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Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

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BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

What would be your next step?

Ok, so I started my ISV just a few months after graduating from uni.  Everyone, except my parents laughed at me.  Now, I am laughing all the way to the bank.  Last month, my net profit was US$70000.  Woo f***ing hoo.  I posted a few times before on this forum and got good advice.  Anyway, here is my dilemma.

What should I do?  Apart from upgrading the product, and trying to expand the product's depth, what should I do?  It is a very niche market... Only about 30 client companies have bought my product so far.

The problems I have are as follows:
I am not sure when my client list will dry up.  I am not sure when a better compititor comes along and crushes me... maybe Oracle, or Microsoft or maybe even Joel :-)  So, not sure how long I'll make the big bucks.

I have some ideas, extremely risky, finance wise, but I feel I should give them a shot... a bit like now or never.  Should I spend the money I have saved up in 2.5 months, approx $160,000 to fund this venture, or should I play it safe?  Get a steady job, what, whAT, WHAT???  I can't sleep at night thinking of all these questions.  I don't know whether I am mature enough to handle a company with people working for me as of yet.  I am more of an ideas guy and very creative, I can't stay focused too long on details of everyday corporate details.  In a perfect world, I'd love to be an actor.  But, that ain't gonna happen.

Anyway, any advice, words of wisdom, words of encouragement are welcome.

Thx - Ary.
Ary M
Tuesday, January 03, 2006
 
 
Keep careful records of costs and income. After you have a couple years of continued profitability and growth there will be plenty of companies willing to by it from you for big bucks, enough that you'll be pretty much set for life. When you sell out you'll be required to hang around in an advisory capactiy for about one year and promise not to compete with them.

But immediately startup something new with your windfall and just show your face from time to time and let them trade off your name and reputation. One year after the sell out, sever all connections and go enjoy yourself in your new endeavor.
OldTimer Send private email
Tuesday, January 03, 2006
 
 
I would bank a years worth of living expenses and then take the rest of the money and pursue more growth opportunities.
Eric Wise Send private email
Tuesday, January 03, 2006
 
 
I would be very careful about spending the money you just made.  Put it in the bank or some other place where it will be safe and continue to grow it.  At this rate, you'll be a millionaire soon.  I don't think it's wise to throw all your just-gotten eggs into another basket, especially if said basket is risky.
saberworks
Tuesday, January 03, 2006
 
 
I'd make sure to pay my quarterly taxes. 

I'm having a tough time believing this post.  What's the problem?  Keep making more money and quit complaining about it.
Steve
Tuesday, January 03, 2006
 
 
Would that I had your problems, Ary.
Kyralessa Send private email
Tuesday, January 03, 2006
 
 
Thanks, best advice.  So, I guess, I will play it slow and steady for now.  And no, I was not complaining about money.  The fear infact is that I won't be able to continue at this short yet wonderful pace.  I do not consider myself a extraordinary person or a genius, but I can be quiet creative and come up with some nice solutions to a few problems.  Only this time I was fortunate that a few companies actually paid me money after testing out the software for a few months.  I am thinking of contacting, inc, business week, etc. to try and get exposure, but then again, I work from my house and don't know how professional that will look, on the other hand...

And to those who think I am making it up, fine, either way, you don't know me and I don't know you, so why would I be falsely "bragging"? :-)
Ary M
Tuesday, January 03, 2006
 
 
When I started investing in equity market, I asked my investment manager - "How much money should I invest per month?", He answered "Only as much that you can risk loosing".

I asked this question becuase I do not consider myself to be an expert and experienced investor, quite simmilar to the way you are thinking right now.

So I would say, invest a portion of the money into new ventures and growth oppurtunities and put the rest in the bank. Invest at a level that you are comfortble with.

The downside is that you will not be able to make as much as you would have made if you have invested to your top potential and the upside is that you will sleep peacefully at night.
Mukul Gupta Send private email
Wednesday, January 04, 2006
 
 
Ary,
 Just curious, but what exactly is your product?
Prashant Send private email
Wednesday, January 04, 2006
 
 
Ary,

First off, congratulations on your new found fortune! That's great to hear a fellow programmer hit it big!

Now, I would bank it, keep SIX months of living expenses, and move on to invest in your next endeavour. The reason I say six months instead of one year is because if what you said is true with your customers testing your product in a 3 month duration and they loved it and purchased it, then six months doesn't seem too long for your next creative project to blossom. Just keep the snowball rolling.

If you were thinking about getting more media exposure, I would look towards Inc., or Entrepreneur magazine. They're the ones that really show the spirit and spark of creative business entrepreneurs.

Good luck!
JD
Jonathan Danylko Send private email
Wednesday, January 04, 2006
 
 
Ary,

If you haven't already, I recommend targeting any publications focused on your market. If there aren't any, is there an opportunity to find new customers, reinforce your relationship with existing ones, and improve your search engine positioning by providing quality content related to your niche?

By all means consider new ventures, but if you've found a successful niche I suggest capitalizing upon it to the fullest extent possible.

You already have a (presumably) satisfied group of customers. What else can you offer them?

Congratulations on your success and good luck!
Mike
Wednesday, January 04, 2006
 
 
Ary,

Congrats on your success - sounds very cool and I'm sure many would be interested in hearing more.  You've mentioned:

* niche market
* 30 clients have purchased your product thus far

I'm curious:

What % of your niche market do these early adopters represent?

How did these learn of your product?

What did your sales process consist of?

What type of license model (perpetual, annual, etc) does your product employ?

Continued success in your endeavor(s).
Bystander
Wednesday, January 04, 2006
 
 
Ary,

What is your current marketing model?  Can you expand on it for more sales?  Or branch into a new marketing arena for new sales?

I would definately bank much of the money for the next couple of months, then (after you have a nice safety net), work on a new project.  Just keep the old one going.
Eric D. Burdo Send private email
Wednesday, January 04, 2006
 
 
Ary,
I'd really question some of the advice you received suggesting "put it in the bank and keep it safe". First, money sitting in the bank generally earns minimal to zero return, so with inflation you are actually eroding your funds over time. Second, if this approach matched your personality you would have got a job with GE or Microsoft or another "safe" biggie right out of school, not gone independent. Finally, money in the bank, or other traditional financial instruments, is a passive investment - you give them your money and then take whatever the market deems to return. It sure sounds like this does not match your personality or approach: starting on your own, fast growth, focus on future sales and revenues - these are not things that safe investments generally return.

You risked it all before and were successful, but now your worried about loosing it all - why? because now you actually have something to lose - that's a totally reasonable reaction.

My suggestions - which carry the same (zero) value as all the others you received:

- Bank "some cost of living" money - 6 months, a year, a buffer that makes you comfortable you can eat for a while. Unless you've started living the high-life this shouldn't be too much $.

- Bank some "cost of doing business" money. Make sure all of your taxes are paid to date, with projections for an future owing. Get your corporate structure in order, including legal and the books. Cover rent, utilities, office supplies, etc.

- Do something fun that lack of money has prevented you from pursuing. It doesn't have to be super-extravagant, but can be something that would be ridiculous for a salaried 9-5'er: Fly somewhere for the weekend and stay in a 5 star hotel, buy yourself a 60" flat-screen TV, take all your friends out for dinner at the fanciest restaurant in town - reward yourself.

- Focus on your current market. Is it really tapped out? get a strangle-hold on every last customer. Keep them happy.

- Look to grow. can you leverage your existing product and customer base? can you build compliments within the market, or apply your technology to similar markets? The urge is going to be to build something entirely new because that's exciting, but you get better return reusing whatever you can (that's the essence of commericial software development - low-to-no marginal cost).

- develop a harvest strategy. Are you going to grow and sell out to a competitor or a client? Build your company into a broad-based enterprise? Run a lifestyle business and keep it small, winding down when you're no longer having fun? You need an ultimate goal and you should have it from the beginning. It can change, and it can be unclear at times, but work towards *something*

Finally, why do you feel you need to spend money to develop new product(s)? You didn't the first time. Don't just spend money because you have it - use money where it accomplishes goals the most effective way. Easier in theory than in practice determining when this applies.


Oh, and have fun :)

Best luck,
Mark
Mark D.
Wednesday, January 04, 2006
 
 
Ary,

My next step would be to take 20% of the net earnings and reinvest it into the company.  This doesn't have to invested in one place.  You could give 10% to advertising and 10% to developing a new product or an add-on product.
Is there a trade show for your customers' industry?  For niche products targeting the enterprise, this might be good for growing your company.

I think the greater question is how do you want to go about shaping your career?  Do you want to run the next Adobe/Intuit, or do you like startups and want to make a number of serial ventures?  If you know what kind of work you enjoy in what size of business, then make a concerted effort to create the lifestyle you desire.

If an exit strategy is what seems to be the best fit for your goals--that is, building a company so that you can sell it--then keep in mind that the asking price usually starts at ten years of profits.  If you can't show any profits, then selling will be harder.  It's still possible to sell your customer base to a competitor, but having hard numbers and great margins will give you more room to negotiate the price upwards.
soon 2b uISV Send private email
Wednesday, January 04, 2006
 
 
Thanks all for all the lovely advices.  I think Mark D has figured me out and I needed to be reminded of why I took the risks I originally did.  It is too early to be conservative any way.  Let's see, I live with my parents.  My spending is max $1500 to $2000 USD per month.  So, at $1500 a month, I can survive for a year at only $18,000.  This month I will at the least earn $35000 to $40,000.  So, that would cover atleast 2 years of living expenses. 

I did splurge on 2 things.  I bought a few computers cause I had a craving for them, and bought an Asian travel tour for my parents, cost (approx $12,000 USD).  They deserve it since they are everything to me and they have supported me no matter what.  Also, I bought diamond earrings for my gf.  Needless to say, she was thrilled.

But, you are right Mark D, I won't play it safe.  I also like the other advices regarding what percentage I should spend where.

Anyway, someone asked what business I am in.  I didn't write about it since I a little paranoid that someone else (someone with better skills) will make a better product.  But, anyway, this is the product:
My other passion is Organic Chemistry, Biochemistry, etc.  I am just fascinated with this field.  So, I know quiet a lot about this industry.  Anyway, apart from the huge companies like Sigma Aldrich, BASF, etc., the smaller shops/resellers/companies really don't have great automation in their companies.  Soooo, I create modular customized software for cataloging, datamining, etc. 
The database is quiet ingenius actually.  No prior knowledge of using databases is required.  Also, you can search and do other cool stuff with CAS numbers, take care of MSDS sheets, automatically dowload catalog info from suppliers, figure out your best clients, predict what chemicals are going to be needed next week, month, year etc. very accurately, automatically send emails to clients offerring them special deals based on previous sales and  potential future sales.  You can update the database as you go, so you don't have to fill the database with all the information at one time.  You can connect it with existing accounting software already used by the company, to figure out a lot of sales data.  You can better manage your inventory and also minimize useless over storage.  The big comapnies have expensive software to do this, but amazingly small companies, do this intuitively and manually.  By automating the processes, they save tons of money, man power, etc. also they can actually increase sales by notifying potential purchasers of what they will probably buy.  This way, the client will rather buy the chems from you than a competitor, etc.
Also, does a lot of other things.  So, there, now you know what I have made.  Now, go and make a better version and push me out of the market. :-(
Ary M
Wednesday, January 04, 2006
 
 
Good for you Ary! Well done! And good luck!
Tim H Send private email
Wednesday, January 04, 2006
 
 
Thanks for the kind words Tim, and thank you all those who took the time to write to me.  I got a lot of valuable advice and differring point of views.  Now I feel more confident with what I want to do. 

I am thinking I will take the "big risky" plunge in March or April.  By then, I will have atleast another $60,000 - $100,000 saved up (after taxes that is).  Ofcourse, I will be staying overseas (read, 3rd world) for a few months... that will be the hardest, as I will miss my parents and gf.  Hey, atleast I'll be able to make new friends and get another gf. ;-)  I make friends easily and have travelled a lot in my life so atleast I wont face culture shock.  I could always manage my existing chem software biz electronically and have my mom manage the day to day admin stuff.

The venture that is so "risky" will probably cost me $60,000 upfront and $30,000 per month for atleast 4 months before I am certain of making a profit.  I hope to be profitable by month 2 itself, but one never knows as this is a totally unknown market.  Hey, I'm trying to be as ambigious as possible.  However, if by 5 months I don't make it, then I think it will be money wasted... let's see.

Anyway, if I had taken the route everyone wanted me to take, I wouldn't be in the position to even think of the venture in the first place, so, I'm actually happy to have these sort of predicaments.
Cheers.
Ary M
Wednesday, January 04, 2006
 
 

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