The microISV’s Biggest Advantage
As microISVs, especially those who are just starting out, we have one big advantage over large corporations. This advantage gives us the ability to develop and release applications that would take larger companies much longer. This advantage allows us to take risks that larger companies can not even consider. This advantage is so great that used properly, it allows us to accomplish things that no other company can. This advantage is our naiveity. Our ability to try new things, take risks, and learn more because, well, we just don’t know any better.
We can decide today to try something new simply because we can. We don’t have to worry what our boss thinks or what it will mean 5 years down the road. Our lack of experience and, in some cases, lack of knowledge about certain things pushes us to try new things without considering all of the consequences.
Large public companies have to evaluate all projects and ensure their rate of return is as much, or more, than their investors are expecting. For example, if you have purchased stock in Google you are paying 60 times their current earnings (as of the time of this post according to yahoo finance) for each share. This means you are expecting huge growth in their profits which will eventually be distributed to you in dividends or increases in the stock price. The only way to ensure growth in dividends and their stock price is by continually increasing their rate of return on their investments and making more money. Why else would you pay so much to own a share of Google? Now, how would you feel if Google announced today that instead of putting their money in creating new products, they will be putting it all into a savings account and earn 3%/year in interest? Or they decided they will go to vegas and put their 10.43 billion dollars in cash on double 0? Of course these are extreme circumstances, but the fact is that these large companies have a measure they must meet, and they better be pretty certain they can meet and surpass these expectations. You won’t see many companies take a large amount of risk without evaluating possible outcomes.
We as microISVs can use this to our advantage. We can be the ones who launch a simple site that sells each pixel for one dollar. We can decide that we will release a utility that lets users share files without concern for legal issues (not to say that this would be a good decision). We can decide that today we will try something new and so what if it fails. If it succeeds, WOW!
This does not mean that companies do not make bad decisions or try stupid ideas. What this means is that companies are required, by their investors, to provide a return on investment that will continue to attract these investors. In order to so, they must be careful to analyze everything they do.
When I released my first application I had never spoken to another developer. I had no mailing list. I hosted my web site on one of those free domain web sites. I didn’t do any market research on whether or not this product was something people needed. I didn’t even do any real beta testing (though it was a public beta). I just built it because it was fun and posted it on some software listing sites.
Seven years later I have a successful software company and am getting ready to launch an invaluable service for software developers. Looking back, I would never have released the product as it was knowing what I know now, or how much work would have to be put in to get to where I am now.
How far has your naivety taken you, and where will it lead you next?