What I took away from Business of Software 2010 (it wasn’t what I expected)

by stevew on October 10, 2010

Post image for What I took away from Business of Software 2010 (it wasn’t what I expected)

I’ve briefly mentioned the Business of Software (BoS) conference in past posts – it takes place annually in the United States around this time of year, and this year it was held in Boston. As was the case last year, it was a great opportunity to learn from people who’ve built great software businesses, and I would go so far as to suggest it is the best conference for software entrepreneurs anywhere in the world.

Attending Business of Software is not unlike being a comic book fan attending the Marvel Conference, only to find the real Iron-Man, Spiderman and Captain America are taking part! Not just taking part (and in many cases, speaking), but available there for you to talk to and share real-world problems with. And although clearly successful in their own fields, none of these guys are aloof or patronising, but in fact turn out to be genuinely nice people.

This year, amongst the superheroes of software were Joel Spolsky (the first serious developer blogger and the man that taught the software world to value developers), marketing guru Seth Godin, founder of Smart Bear Software Jason Cohen (arguably the father of collaborative code review), Dan Bricklin, inventor of the spreadsheet, and relative newcomer Peldi Guilizzoni, creator of the hugely successful Balsamiq Mockups wireframe tool, to name but a few.

The first two days of the conference were packed with useful information for people thinking of starting or already involved in an entrepreneurial software business, and even for the few looking to get out of one. Attendee Mark Littlewood of the Business Leaders Network posted a series of excellent summaries of the talks, and doubtless some talks will go up as videos in due course – definitely worth looking out for.

What I didn’t expect…

The first two days of talks were great, but it was the last half-day that affected me most profoundly. Some nine months ago, I wrote a post talking about the kind of startup founder I saw myself as. It was triggered by an article by Jason Cohen explaining why he sold Smart Bear when he did. In short, I was arguing that if your motivation for founding a startup is primarily to make money, then firstly there’s nothing wrong with that, but secondly that you are better off being clear about that up front.

The problem with this line of thinking is that starting a software business purely to make money just doesn’t compute, although the reason isn’t immediately obvious. One thing that was clear from the talks over the first two days is that behind every successful startup is passion – passion for solving the customer’s problem, passion for providing a great product and passion for providing great service behind that product. Focusing just on generating cash doesn’t foster passion like that, and arguably inhibits it.

Furthermore, unless you are running a lifestyle business with no staff, you need your employees to exude that same passion, but once they work out that you’re only in it for the money, any enthusiasm they had for the business will quickly wither, and you will end up having built precisely the type of company you so desperately wanted to get out of before you started your new business.

Joel Spolsky was the last speaker at BoS 2010 (curiously the only speaker at the conference who didn’t use slides but whose talk was nevertheless captivating). He talked very candidly about the process of raising $6MM of venture capital funding to grow StackExchange (the platform behind the invaluable StackOverflow Q&A site for developers). Aside from the fund-raising process, for me what was interesting was Joel’s attitude towards business, and towards his team at Fog Creek Software (based in NYC, they publish the highly successful bug tracking product FogBugz). What struck me through listening to Joel (and also through talking to people like conference organiser Neil Davidson (who, in his spare time, is joint-founder and CEO of .NET/SQL tools vendor Red Gate)), is that these guys are genuinely interested in building and sustaining a great place to work for all their staff. Taking this onboard, there then is another consideration for founders who are building a business with the primary goal of selling it off once it’s successful – it’s rare that an acquirer will be interested in the caring culture you’ve painstakingly built; more likely that they’ll see it as excessive, expensive and ultimately just a load of unnecessary sentimentality.

Not the whole story…

That’s not to say that there’s anything intrinsically wrong with selling your business eventually; there may come a time when the business has outlived your contribution – for example, BoS 2010 speaker Derek Sivers talked about how over time he lost his passion for his music publishing business CD Baby, and that by staying with the business he was actually doing his customers a disservice. (Interestingly, he then put most of the funds from the sale, some $22MM, into a charitable foundation to fund music education after his death). As he notes on his blog, he felt that CD Baby’s new owner would take much better care of the business going forward that he was able to.

To close, I still believe that when you build a business, in the end it is first and foremost a business, but at BoS 2010 I was challenged to think about a bigger picture, about other people. To quote several speakers at the conference, I’m still a red-blooded capitalist at heart, but over the past week I’ve come to see that there’s more to life (and business) than the money. To borrow from the philosophy of Joel, Neil and many others at Bos 2010, making the world a better place, one co-worker at a time, is not just a laudable goal, but should be a core tenet of being a responsible entrepreneur.

If you feel the same – that’s there’s more to being in business than making money…  or perhaps you feel I’m being soppy and sentimental? – Please leave a comment and let me know.

Post to Twitter Post to Delicious Post to Digg Post to StumbleUpon

{ 6 comments… read them below or add one }

Lisa Wells October 10, 2010 at 11:21 pm

Having worked with the Smart Bear team for 4 years and experienced the incredible culture there, I heartily concur that ‘excess, expense and sentimentality’ pay for themselves many times over in loyalty and dedication… from users as well as employees. Creating a great workplace is not just the ‘right’ thing to do, it’s an effective business strategy.

I love how you turned a conference summary into a captivating story… one that clearly demonstrates the passion that pervaded Business of Software. Thanks, Steve!

Reply

stevew October 11, 2010 at 7:06 pm

Lisa – good to hear from you again and thanks for taking the time to comment. I had planned to do a long post about all the things I learnt at the conference, but I realised on the way back that this was by far the most important.

Reply

Marcus McConnell October 11, 2010 at 2:34 am

Steve,

I got the same message from BOS2010 and it really has made my think about my motivations and the passion that I’m projecting to my customers. When I get frustrated and start to write an email I shouldn’t I’ll take a step back and think about how to write positively and project my passion instead of frustration. So many of the speakers seemed to believe that their passion was the x-factor that took an ordinary business and allowed it to grow to a super-star company.

It was great to meet you at the conference! Not only were the speakers world-class but the attendees were just as motivated, intelligent and passionate about building software businesses.

If you run a software business or want to start one you can’t miss the Business of Software Conference.

Reply

stevew October 11, 2010 at 7:22 pm

Thanks Marcus – appreciate the feedback – looking back, I reckon I’m going to say BoS2010 was a real turning point for my business. All the best with yours as you aim to inject more passion into what you do.

Reply

sebastian October 11, 2010 at 1:56 pm

Damn it! I wanted to be there so badly.

I don’t think that you’re being a sentimentalist by thinking like that.

I think that people that ignores all that isn’t directly giving them more money are sentimentalists. They are the sentimentalist of an un-human kind of capitalism that is over. A machinery that is clearly decaying.

A new economy is getting invented in this revolution.

One that is including art, emotional labor and emotional design because we are sick of being ignored as persons (even in the business world).

I’d say that a marriage between jobs and life purpose are something that is worthy. That’s the most motivating force you can have in a team. If your startup has it, then your culture is interesting (to know, talk about it and perhaps to consume).

Making a business that makes money as its secondary focus makes everything have more sense to everybody. But it’s still very underestimated.
sebastian´s last [type] ..Lucidity is the new capital

Reply

stevew October 11, 2010 at 7:50 pm

Sebastian – thanks for the feedback – for future reference, if cost was an issue, there are apparently a number of ways you can get to go there for free (although travel & accommodation are still your responsibility) – this year there were free tickets available for people helping other people, and for the people doing the lightning talks.

I have to agree – the ‘unhuman’ form of capitalist machinery is clearly in decay. Not too many people seem to know what to replace it with though. I think the next 10-15 years are going to be a very interesting time for us in the business world.

I am not sure I would describe making a profit as a ‘secondary purpose’ – without that you can’t pay your staff and they can’t feed their families – but the aha moment for me was seeing that people matter much more than I’d realised, and given that people are the foundation of a software business, you need to start by making sure you care for them rather like you would care for members of your own family.

Reply

Leave a Comment

CommentLuv badge

{ 2 trackbacks }

Previous post:

Next post: