BREAKING NEWS: building a great software business is hard

Who knew?

There has been so much change in the software industry since I joined it in the early ’90s. The idea that you could have an application built, deployed, and in the hands of thousands in mere weeks was a fantasy back then — today, it’s reality.

What is the “average” story? What does life in the software industry look like for most of us, not a select few?

Going from idea to product is still a great challenge because the fundamentals of developing the right product have not changed. It’s just that in 1994 you either had a ton of money or you had bullet-proof evidence to persuade investors. Now you can raise a quick £50-100k via the Seed Enterprise Investment Scheme (SEIS) and be on your way. But the evidence is that most new software businesses will die prematurely.

So, the average story tends to be one of despair.

"Move fast and break things" is the mantra everyone wants to aspire to, and understandably so — it's bold, it's exciting, it suggests we can be driven-yet-carefree in a way billionaires usually appear to be.

... but imagine you are standing at the edge of a minefield. Does "move fast and break things" sound like a good idea? To me, it sounds disastrous. But the edge of a minefield is where most of us tend to be. Better advice could be “move carefully and be sure not to throw your life away”.

For most software companies, moving fast is a desirable phantasm. It’s not their pace that will kill them, it’s that nobody wants what they're building. I often have to restrain clients from spending many thousands of pounds per month, building a product that likely is not commercially viable.

In the beginning, you know less than you think about your customers, their problems, how they think and feel about them, and what will make their lives better. As CEO your real job is to make sure you figure this stuff out, not to start building product straight away.

Now and again someone like Steve Jobs comes along and makes this bit look easy, but most of us aren’t Steve or anywhere close to his level of nous. The reality is that, for most of us, this bit is really hard and we need to sweat it.

Then again, wanting to build software solutions is only one part of the equation. We need to also recognise that our product is both feasible (looking at you AI kids, hope you have a warm coat handy) and viable, which is to say 'can we make the kind of money out of it that advances our mission?'

Feasibility questions mean having good, trustworthy, technology people on your team and advisory board. It also helps if you follow the principle of "Minimum Viable Value Proposition" and don’t try to invent too much in one go. Tools like Assumption Mapping & Impact Mapping can help you focus on proving the most valuable hypothesis for your business, or hitting important milestones.

Lastly, think about your profit model. Yes, the business model is important too, but it’s your profit model that could make the biggest difference to your success. That was actually true before the collapse of the WeWork IPO but is even truer today.

Too often people try to copy a business model without thinking about the context that supported that model and how they are going to tap into the value chain — but, once you start thinking about this, you may find interesting ways to create value, as well as new models of competition. This is very important as a startup. A great read on this is The Art of Profitability

Building a great software company is hard, navigating the minefield is hard, what would help you most right now? Want to talk about your unique challenge? Get in touch.