What are the most important things for a new software business to do to lay the right groundwork for success? Duncan Stockdill, CEO and Co-Founder of Capsule; Jeb Banner, CEO of Boardable; Eric Prugh, Co-Founder and Chief Product Officer of PactSafe; and Eric Diamond, CEO of PushSend advise ISV startups to focus on these seven things:
1A great product
An essential element of running a software business is the product you choose to take to market. Stockdill says, “You don’t get a shot to build a software business every day, so choose a market and product that you have a genuine passion for. You’ll need that passion to sell your vision to customers and build a great team around you.”
He says, “Obsess on making every part of the customer journey frictionless and enjoyable. Not only will it help your conversion rates, but happy customers come back and will introduce you to other new customers.
2The right mindset
Banner adds that since you are launching a business that sells a product, you need to adapt your approach, especially if you’ve provided services in the past. “Running a product business is fundamentally different than running a service business. It’s something of a balancing act between product vision and customer voice. When the product leads, it means the team has to follow the customer and their needs without letting one customer dictate where the product goes.” Banner says. “A part of this mindset must be a willingness to fail, say no, and to act with an underlying sense of urgency.”
3The right market
Prugh says running a software business also requires that you validate the market for your product and that people are willing to pay for it.” He advises, “Develop the commercialization and monetization strategy behind the business as early as possible.” Prugh says to anticipate that “your initial strategy will probably be wrong and it will probably change.”
Banner says to start by answering broad questions and get progressively specific, for example:
- What are we selling?
- Who are we selling to?
- What problems do our customers need solving that they aren’t telling us about?
- What is the one thing our product does that really closes the deal?
Banner reminds startups that devising your commercialization strategy isn’t a one-time event. “Even when you get some sales and success, don’t assume that you are there. Keep listening and refining,” he says.
4A great team
Diamond comments that a great product can gain traction, but a great team that is creating, supporting, marketing, and selling your product is what will help make your business a success. “Getting the right team in place is as important as the product itself. Remember that having a great product does not make you a company,” Diamond says.
Banner adds that your team can extend beyond the four walls of your office. He says to consider building and engaging a board of directors or advisory board. “The wisdom and accountability both of these boards bring to the organization is invaluable,” he says.
Stockdill says to look for “shortcuts” for elements that aren’t a core part of our product your value. “For example, there’s no need to build your own complex payment solution when you can plug in a service instead,” he says.
He comments, “We’ve benefited from integration partnerships with other solutions. Many vendors have open APIs, and they welcome new integrations that extend the value of the solution for their customers. And typically, this can be done without the need to negotiate complex partnership agreements with them. When customers connect your application with others, it creates more value for the customer and at the same time embeds the selection solutions more firmly in their business resulting in stickier customers.”
6The right price
“This is the million dollar question,” says Diamond. “It depends on how you want to position your service. Do you need to be exactly on par with your competitors, or do you have a premium offering where being the cheapest price matters?” He advises studying competitors and then comparing your offering to theirs to see which pricing structure makes the most sense for your product. “Then, call as many people as you know and trust and do a pseudo-focus-group to get feedback from them on pricing before you make your most educated guess where you want to be.”
He adds, “If within a year of launching you have not changed your pricing a few times, then something is definitely off. Be open to change quickly as you get feedback from users. This is an area where the only way to know is to do and then learn.”
7Make it all work together
Banner explains to build a successful business you need “the right people, the right opportunity, the product, the right timing, and the right price. But all these things work together in a way that can only be described as alchemy—when the whole is more than the parts. Getting the alchemy right is part science and part art, or maybe, magic.
Diamond agrees: “It takes software developers, product people, sales, marketing, leadership, and more to succeed. The actual product is just one piece of the pie. Focus on getting the right team in place that is capable of taking your company to the ‘promised land.’”
A Final Word
Even when you have all of the elements of running a software business successfully in place, you still probably need one more thing: time. “Success doesn’t happen overnight,” says Stockdill. “Be prepared instead to put in the hard yards and wait for momentum to build.”