Perlcast is back with an interview with Bob Walsh, the owner of Safari Software, moderator of the Joel on Software: The Business of Software website, and author of "Micro ISV: From Vision to Reality".
Once again, Apress will be giving away promotional copies of the book featured in a Perlcast
interview. To be entered in the drawing for one of five copies of "Micro ISV", just send an
email to perlcast+isv [at] gmail.com. Get you're email to me by April 24th 2006 to be entered in the drawing.
- Interview Audio
- Micro ISV: From Vision to Reality
- Safari Software
- Joel on Software: Business of Software
Welcome to another Perlcast interview. This is your host, Josh McAdams, here with an interview
with Bob Walsh. Bob, the owner of Safari Software and a moderator at the popular Joel on Software:
Business of Software website, recently authored "Micro ISV: From Vision to Reality", published by Apress.
The book covers information that enterpenural programmers need to successfuly establish their
own software business.
Once again, Apress will be giving away promotional copies of the book featured in a Perlcast
interview. To be entered in the drawing for one of five copies fo "Micro ISV", just send an
email to firstname.lastname@example.org. That's perlcast, the plus sign, ISV, the at sign, gmail dot
com. Get you're email to me by April 24th 2006 to be entered in the drawing.
A transcription of this interview can be found on the Perlcast.com website if you would like to have
it to follow along or later reference something that was said.
So, let's get to it. Here is the interview.
I'm speaking with Bob Walsh today on Perlcast and Bob is the author of "Micro ISV: From Vision to Reality". Welcome Perlcast Bob.
Well, first off, what is a Micro ISV?
It's a self-funded, one to five persons startup software company. They may be selling a product for the desktop or they may be selling a product for the web. But, the real key there is first off, they're self funded and secondly, they live and die on the internet.
That's where the find their market. That's were people learn about them. That's how they distribute whatever it is that they're making and selling.
It started out as a term coined by Microsoft: Independent Software Vendor. Basically independent of everyone, of them, of Microsoft. And Eric Sink, a few years ago, coined the term Micro ISV to talk about one person startups. But when I think of micro ISV I really think of it as micro internet software vendor, because without the internet the whole economic model of a micro ISV just would not work.
And when you say internet software vendor though, you're not necessarily meaning an internet based software, but more internet as a distribution method than a platform. It could be also the platform, but not necessarily.
It could be and not necessarily, that's true, but most of the time what we're talking about here is the way the software gets from yea to they is via the internet. We're not talking retail distribution here, which makes a whole big difference when it comes to trying to start a software company.
Pretty much all the micro ISVs out there distribute their product primarily via the internet via the internet and people find them via the Internet versus retail operations.
You come from Safari Software and you wrote a book about micro ISVs, so I'm guessing that Safari Software is a micro ISV. This that how you find yourself qualified to write this book?
What happened here is, I started Safari Software about ten years ago. And, I was basically an IT contractor. I had written a lot of software for various Bay-area and other companies. And a couple of years ago we had the dot-com bubble and the dot-com bust and outsourcing and off-shoring. And I found myself working twice as hard for half as much as an independent contractor. So, I decided it was time to write some software commercially for the first time in basically about twenty-plus years of doing IT. And I wrote a program called Master List Professional, which I sell at my website. It's a task-management program.
And I got though writing that and I realized I just knew nothing about marketing this commercial application and all of the things that I really needed to do right for that. Now, before I was in IT I was a reporter. And reporters get assigned to all sorts of things that they have no idea what it is. What they're good and and what I'm pretty good at is going out and finding out the information and reporting it back accurately.
So, this was a book I wrote because I really needed this book to start doing what I wanted to do in life. ANd there simply wasn't any one good book out there that had this information and I was fortunate enough to be able to get the time of a whole lot of different people, both micro ISVs and vendors and people at Microsoft and people not at Microsoft to get good information for this book. So I treated it more like a story that I was going out to go get rather than saying well, I've done fourteen micro ISVs and these are my lessons that I've learned and hopefully they'll be something for you.
The book seems to indicate that open source is not necessarily the best way to go about developing a micro ISV. So how do you feel about an ISV developing open source components and then trying to sell the service? It sounds, definitely from that last answer, like that's probably the backwards way to go.
There's open source in two different ways. This is still an uncomfortable position for a lot of people right now. But, if your going to start a project, and open source project, and make money with that by selling the services around that project, you're going to have a pretty tough row to hoe.
There are few people out there who have done that successfully. Maybe the best example I can think of is the BBPHP people. But, selling open source services hasn't really made a lot of money for a lot of people.
Now, that said, there are more and more people and more and more programmers who look at open source and say "Hey, that's great. I'll use it if the license says I can, wonderful". And open source is having more and more effect on software development as a whole. The problem is when you're a micro ISV you're a one person business and if you're not making revenue, you're not gonna be in business to long. And it's pretty hard to convince people to pay for something that they think is free. It's not free it takes a lot of effort and a lot of creativity and a lot of work on the part of a lot of people for open source to work. But, it just comes down to the idea of you're making a commercial product. There's nothing wrong with the idea of charging for that. You can deliver that software at a lower cost and charge people less than you would if you went the traditional retail route. And that seems to work pretty well for a lot of people today who have started their own micro ISVs.
Whenever developing your software, and you had mentioned marketing so we'll add that into the mix, but, a pretty interface or a more functional application or just an application that you can convince people to buy, which is the most important aspect?
A long time ago I learned that at least the first impression that most people have of software comes from what it looks like. It can be the worlds most robust functionality, but if doesn't look good, you've got one foot in the grave at that point and then everything else is a long slide, or a long climb up trying to convince people that the software is good.
Now, just because your UI looks good doesn't mean that your application is good, but people go by what things look like, at least initially. So I think that really one of the things that you have to do, and this is tough for people who are, you know, hard-core programmers and don't do anything graphically oriented. They don't do graphics per-say. They have to make their application look attractive and that's one of the definite challenges that a micro ISV has.
From that it sounds like you'd say, go as far as paying somebody with artistic flair to actually take a look at your application and make it better.
That would not be a bad idea what-so-ever. The other things that I talk about in the book is that there are open source sources for some really good artwork out there. And, there are also lots of independent graphic artists who do things like icons and screen design and the rest of it. And that is money well spent. I've got a couple of interviews in there, for instance there's one with a guy who runs a small company out of Perth, Australia, which is basically about 4000 miles away from everything else in the world. And, his icons are in Feed Daemon. They're in my application. They're in dozens and dozens of applications.
You know those sort of graphic touches are easy to sort-of ignore when you're thinking about classes and code. But, you have to think about [them] because people go by that impression and a good icon is a good thing to have.
A lot of the software and services that you did mention in the book are closed source or they at least, they cost money. So, we'll think in just the free or not free in the sense of money. And, this is especially true for the SCM systems that are mentioned. So, why not have somebody use CVS or Subversion, which are both open and free, but with the optional commercial support. It seems like a micro ISV would really want to save money where it's possible.
You do, but there's always a trade-off between doing it yourself and getting a product that does the job that you can get help for. Both Perforce and Source Gear let one/two-user licenses for free. Now, their support policies differ but their forums are excellent. And, there's nothing wrong or bad with subversion, but every moment you spend not writing code that ends up improving or in the product is what we used to call overhead, in the business world. It's nice and fine but it just eats away at your bottom line.
So, if you know Subversion and you really feel comfortable with it, by all means. If you don't. If you've never had to deal with source control before, simple is better and the least amount of effort is better and if you find that subversion is just not working for you as an approach, then p4 makes a lot of sense, as does Source Gear's Vault.
There were quite a few very useful things in the book and one of them that I found really useful and a good idea was your code checklist. Would you mind explaining what that is.
You know, most people do things, they do a thing for money, okay. Like, I write code and I write words. Most programmers write code. And, everyone has the need to improve their processes. The idea of a code checklist is there are certain things I will do every time I sit down and code a class. There are some things that I wish I didn't do and those are the things the checklist is there to catch. Just in the same way that when you write something, it's not a bad idea to have a checklist to go over and make sure your writing is good. For instance, let's say you take a blog. If you, every time you post, you've got at least three or four items on your checklist and you just follow those. You will avoid the things that later show up that you wish you hadn't done like misspellings, for instance. And the same way with code, you just make the process that much smoother. Now what those things should be on your code checklist. Each programmer is going to have a different take on that. But I that as just a general rule, the more you improve you're process of what you do that you add value, the more value you produce with less effort, which is a good thing.
Well, until reading the book, I didn't realize how difficult is was to get money from people. How can a micro ISV protect themselves from Internet fraud.
The reality there is, everything is credit card based and you have to decide whether you want to get into the business of doing credit card fraud detection and credit card verification or not. What I've heard from enough people to take it as a good working thumb is if you expect to be doing more than 10,000 dollars worth of sales consistently, it might be worthwhile to go the merchant account than through an authorize.net or, say, Wells Fargo, and to go the more traditional way of doing things.
But, you know, for most Micro ISVs, there first month of sales is not gonna look like $10,000. So, my recommendation there is, you go with a company that already does it. They take a bite out of what you make, but you don't have to worry about those type of problems.
I recommend right now two different companies. Pay-pal, it's owned by Ebay. And a company called 2co or 2checkout.com. 2checkout.com's a little more expensive. They take a little higher discount, as it's called. But there's some advantages to them. Mainly, there are some people out there that just don't want to deal with Pay-Pal. So I use both and I've found them to both be, well, you know, just excellent ways of getting the money. And other people have reported back the same thing. That they both work well. While 2co you actually move the user over to the 2co site to complete the transaction, with Pay-Pal now, you can just pass the transaction to Pay-Pal directly. They [the customer] never have to leave your site.
And, I just don't think as one of the first things a micro ISV should worry about is merchant account and payment processing, per say. Merchant account fees can just eat up your profit pretty quick.
If down the road your making 10,000 a month in sales every month, then it's a good time to turn around and take a look at it again.
You mention that LLC seems to be the way to go when formalizing a micro ISV. Why is this?
It's a question of ease of use vs. liability. Now you can write a piece of software and start selling it on the internet and be fine maybe, let's say, 90% of the time. But for 10% of the time, someone out there is going to say your software caused them a brain tumor, their hair to fall out, their dog to leave, there wife to stay, whatever, and they are going to sue you. We live in a society where people sue other people a lot. You don't want that to happen to you. You want that to happen to a business entity. And this is why people set up business entities like corporation and LLCs. They set it up to limit their liability. To set up... they want some protection from the slings and arrows of outrageous lawyers and they want to separate what is theirs from what is their company. It's a little schizophrenic, I admit. And I've been a corporation, Safari Software Inc., which is a Sub-chapter S Corporation, for ten years. But, in that ten years, the landscape has changed. And now we have LLCs, where you get protection, but it, the paperwork, is a lot less than for a full-blown corporation in the United States. So I think now-days an LLC makes a lot more sense in most states. You, this is one of those things where we're talking state law rather than federal, in the United States and it varies from state-to-state. But don't worry, if you're in California the franchise tax board will get it's 800 dollars minimum from you in either case.
One thing that would, or an interesting interview that you could have had in the book, would have been somebody who did not incorporate or did not LLC and got screwed for it.
It would have, I don't know too many people like that fortunately. The thing about being a micro ISV is you're really a full-scale real business and because the internet makes it possible to reach out and sell what you're doing to people all over the world, that you don't even know, but they find you in a couple of clicks, you have to act like a business. So, you should have your own business accounts. You know, you should definitely, definitely, do that. And you need to track all that and you need to do taxes and you need to do the legal entity, but it, you, it's not that bad. It really isn't that hard to do and bottom-line here is, you can make a lot more than you can working for someone else and you are your own boss.
Well you give examples of what a good micro ISV website should do. What are some of the most common mistakes that you see micro ISVs doing to their websites?
I'd say there's three. First off, they get shy. They've been working on this great widget, code, thing, site, whatever, and suddenly they're about to put themselves out in front of the whole rest of the human population. Or at least the one-billion of them that now use the internet. And they get shy. They don't say what their features are. They don't say what the benefits are. They don't say why people should give them money. What the unique selling proposition is. A lot of them won't say what the price is. That's a big mistake. It's not a place to be shy. It's a place to be proud of what you've done. If you're not proud of what you've done, well that's a reality check and you need to talk to yourself about that. But anyway. But a lot of programmer-designed websites don't do the three things they need to do at the very-very beginning. They don't say, this is an x that does y that unlike z makes it possible for you to do one and two and three better than other a and b's. That's called a unique value proposition or a unique selling proposition, USP. That should be the first thing that somebody sees when they come to your website.
Second thing they should see is your price. You want to charge me three hundred dollars? Well, that's not gonna be as attractive as, say, thirty dollars. And, people aren't going to buy things without knowing the price. So, the second thing really ought to be the price.
I'd say the third thing is, they need to start feeling comfortable about, you as a micro ISV, as a company, you know, they need some information about you. They need some reassurance that you're not some sort of weird scam coming out of some country somewhere else and their thirty dollars, or three hundred dollars, or whatever you're charging, it isn't going to just disappear. Testimonials work well there. Screen-shots that are simple to understand and aren't too small work well there. You need to start talking to them and engage in the conversation where you're explaining both the value of what you are selling and your credibility as somebody selling it.
And these are things that don't come very easily to programmers.
Notoriously bad self marketers.
Well, that was an interesting thing about, you know, your price being three hundred or thirty dollars. It it seems like whenever you're buying from a micro ISV or a company that you've never heard of, that you never seen maybe a commercial or something, you seem to, I don't know, I would be much less inclined to give three hundred dollars than thirty dollars, even if it was a good product. Is there some magical price-point that people tend to let go of on the internet easier?
Well there are some sort-of time-honored truths, that, for instance, twenty-four ninety-five is easier to sell than twenty-five dollars. And twenty-nine ninety-five sells better than thirty. I would say, and this is by no means a rule, this is just kind-of a rule of thumb, plenty of exceptions to it, but if you're selling to consumers, if you're selling to just people in general, you're gonna have a tough time convincing them that you're software is more valuable than say, fifty bucks. Please don't hold me, now I can think of many exceptions to that. You know, some of the games I can think of right now go for more than fifty bucks. But, basically, that's kind-of where that market is.
Now, business, that turns into a different story. If people are using it for their business, you know different scales apply. I think that the key to finding the right price to sell your product is to ask your public and private beta tester what they think.
Which brings up, by the way, the important point of having public and private beta testers. One of the other things that you have to do right to get your software selling, is, besides all of the things that you do to end up with a good product, you've gotta start listening to other people. This is called the market. This is called listening to the market. And the best way to do that is before you start selling your product, you have a public beta where people can download it or use it and try and give you feedback. That feedback isn't, okay, there's a code break over here and we need to fix that. It's, this is a wonderful feature but I wish it could do this because in my line of work we it that way. It's that type of feedback. It's how well you're addressing the problems that people are having out there with your product. That's what comes out in a public beta. And a public beta is just a great way to build a platform for your software or for your website.
As a micro ISV owner you have to provide technical support. As a consumer you've bound to encounter really bad support. So how to micro ISVs handle and mishandle support?
Mishandle it by not doing it. Good tech support is the micro ISV secret weapon of choice. Because, in a world where we all get screwed by big companies, you would be amazed at how people react when they actually hear from the person who wrote the software and they say, "Yeah, that's a bug. Thank you for pointing it out. Be fixed in the next version. Thanks again". People jump up and down when they get that. I do. You probably do too. It is that personal touch that makes a huge difference.
Now, micro ISVs need to honest with themselves and with the market as to how big they are. They are a one or two or three or four or five person operations. They're not GE or Microsoft or Adobe or any of the big companies. But, by reaching out with good tech support, and that basically starts with the process that you use to make sure that you capture every single tech-support incident and address it and know that you've addressed it. Micro ISVs have a real good strong positive connection with their customers. One of the misapprehensions that a lot of programmers who are becoming Micro ISVs have, is that if someone finds a bug in my software, they're gonna hate me. It's gonna be really weird to talk, to deal with as an email or, god forbid, on the phone. And, I just don't want to do that. It's gonna be painful. You know, the reality is, is that everybody understands that software has bugs. What's really matters is that, what are you going to do about those bugs? Are you going to send somebody off into some forum system or, god forbid, a knowledge base, where they'll spend the rest of their life looking from place-to-place trying to figure out what the hell went wrong. Or, are you going to say, "Okay. That's a bug. Thank you for helping me reproduce it. Now I know what to do and we'll deal with it".
Good tech support is a sale-maker, not a sale breaker.
Never battle a customer and yet never tolerate abusive people. So how can you initiate the refund with a hostile customer.
I have a simple rule, if somebody wants their sale back, boom, they've got it. And after they've got it, I'll talk to them, if they want me to. But, you know, in all the sales that I've done, every time someone has said to me, "Oh I hate this software now. I want my money back', and I've said "Okay, great", and boom. They've turned around and usually within the same day, before I can complete the transaction on my side, they say, "Well, no, you're talking to me and I've changed my mind". That's happened in two cases and I think that, you know, it's part of business. Business has returns. You take back the pants. You don't fit in them any more or what have you. And, that's kind of the way business is. Everyone expects to see some of that. The good thing about Pay-Pal or 2co.com is, they make sure that you're not getting ripped-off in the process. Because, there are, like I said before, a lot of credit card fraud things out there and as a really micro-business person, you just don't have the time to get involved in that. You don't want to go there.
On getting you're business noticed you talk about Ad-words, and this is pay-per-click model which can add up expenses fast. And so, for a Micro ISV without a lot of extra money, would you consider something like affiliate marketing to be useful? Sort of like a pay-per-performance or pay-per-sell model instead.
Well, the problem with affiliate networks is they've gotten something of a bad reputation. I would actually step back and say that the problem with affiliate networks is that it's, it has two problems. First off, it's more of a form of advertising than anything else. And, you know, I don't know about you, I hate ads. I really hate, hate, hate ads. They're intrusive, they don't talk to me about what I want. They're in the way. They're just, just drains on me. And a lot of people feel the same way about advertising, at least traditional advertising.
The reason that Google Ad-words works so well is, you go looking for something like a new sit-down mower so you can mow your lawn and you find all this information and over on the side, you've got some ads that are about, well, sit-down mowers. At that moment, when you have decided that you want some information about x, you've got some people raising their hand saying, "Hey. We sell X. Come click on us and see what we've got".
Now, it's true, if you're not careful and you just throw money at Google Ad-words, well, they'll be happy to spend it for you. But, they'll also be happy to intercede into your ad program and give you some really good advertising advice. In fact, they will go so far as to say, "Okay, you pay us three hundred dollars. We will assign a professional to you who will work with you to build a good solid, call it a B-plus, advertising program". They will aline the good terms for you to be clicking on. They will show you how to exclude things you should be excluding. They will help you write the ads and they will show you how to test ad A versus ad B. And they'll do all that for three hundred bucks. Except they'll turn right around and give you three hundred bucks worth of credit on Google Ad-words. So your cost for that expertise is zip. In fact, one of the lesser known facts is they will turn around and do that even if you already are using Google Ad-words. They will turn around, help you for free to do it. It's in their interest. It's in your interest.
Of all the types of advertising out there, I like Google Ad-words best. Now going back to affiliates. The other problem with affiliate marketing is, besides it being traditional marketing, it has gotten this reputation of being sort-of, eh, you know, I'm gonna say kind-of like, Am-way like. A lot of people selling marketing to each other. And the problem is you don't have any control over the quality of the advertising venue that you're in. You're ads may appear anywhere. And, ads of things you may not want to have anything to do with can appear on your site. And I would just say that one of the many things you shouldn't do on your micro ISVs site is have any sort of advertising for anyone else. That means no affiliate ads for other products. And, that means no Google Ad-sense that are selling things that just happen to have words on your site. That's not what your micro ISV website should be about.
Now there's nothing wrong with informally working with other companies, be they big or small. And that's actually a very good thing to be doing. But, the affiliate networks tend to promise a lot and very very seldom deliver any sort of really good result.
The end of the book contains ISV examples for all maturity levels of businesses. Which would you say is a must read?
Well, I would pick Ian Lansman's UserScape as being one that really stands out because he did an excellent job of just very much, in a very planned way, designing his software, including people in his public beta to start building a buzz about that software get feedback about what worked and didn't work. And, in a lot of ways, he is sort of the poster child for how to do it right.
Now, with that said, I'd also point out Profit Desk, because they sell to a market that most people don't think of as being one that micro ISVs can hit, and that's to banks.
The point I'm trying to make here is that there are approximately in the order of about forty to fifty things that a micro ISV has to do right. None of them are particularly hard. None of them are going to tax the mental abilities of anybody who can handle a modern programming language. If you get those things done right, you're going to find that your product fixes a problem that people want to pay you money for to solve. And, that is a good thing.
So, I would say that just about all the twenty-five people, or twenty-six people, here have a little pearls of wisdom, if you don't mind the pun, to share. And, that's why I interviewed them. Because, they're the ones out there doing it and showing how to be successful in what they do.
Beyond just the twenty-five interviews, or more, in the book, you've actually gone further and created a website, mymicroisv.com, to continue on with the learning and helping micro ISVs out. Would you mind telling us a little about that?
Sure. It's a my micro ISV dot com, all one word, and I call it a blog resource site by, for, and of micro Internet software vendors. I've been lucky to get a good number of people who are micro ISVs to post a wide number of topics besides whatever I think you should be reading. And, these topics include things like: how to do a mash-up, by somebody who's actually done a successful mash-up; what are some of the more arcane issues that you may deal with if you plan to eventually sell your micro ISV by a person who's quite successfully sold a couple. So, basically, it's a site that people who want to be micro ISVs or are micro ISVs, I hope will find some very good information on an on-going basis.
There are a considerable number of tips in the book. Is there any tip that you would consider vital to the success of a micro ISV?
I'd say the one thing that you have to do above all everything else, is you have to want to do this. It's not a class assignment. It's not something that some boss is saying that you should do. You need to really want to be a micro ISV to do it because it's gonna be a lot of work. And sometimes it's going to be hard and sometimes it's going to be a drag. And, you need to have that passion about what you're doing to be successful.
One of the reasons that I have twenty-five different interviews in there of twenty-five coming from all sorts of backgrounds and ways of doing things is to show people that they can do it to. And, that's the thing that I really want to impress upon people, is that, you know, if you can write code, if you can solve problems by writing software, you can become a successful micro ISV and not have to work for other people the rest of your life and write the type of software that really gets you excited.
Well that's all I have. Bob, I'd like to really thank you for coming on Perlcast. This was a great interview. And, I guess I'll leave the floor open. Is there anything else you'd like to mention.
Not really, other than please do stop by mymicroisv.com. Also, you might want to stop Joel on Software's Business of Software Forum. And, that is over at discuss.joelonsoftware.com/biz. The business of software, you're going to find a lot of people there who are micro ISVs or want to be micro ISVs and I moderate it, along with Eric Sink, so we keep the quality of the information high and the noise low.
I'd like to once again thank Bob Walsh for taking the time to be interviewd and also thank you for
listening to Perlcast.
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