In consumer software, customer acquisition cost is low and development costs can be spread over millions of people, so there is a big profit potential even though the price is low. For large enterprises, the customer acquisition cost is high (lots of meetings with suits), but the payout is high (millions of dollars is good value for software that is going to be deployed at 20,000 locations and serve millions of customers). For a small business, customer acquisition is still expensive (sales and support done personally), but the price is still pretty low.
The book cured me of mumbling "I could make software better than that in a week" every time I saw a receptionist at a small office struggling with a bad app.
If your dream is to make millions through a sustainable enterprise, then small business software is awesome.
I'm currently scoping a small - medium enterprise concept with a very concrete set of paying first customers, but thinking ahead this looming uncertainty really bothers me.
Small niche software doesn't suck : if you love that niche, if you can create something that that niche loves and that what you create is difficult for others to replicate.
I have small business with small client base that will forever remain small. ~ 140 clients. A couple of staff members now days.
Cost of acquisition is high. I need to retain a client for 2 years to achieve ROI. That bit is hard work. But you structure things accordingly. From the clients perspective, changing competitors products is very disruptive so I need to make sure I create something that makes it worth their while. The product itself and its capabilities compared to competitors, where the product is headed, support etc around that product and whether or not their is a genuine need for the product.
Making good money. Now bringing home more than market salary, but only after many years of sitting under so probably not at net break even just yet. In a few years all going well I'll sell out and will live very comfortably in retirement off what I expect to be able to sell for.
Fairly happy with my lifestyle. Flexible and generally a little less hours than full time. Can be pressured/stressful at times but no more than I remember when I worked for others.
I'll never be Peter Thiel wealthy but I am on track to achieve my financial goals.
Sometimes the market is too small or costs too much to reach.
Users might legitimately want something, but not enough to pay the price required to sustain a business.
What if the acquisition cost could be made low? Doesn't patio11's appointment reminder app fall into this category?
I stand about as much chance of becoming the next YouTube/Insta star.
It could very well be that acquisition cost was quite reasonable, and he may have talked about this elsewhere. I just don't think the IH interview tells us enough to know for sure one way or the other.
I say that with the greatest amount of respect for the man by the way, he's super super smart and I love his writing.
It just doesn't lend itself to the "do a business that sells $10 dollar bills for $5 funded by VC money until it has enough eyeballs to start selling ads".
Because the author prefers filthy greed and the creation of yet another corporate behemoth over creating something decent, charging people for it, and making a living from that?
Plus, I don't see Basecamp or Panic or Bare Bones or whatever paying less to their devs. And less compared to what?
Behemoths are usually in SV or a few constrained places, and have the usual SV culture (including ageism etc).
Small niche business are anywhere, in places with much smaller costs of living, better work-life balance, and more kid-friendly environments. Heck, Procreate (frequently top of the App Store and Award Winning) is in Tazmania.
I think Basecamp is not targeting niche small businesses; they're a general purpose project management/team collaboration software, used by many businesses. It happens to be used by some small niche businesses, but in the same way a business checking account is used by many small niche businesses.
To me, niche small business software evokes more "software to automate inventory in a small machine shop", "landscape sprinkler system installation planning software", "antique shop inventory management software", "beekeeper scheduling software", etc.
Investors invest in many startups. Each one starts in a different valley and starts climbing the hill. The investor's job is that one of the startups pays off. Your job is to climb your hill quickly and cheaply.
You aren't going to make a new storage company or a new ASIC-based company in the lean startup model (though you can certainly be _lean_er_ than companies tended to be in the past or the lavishly spending mega-investment-level companies on the spendthrift side of the capital wall like Uber) but you can do a lot of probing of the consumer marketplace this way.
I couldn't believe this statement. It completely neglects the massive differences that exist between people of any intelligence in terms of what and how they think. I'm talking about things like educational level, ideological biases, epistemological approaches to thinking, etc. It also completely neglects the honesty and integrity of the person you are emulating.
To give just one example: I've found that most of the "conspiracy nuts" I've met (people who think we didn't go to the Moon, etc.) are highly intelligent, probably pretty far above average. If anything being highly intelligent makes it much easier to rationalize a ridiculous belief system. Any idiot can imagine a round Earth that spins and orbits the sun but it takes someone with very high intelligence to understand ether vortex theory. Judging by the intricacies of their speculations the "bakers" who assemble bizarre far-fetched conspiracy theories out of QAnon's cold reading act are also quite intelligent.
Con artists also tend to be highly intelligent, hence my comment about honesty and integrity.
For some odd reason it seems like a whole lot of very bright people have adopted this weird kind of biological determinist hard materialist view of cognition and its quality. By materialist I mean it reminds me of Marxist dialectical materialism: the idea that the state of society is a pure function of its technology and other capital. A bunch of people think you can measure someone's IQ and that will tell you how correct their opinions are. Smart people have better opinions because they can think more faster, or something.
I struggle to understand how anyone could possibly believe this. It's patently absurd. It's roughly analogous to saying you can tell the quality of a driver by the performance of the vehicle they are driving, or that the correctness of a computer's output is a pure function of processor speed irrespective of what software it's running.
Human beings can and often are extremely competent in some domains while simultaneously being highly irrational, misinformed, or just ignorant in others. Then you have to consider ideology and social conformity which can both bias people toward holding beliefs that don't make sense regardless of intelligence.
My overall point is that intelligence is only weakly related to logical validity or overall correctness. What and how you think matter quite a bit and those things are learned.
Tech is pretty bad for that.
I try hard to avoid that trap, we seem to live in a world where experts are undervalued and loud confident sounding people are listened to.
It's frustrating since people like simple answers and the loud confident ones are happy to pretend to give them.
"loud confident sounding people" is fairly self-evident
Can you share your definition of "expert", please? :)
The former get a lot of airplay (here and elsewhere). Finding the latter appears to be a whole lot harder.
Psychologists have found that a lot of decision making is rationalisation of an instinctive decision.
Those moments when you stand there thinking why the hell did I just agree to that etc.
>I struggle to understand how anyone could possibly believe [really smart people tend to be right].
You don't really struggle to understand that, do you? It's kinda shoved on us from an early age: "Respect your elders, they have more life experience.", "Do what the teacher says, they're the experts.", etc. It takes a fair amount of willpower to think "wow, no one else sees it this way, or at least if they do, they haven't come up with a solution".
Agreed. See Theranos.
That second phrase is gold!
Genuinely not trying to start a flame war, just trying to make an interesting point.
"Eat fruits and vegetables if you want to be healthy"