Friday, August 9, 2002

How to Grow a Software Company

And, as I opined last year, I am skeptical that funding ( from VCs, Microsoft, or anyone else) is a key limiting factor influencing the amount of software innovation. Right up until 1994 or so, VC funding for software was nearly impossible to get. It was in this austere environment that TCP/ IP, SMTP, NNTP, and HTTP were created.  This was the genesis of “The Web”.  Then, for the next ten years, the market was saturated with “stupid money”. And I argue that innovation stalled during that time period. Certainly the reach of the web expanded, but increasingly the practicioners abandoned fundamentals and chased after politicians, get-rich-quick schemes, and “the next big thing”.

Good ideas don’t need crazy money to grow.  Especially good software ideas.  [Better Living Through Software]

Good thoughts from a Microsoft program manager. The company where I’m at, Interface Software, took an initial investment from our founder more than five years ago. All growth since then (500%+ revenue growth) has been from revenues, and we’re profitable. Probably best of all, we didn’t have anyone forcing us to go public in 1999 or 2000. Instead, we have a healthy company that grew over 40% in a year when the overall CRM market was down more than 15%.

I think the current VC market is healthy – companies that confused “burn rate” with “revenues” have gone away. And I like the idea above – good ideas don’t need crazy money to grow. I’ll take leadership, focus and flexibility any day of the week.

No comments:

Post a Comment