Software // Information Management
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7/18/2007
02:19 PM
Neil Raden
Neil Raden
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How to Get Rich in Software

From time to time, CEO's and founders and even venture capitalists ask me for my opinion about how to do this or that, and I always respond the same way: "I've never earned a dime running a software company, why would you ask me?" And it's true. I have the utmost respect for the entrepreneurs and managers who build something from nothing and have the attention span to attend to the details. I can't do that.

Five years ago, I bought a covered wagon and put my family and whatever belongings we had into it and headed across the prairie. Well, figuratively speaking, anyway. I shut down my data warehousing/BI systems integration business and re-invented myself as a consultant to software companies. It wasn't really that bold of a move. I was tired of the constant travel and I had a fair amount of residual goodwill with the vendors so that I was able to pick up some work right away. Along the way, I've learned a lot about how software companies work. And now, after five years, I'm something of a presumptive expert. From time to time, CEO's and founders and even venture capitalists ask me for my opinion about how to do this or that, and I always respond the same way: "I've never earned a dime running a software company, why would you ask me?" And it's true. I have the utmost respect for the entrepreneurs and managers who build something from nothing and have the attention span to attend to the details. I can't do that. I can help them in other ways, but the creation and nurturing is up to them. I'm not a company guy.In 1999, I had the distinct pleasure of spending a few hours with the late Peter Drucker. I was interviewing and photographing him for a story and the cover of the premiere issue of my (now defunct) magazine, Hired Brains. That's a subject for another day, but suffice it to say it was a fantastic few hours that I will cherish forever. But I learned just the other day that Drucker and I had at least one thing in common when I came across this quote of his from his book, "The Frontiers of Management": "I don't enjoy having to do work to keep other people busy. I want to do the work I want to do and not the work I have to do because I have to pay them or they have to eat. I'm a solo performer. I've never been interested in building a firm. I'm also not interested in managing people. It bores me stiff." So I guess there is at least one shining example of someone who really knew about something he didn't care to do himself. Every software company I've studied that has achieved success - and remember, all success is fleeting, so some of these companies may have stumbled later - had certain characteristics in common (in descending order of importance): Focus Relentless energy for being successful Message Luck Product

Yes, that's right, you have to have the product, but it is not the most important thing. Have you ever wondered why companies with brilliant products founder while others, with less impressive offerings thrive? Because when it comes to making money in software, execution trumps product every time. Luck is a factor too, because over a three-to-five-year horizon, no one can predict what will be hot. But you can't leverage luck without the first three. It isn't enough to have the message, you have to be able to keep your focus on it and do it relentlessly. Relentlessness is not a bad thing. It doesn't imply you have to grind down your customers, your employees and your competitors. It means that everyone in the organization maintains the energy and drive to stay focused, on message and not fall into the trap of worrying about your competitors. That's what the market rewards, for better or for worse.

Neil Raden is the founder of Hired Brains, providers of consulting, research and analysis in Business Intelligence, Performance Management, real-time analytics and information/semantic integration. Neil is co-author of the just-released book "Smart Enough Systems," with business rules expert James Taylor.From time to time, CEO's and founders and even venture capitalists ask me for my opinion about how to do this or that, and I always respond the same way: "I've never earned a dime running a software company, why would you ask me?" And it's true. I have the utmost respect for the entrepreneurs and managers who build something from nothing and have the attention span to attend to the details. I can't do that.

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