, think about your skills and experience. Find a niche, something you have expertise in, and find a bit of the long tail to own. These days there’s not much point in releasing another text editor, antivirus tool or CD burning utility.
Sharon:
Moving a software business from part-time to full-time takes a lot of self discipline; there is no clock to punch.
If you are working from home you need to strike a balance between work and play.
While being self-employed offers a great deal of freedom to set your own hours, it is important that you find time for your family and personal interests while still working to develop your company. Initially this can be difficult to accomplish, and if your family members are not involved in the business they might not understand the time commitments. Be firm and create structure if you need to.
If you work with family members remember to set work aside and not let it consume your life 24/7.
And finally, setting up a business can be very unpredictable. It’s a good idea to have a nest egg, so that you can give your business a fair chance to develop into a full-time income.
Dirk:
Grow-as-you-go and grow-slow. Paessler was started as a home and part time business and has grown into a company with a staff of 15 in ten years. No external capital, no bank loans. We simply reinvest most of the profits into the company.
Question: What would you say are the three most common mistakes that software companies make?
Dirk:
– Don’t underestimate the importance of a good look. Hire a graphic designer to make your software (and website and everything else) look great and different from the competition. Try www.elance.com for a cheap start!
– Stop trying to do everything yourself; especially if you are not good at it. From the early days of the business we hired companies to do the software archive submissions, SEO, Google Adwords management, website shop and press relations for us. This allowed us to concentrate on the products and the customers.
– Never stop innovation and improvement. Even if you have a product that sells well today, don’t stop what you’re doing and don’t get too comfortable! Start developing the next big hit while existing revenues are coming in. Even your top selling product won’t sell forever.
Marcus:
i) Trying to sell features rather than benefits. Or worse, not trying to sell anything. I clicked through to a software company website from a sig in a forum the other day to be greeted with some kind of mission statement.
Nothing on their front page told me what they did, or more importantly, what they could do for me.
ii) Undervaluing their products. If your software solves a real problem people will pay a lot more than $20 for it!
iii) Being too cheap and thinking they can do everything themselves. I see this all the time in the software forums. People don’t seem to be prepared to invest in their business. Instead of paying an expert to do something properly, be it write a press release, design an icon or help with marketing, they seem to begrudge the cost and think they are better off doing it themselves. Wrong! Recognise your weaknesses as well as your strengths. Your time is worth money. Don’t waste it. Pay someone who knows what they are doing instead.
Sharon:
a. Tech Talk – Developers tend to market their software using tech talk, rather than promoting their software’s benefits. Customers often don’t understand what the software does and developers struggle to explain it in simple terms.
b. Don’t Listen – Some software developers think that they know what is best and they don’t always listen to feature suggestions from customers. They don’t look for patterns in support queries, and often assume their customers are all stupid.
Software developers really need to listen to what their customers are saying and even more importantly, listen to what they are not saying! The best software is easy to use, and I do think that software developers sometimes forget that. Developers load their software with so many bells and whistles, the feature creep has the tendency to over-complicate software. Software should be easy to use, and not be overly complicated. The bottom line is that the best developers listen to their customers.
c. Design with Support in Mind – When designing software thought should be given to support. What types of support issues do you expect, and how can you minimize them? I think developers tend to think of support as an afterthought. If an application is designed with support in mind, many support issues can be designed out of the software from the outset. The company stands a better chance to succeed if support is considered as part of the design process.
Question: What would you do differently the second time around?
Sharon:
I have never really thought about it, I don’t know that I would change anything. That isn’t to say that we haven’t made mistakes along the way, we definitely have, but we’ve learned a lot from them and learning from a small mistake is better than learning from a big one. So I’ll keep my mistakes just the way they are. 🙂
Dirk:
Turn the part-time business into a full-time business earlier.
Marcus:
For a long time I didn’t send out regular newsletters to my customers. I guess I was worried about appearing to send spam, or just too shy or something. Now I try to send a monthly newsletter. The benefits are enormous. People appreciate the information and each newsletter generates sales. People want to buy your software and existing customers want to support you and upgrade, but you need to remind them you are there. You don’t need to send pushy sales letters. Just remind them you’re there and you can help them. It makes a big difference.
Likewise, I regret not asking for an email address on the download page sooner. We now ask people to provide their email address when they download. It is entirely optional.
Not everyone provides an email address, but many do. We send follow-ups to those that do with links to tutorials and other helpful information. People thank us for this and it increases the conversion rate. I should have done this 10 years ago.
Question: If you had the time, inclination and funds, what technologies would you choose to invest in today?
Marcus Tettmar:
Maritime satellite broadband! Seriously. It’s still too expensive and too slow.
I don’t need to spend money to invest in automation technologies because that’s what we do 😉 But automating the business as much as possible has been essential. For me, mobile technologies are important as I do a lot of sailing, and don’t like to be tied to the office. 10 years ago it was a brick-like mobile phone wired to a laptop with 9600 baud, but more recently a Blackberry – what a difference! Things have certainly got easier and faster. Coupling automation with mobile technologies has allowed me to run my business from anywhere, including while sailing, and no one notices the difference.
Sharon:
Are you offering me a bundle of money? 🙂 I like to have my hand in a lot of things, so we’re always playing with new ideas and testing different markets and models. I have never been a big risk taker, but I think a number of markets are solid and developing fast. I think personal search has potential, as well as attention data. I think social bookmarking will become a component of search, meaning the larger search engines will use it in their algorithm for organic search results. The subscription model is gaining traction, and the right type of products have potential. I think the model introduced last summer by TrialPay is quite interesting and shows some real promise. As far as offline investments I think alternative energy and green energy is a no-brainer, and a solid investment.
Dirk:
Do you really think I would tell you here? 🙂 Invite me for a quiet beer and something nice to eat and we can talk!
Question: What worries keep you awake at night?
Dirk:
My little 4 month old daughter (well, only some nights actually). YOU definitely know what I mean. [Note from Dave: I also have a four month old daughter, so most *definitely* know what Dirk means!]
Marcus:
Worries? I have an 11 month old son, Ben, and a busy business, both of which ensure that when my head hits the pillow I’m out like a light.
Occasionally Ben wakes us up, but that’s very rare. So not much will keep me awake these days! If something is bothering me and needs fixing I’ll usually sort it out before I call it a day so that I am not kept awake thinking about it. But if I had to think of anything that concerns me most it would be ensuring that customers get the best possible support. I worry when a customer hasn’t had a response to a query, or when I can’t think of a solution to an unusual technical support problem. I make it my priority to find a solution for my customer and won’t rest until it is solved.
Sharon:
I am assuming that you are asking in the context of being self -employed and are not the least bit curious about my personality quirks 😉 Business worries really do not keep me up. We have developed a healthy income from multiple product lines and the business has matured and grown. We do not live hand to mouth, so many of the concerns that newer developers have are no longer an issue. We have reliable staff that have been with us for a number of years, so I do not feel solely responsible for everything that happens. We have put redundant systems in place so that everyone has coverage and backup, if the need arises. Just having redundancy in place, and being able to take an occasional vacation has made it a whole lot easier to sleep at night.
Question: Anything else that you’d like to share?
Sharon:
There are very few industries that afford people the luxury of flexible schedules and offer the opportunities that software does. Treasure the opportunity that you have been given.
Dirk:
I am all out of ideas!
Marcus:
Hmmm ….
—–
ON A LIGHTER NOTE:
After spending a Saturday with some friends (one of whom is a software developer and therefore by design slightly gadget prone), I was finally convinced that getting myself and Karin on Blackberrys (blackberries?) was a good idea.
And I was right. The technology is incredible, and aside from a recently purchased iPod, I don’t think I’ve ever come across such a slick hardware-software combination.
Truly incredible technology. Unlike the people that sell it.
After returning home that Saturday, I immediately (obviously) signed up with a company offering a great deal. As I hadn’t heard anything by Monday, I gave them a call, only to find out that my order had been “lost in the system”. It took me over an hour to get that far. When I asked whether I should cancel the order or just re-order, I was told I couldn’t do either. I couldn’t cancel a lost order, nor could I re-order using the same name. I’m still wondering what happened.
When I went back to my existing phone provider, they were happy to beat the offer I’d been given. The phones arrived the next day; excellent. Unfortunately the data service didn’t. A mere two and a half hours later it emerged that someone had forgotten to activate the data service. Fair enough. I’d only asked them to do so four times.
When nothing happened 24 hours later, I called again, and was told that technical support would contact me within 7 days.
After banging my head against a very hard wall I finally managed to speak to someone who then activated the data service. Instantly.
Blackberry is astonishing technology. But apparently our species (or at least those of us in Britain) aren’t yet ready to handle it, sell it, or even turn it on.
The Competitive Edge newsletter is a monthly in-depth look at the issues faced by independent software developers today.
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