Why the Burlington Coat Factory, no reason other than that’s where Gareth and Steve were when the conversation started. Their wives were “trying on” stuff and weren’t about to finish anytime soon.
The two loitered amongst the leather jackets. They were planning on starting a custom development business and generally discussing opportunities and challenges. “The question is” said Gareth “what happens when the cost of software drops to zero?”.
Gareth’s a recognized expert in Agile Development. Steve’s been selling Enterprise Software for twenty years. The conclusion they came to was ultimately people would get rewarded in some way for using software. The big software vendors would go broke without those $billions revenues. Their place would be taken by a new breed of service providers offering utility processing. The point of competition would move from the distribution channel to ease of use, rapidly followed by value add - business best practice “built in”.
By this point the new software service providers would be making their money in other ways, exploiting ownership of the network. New entrants would build on the model but compete based on sharing the value of the network with the people contributing to it - the users. Ultimately the users take over the reins. They decide what the software as a service does, and how. They decide how the network gets exploited and who by. The service provider ends up as coordinator for the network and the “brand” which disintermediates all the other brands, driving established goods and services providers to the commodity level.
Two years ago this seemed close to heresy, but today we’re surrounded by examples of this progression accelerating. It’s in social media for the moment, but will quickly spread to the business sector, starting with the smaller businesses.
The conversation moved on to how the two might combine skills to get in front off, and ultimately catch this wave.
The first issue was finding some clear blue water in amongst all the business software. The space had to offer some potential as a market prior to the emergence of the value in the network. This would be where the new software would get traction and put down some roots. The decision was Sales Management.
Enter the first fundamental principle. Traditional software competed in features which met all of somebody’s needs. These features result in the complexity we’re all familiar with, in software at least. This new software would meet some of everybody’s needs and provide flexibility to accommodate the unique requirements. Taking out the complexity dramatically reduces the cost, and makes the software easier to use.
The second issue was finding a market segment. Choosing the small business segment wasn’t hard. The new software could never compete head on with the enterprise vendors. Sales Management was something most businesses could use some help with. It had a chance of adding real value to users quickly, and it was something Steve knew a lot about.
The third issue was the technology platform. It had to be hosted on the Internet of course. Gareth’s knowledge of languages and database systems made that decision easy. Ruby on Rails was the new thing. Community software developed by programmers as they used it. Extraordinary productivity, continuing development and “free” ROR was the technology of choice for the new generation of developers. With a combination of Agile Development techniques and ROR, the first iteration of the software was up and running within two weeks.
Enter the second fundamental principle - permanent Beta. The software would continue to evolve. With permanent Beta users could experience the real benefits of Agile - if the software doesn’t do what you want, change it.
The fourth issue was finding users to dictate what the software would do, and how. It would be used in their own business, but the two needed some external users to validate their thinking. Paul was a friend of long standing, a veteran in the insurance business, a technology novice, and best of all needed some help. He was managing an industry insurance program and floundering under the weight of lists, notes, documents and emails.
Paul started using the software and over the next six months contributed ideas about functionality to add, based on his particular needs. The focus for the application changed during this period. It turned out Paul wasn’t just using the software for sales management, he was using it for everything. From his strategic planning to his air miles program, everything he wanted to do in his business was in the software. On his own he’d refined a workflow that’s now at the heart of how the software works.
Here comes the the third fundamental - users know much more about how software adds value than the people who build it.
The fifth issue was resources. There would be no money to pay for offices and staff and the two didn’t have the skills, or time, to make the software “market ready”. It had to be ultra friendly, look gorgeous, and give 24*365 reliabiliy. The answer was partnerships with hosting, design and development businesses. Partnerships with the very best people to guarantee the very best software as a service.
This is where our fourth fundamental principle takes center stage. This concept is so challenging to conventional thinking nobody’s ever going to believe it’s right. To make sure it has the opportunity to mature, the business has to be constrained within its own resources - no outside equity, no debt and fixed cost close to zero.
The sixth issue was creating the network. At this point a detailed understanding of user behavior is crucial. With a combination of social media participation, direct invites and paid search the number of users climbed toward critical mass. Naturally enough it transpired some people never used it. Others enjoyed the benefits and yet more recommended it to partners and friends but few understood the opportunity of participating in the network.
That’s where we are now guys - join in and give us a hand to build the community so we can make everybody more successful.
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