
Balsamiq hits $100,000 in revenue - pchristensen
http://www.balsamiq.com/blog/?p=424
======
aditya
Single founder + non-startup hub + non-web2.0-buzzworthy product == everything
you're told not to do.

I've said this before, but the biggest takeaway from the balsamiq story seems
to be: put your head down and focus on making a great product, everything else
will follow.

~~~
swombat
_put your head down and focus on making a great product, everything else will
follow_

And market the hell out of it.

The Balsamiq approach to marketing (market the success story) is quite similar
to that of 37Signals, actually, and both essential and very effective.

~~~
webwright
Absolutely.

The "build a great product and they will come" myth is bullshit 99% of the
time (unless you have a built in marketing engine-- SEO or viral). Balsamiq
won the same reason that 37s did (and JoelonSoftware for that matter)... They
had a great story, told it well, and the story happened to resonate/be
interesting to their exact target market (web geeks / entrepreneurs).

Bravo!

But try to build great software for supply chain management, or managing a
beauty parlor and let me know how "everything else will follow" there. There's
a reason that SalesForce.com (which, arguably, has/had a great product) has
spent 60-70% of their topline on sales and marketing.

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davidw
Regarding "what if you get hit by a bus" question from potential "big license
buyer", you could offer to put the source code in escrow so that they can have
it if something goes very wrong.

Comunque, congratulazioni:-)

~~~
13ren
I had this discussion with a (huge) US corporation, and they weren't
interested in escrow, saying it was too complex. They wanted source code; and
I had the impression that with appropriate license restrictions (i.e. they
couldn't sell/distribute it) it wouldn't be a problem (actually, having source
would help them give me bug reports).

A secondary reason (or perhaps the true one?) was a _sense_ of reassurance
that the source code really did belong to me (not violating anyone else's IP).

They offered 3 times my top license price, straight up. They arranged an
international conference call with their IT VP, and two tech guys with me. I
think they would have gone much higher. I didn't actually go with this,
because I just felt uncomfortable about it.

My opinion: (1). Big US corporations are amazingly _terrified_ of litigation,
therefore you can trust a negotiated license; (2). Big US corporations will
happily pay much more than you can realistically imagine your product is
worth. The inconceivably rich corporations are not like you and me, they
evaluate on a different scale, with different values.

~~~
palish
Personally, I feel that we worry way too much about keeping our source code
top-secret. One reason people think source code is valuable is because "the
resulting product is valuable, so therefore the source code is even more
valuable, right?" ... well, no. The product is valuable because of the
thousands of small decisions you made as you were developing the product. The
source code is just the manifestation of those decisions. In other words, the
product is valuable because of its design, not because of the source code that
describes that design. Just because someone has access to a product's source
code doesn't mean they can make valuable decisions about it. And if they can't
do that, then they can't "steal" your hard work by building on top of it and
selling it. They just don't have the domain experience to do that. Plus, they
would always be slightly behind you in terms of development, because you're
constantly adding new features and fixing bugs.

I'm actually toying with the idea of shipping the source code to my first game
when I release it. The game will be pretty large-scale (it's 3D, as just one
example) so the game engine's source code could potentially be very valuable.
However, I feel that I shouldn't necessarily keep it closed-source, because
the profits from _actually selling the game_ would far outweigh profits from
licensing the engine, so it wouldn't be tactically wise to spend time on
trying to license the code. Therefore, the closed-source model doesn't really
provide a competitive advantage, so why not open-source it?

A potential problem with "open source on launch" is that someone could
immediately clone the product and sell it for less. Except they can't. In the
case of my game, I'm going to copyright all of the art assets and other game
data. To clone the game, they would need to copy and redistribute that game
data, which is illegal, which means I could sue them and shut them down. It
would be an annoyance, but it doesn't make sense for them to do that anyway,
so I doubt many people will try.

Also, piracy isn't a problem for the "open source on launch" model. In the
case of desktop products, releasing the source code would allow pirates to
easily circumvent any copy protection embedded in your code. But the thing is,
it's easy to crack a closed-source program's copy protection anyway. It won't
cause additional people to pirate your desktop product. And if your product is
server-side, then by definition it can't be pirated.

Lastly, consider this. If it's harmful to open source a propriety application,
then there should be examples which support that conclusion. However, can you
find just one example of a company that failed or was harmed because they
open-sourced their application? Id Software has released the source code to
many of their games (Doom, Quake 1, 2, and 3, etc). Quake 3 generated over a
_billion_ dollars in revenue, and yet its source code is free to all. And it's
very unlikely that Id was hurt by that decision.

It seems like source code protection is one of those logical fallacies that's
easy for most people to believe, as long as they don't think about it too
much. (Like "the world _seems_ flat, so therefore it _must be_ flat".)

~~~
m_eiman
One note about Id and their open source: they "only" release the source for
their old engines, the most recent one is closed and licensed.

Giving something away -after- it has earned you a billion is less risky than
doing it -before- you've earned the money.

~~~
palish
Right on. But it's as close as anyone has come to "shipping the source code
along with the CD". So even though Id did it after it generated a lot of
revenue, they still did it, which is extremely rare.

Also, one reason that Id's most recent engine (Id Tech 5) is closed and
licensed is because of its brand-new technology: MegaTexture. As of now, no
other engine has implemented that feature (or the engine isn't production-
ready like Id Tech 5 is). So yeah, if you invent paradigm-shifting new
technology, then it is probably a bad idea to immediately open-source it. :)

~~~
m_eiman
I agree, it's incredibly generous of them and very helpful for the next
generation of game developers to be able to read and use "real" code like
this.

And I think that more or less all their engines have been revolutionary when
they were released, not just this one!

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wallflower
Balsamiq is fascinating because following Peldi's discourse is almost like a
real-time Harvard Business School case study on an evolving, successful
business (not that HBS would study microISVs in the first place).
Congratulations, here's to scaling to $1M!

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johnrob
YC rejection letters should include a link to this blog post.

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trickjarrett
It's been excellent to follow Balsamiq's progress and I'm stunned by the
progress he's made. Congrats and here's hoping for the best for you.

Just remember, don't overdo it. $100,000 isn't much in the grand scheme of
things, so keep pinching those pennies!

~~~
vaksel
yeah I think he is starting to miss the point, since he is starting to think
of himself as a small business and not a start up. $100K on the startup scale
is nothing

~~~
aaronblohowiak
Not nothing, but not sitting on doves. This use of polarization does not add
much. It now appears that his startup is now a lifestyle business, a shift
worth congratulating and celebrating. Celebrate each success, and when the
party is over, dust off your shoulders and get back to work. But you have to
make sure to celebrate, for the sake of your own motivation. (Well, _you_ may
not need to, but in general, "one" should.)

~~~
trickjarrett
100%. Work without the moments of victory is what I like to call torture.

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cperciva
Congratulations! But now you'd better keep on succeeding, because I'm going to
point at you every time people claim that single-founder companies don't work.
:-)

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lyime
One thing I would like to mention is. You want to be very careful because of
you success others might/will want to copy it. You want to prepare your self
strategically with a roadmap keeping in mind potential and hypothetical copy-
cats/clones and how you can stay ahead of them. I would say companies like
Zoho and other online suites would really want to add a service like this to
their product mix. So stay sharp :)

~~~
13ren
I'm personally troubled about the right attitude towards competitors... I but
I think it's:

 _Don't worry about competitors. Worry about making something people want._

Constantly improving your product, for what your users want, _automatically_
protects you against competition. I also find that worrying about competitors
(instead of customers) can lead to a self-defensive mindset.

 _If [users] take you up, no competitor can keep you down._
<http://www.paulgraham.com/startuplessons.html>

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brandnewlow
I've been following the updates here on Hacker News from a distance and
finally dropped by to test out the product.

Holy cow. It's awesome. As soon as some cash frees up in the budget I will
splurge for the desktop version.

Most surprising, delightful feature: The guides that appear when dragging
stuff around to line it up.

Cleverest feature: The intuitive way that the link bars work. I didn't need to
be told that the commas break up the links, just showed in the example. Slick.

Well done, good sir.

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shabda
Yay! You know you are an inspiration to a lot of us at news.yc, right? Now get
working for that 1M.

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siculars
Peldi - you have been such an inspiration. Not only to me, but to an entire
community of entrepreneurs.

Keep the news coming and congratulations!

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josefresco
Awesome news, and as Biggy once said, 'mo money, mo problems'

Good 'problems' to have though ;)

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run4yourlives
Good grief man, I was originally going to post that although this is
wonderful, your recent downward trend is rather concerning until I realized
you had included November numbers! :-)

It might be a good move to be sure your graphs all report the same information
for easy reading, especially when observing trends... either drop the current
month, or few a per capita month trend.

Regardless, you certainly are an inspiration, and I wish you continued
success! As someone that just needs to design with photoshop and can't work in
pen and paper, I'm considering purchasing balsamiq in the future. (It's a
little steep for me now) Keep up the good work!

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urlwolf
What makes me sad is that balsamiq spent 5 month of hard work to make $100000,
and most internet marketers in the top tier need only launch an email to their
list to get the same amount. No tech knowledge, no brilliance, no incredibly
original idea are needed. Just skil on the noble art of 'bullshit'.

We starup people cannot compete.

balsamiq is an astounding success in the startup world, and a silly example of
how not to do things for internet marketers (who, by the way are the plage!).

Maybe there are millions of people gullible enough to buy most crap internet
marketers throw at them, but only a few thousands of us who are interested in
the product balsamiq offers. Sad.

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lyime
I think its bold of you to post these financials about your venture, none the
less I really appreciate them. It really gives a good understanding on how one
can be optimistic about selling a software as service. Cheers, and good luck.

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donw
All I can say is, congratulations! Most small businesses never even come close
to where you are now.

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j2d2
Congratulations!

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louislouis
Congrats!

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syntax-case
To what extent did the publicity contribute to his success though?

~~~
ashu
It is obviously a large part, but he did not get that publicity automatically.
It seems he worked out and implemented a very effective strategy for getting
that publicity organically. So, plenty of hard work and ingenuity involved
there as well.

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RobertL
Good article p. And congrats on your success.

