Tuesday, October 10, 2006

The "dhanda" of Software: The Indian Perspective of the Software Business.

Thanks to Mohit, I have received my personal copy of Eric Sink's "The Business of Software". Eric is a darn good writer, a programmer, an entrepreneur and a someone who created a "Micro-ISV" for the heck of writing about it.

All of that makes him someone I want to be, except he's 38 and I want to be all of that right now when I'm 32. Go on, smirk away.

The book's an excellent collection of his writing, mostly from his blog. He talks about starting up, staying there, hiring people, paying them, negotiating with customers and in general, the transition from geek-programmer to geek-entrepreneur. You should read it if you're looking to start a business, unless you are
a) an employee of SourceGear, Eric's company or
b) someone looking to compete with SourceGear, because he paints a not-too-rosy picture of his industry.

I think I'm inspired enough by Eric to want to do something more than I'm doing; and yet, I think some of what he says needs a little bit of time to work where I am - in India. The U.S. went through a massive boom and bust in the I.T. industry; in India there's still a boom and no bust in sight. (they're never in sight, are they?)

Attrition rates are high and the job market seems to be so good that it makes little sense for the "Micro-ISV" to even think about ISVing. Or is it?

What's stopping people from going out and starting up? This is a question I asked of a group that's part of a startup network. Here's what I got:

Not yet ready.
This means someone's not emotionally invested enough to launch. Most people think this business of starting up just "happens". Something will suddenly inspire me, they think, to go out and start my own company. It's not a lack of ideas; there are still those that think selling pet-food online is a killer idea that will just have be acquired by Google. Yet, they would like to remain corporate slaves because the idea is still "in an ideation stage", which is another way to say "I'm still chicken".

Not yet ready, to me, is just an excuse. An excuse I've used too, no doubt, but that's me being a wuss. At least I admit it.

How will I survive?
A very legitimate concern for startups is: how am I going to pay the rent? Most people are willing to cut down their lifestyles - what lifestyle are you going to have anyhow, if you work 20 hours a day - but some expenses are just not avoidable. Rent, food, kids expenses and electricity payments is perhaps the bare minimum one needs.

I would plan for a six to eighteen month cash flow, depending on the type of startup. That then determines how much salary you need; if you have that as savings (and a reasonable buffer) you should be on. Otherwise, you have to add that to your funding requirements - I'll get to that later.

Don't want to quit the day job.
Let's face it: Some products need you full-time. You can't set up a retail shop by continuing to have a day job, and you can't sell software or services (in India) while working in another job. And if you're familiar with Bangalore today, you will understand that traffic is going to sap all your energy so you'll have very little time and mental energy to cope.

Most entrepreneur books and sites tell you to start up before you've quit your day job. Apart from making you live in a cucoon and postpone your launch indefinitely, what can happen is that your employer may claim it as theirs; most companies require you to sign off rights to any of your work while in their employment, regardless of whether you did it at home or otherwise.

If you got a free invite to a concert, would you bother going to it in the rain? What about if you paid Rs. 1,000? Creating a product while working full-time for someone else is usually treated like the former - I didn't sweat while making it so its loss is no big deal. Your project might just languish like the hundreds of thousands of those with the same idea; and you should actively protect against such a fate.

Meaning, if you're ever going to NOT quit your day job, set up a time frame when you will. And if you're "not ready" at that time, shut down your computer and lock it up in a garage.

Having said that, it's important to have a small cash nest to depend on in times of adversity. So working to build that nest is a good way to go; except you need to know how much you need or you'll save till you retire and then your pet-food-online-store idea is defunct because no one has any pets anymore.

Don't have the money
How can you start if you don't even have enough money to take the product forward? There are enough funding sites and blogs that talk about how to get equity funding, angel capital, seed money and the sort. I won't go into that, but will say that you can find money through Consulting and contracting: Do a few gigs here and there to get the moolah in, and phase it out as the product gets better financially.

You're going to get beat up sometime - either it'll be money, or your product features, or your customers or employees. You might as well get ready and go for it.

1 comment:

Just Mohit said...

Good to know you're using the book, and thinking independently of it as well.(as is to be expected)
A related link: Paul Graham's latest article on startups (http://www.paulgraham.com/mit.html)