Jason Gorman has written an interesting article: “Stop Chasing Exit Strategies And Start Chasing Great Software“. @robbowley tweeted enthusiastically about it and I enjoy a lot of what Rob reads and writes so I went and had a look. The whole thing left me with a great big feeling of “Hmmm”. Normally I’d leave a comment but Jason’s blog doesn’t allow them so after a bit of consideration I decided to write this. I hope Jason reads it and takes the opportunity to respond … I’m not really a fan of blog posts that deconstruct other posts but if I can’t comment there, I can only really comment here.
Let’s start with the detail and then think about the overall message. First off the title. Very eye-catching and if it were “Stop Chasing Exit Strategies” I’d have to agree; I’ve long advocated an approach to entrepreneurship that emphasises building a solid, sustainable business on the basis that if you do, exit opportunities will come (should you want them). Hyping the hell out of a business and then cashing in your chips just before the whole thing implodes is a strategy that has worked for some and failed for many others. I’m not saying its wrong but it’s not for me.
But what do exit strategy, or lack thereof, and software quality actually have to do with one another?
Reading on a bit further the impetus for the article is revealed:
Today it was announced … that police state-friendly social networking site Facebook is acquiring pointless image filter service Instagram for $1 billion.
You don’t have to be a psychoanalyst to determine that Jason isn’t a fan of either Facebook or Instagram and I understand that as neither am I. But it does reveal a prejudice. I know a number of smart, savvy people – many of them top-class developers - who think Instagram is fantastic. I also read this interesting piece by Om Malik where he says (at the bottom):
People love Instagram. It is my single most-used app. I spend an hour a day on Instagram. I have made friends based on photos they share. I know how they feel, and how they see the world. Facebook lacks soul. Instagram is all soul and emotion
From Jason’s article:
My goal is to create better software (and, more recently, to try and help other people create better software). Most important to me is what value software brings to the people who use it.
By Jason’s own definition it sounds like Instagram has hit the nail on the head with the quality of their software in that their users get a great deal from their service. What’s more its not clear to me that Instagram have been chasing an exit in the sense of hyping the hell out of it before it implodes; they’ve grown very quickly and taken on a lot of VC money, and I can’t say whether they are really worth $1B to Facebook or not. But, from what I’ve seen, they’ve taken an idea that people like, have developed it in the face of real user feedback, have scaled their operation and so have attracted an exit opportunity. What’s the problem there?
Okay, enough of the nit-picking. Perhaps Jason just picked a bad example in Instagram. What about the general concept that chasing great software will lead to a good business?
Er, well, no. What defines a ‘good’ technology business, or any business for that matter, is its ability to make money and we all know of many successful businesses, including ones that have been around for many years, who get away with pedalling shit software through weight of market share, iron-fisted defence of patents, or just lack of credible competition. But like Jason I’m personally not interesting in pedalling shit software just because it makes money. However I am interested in making money with my business because that’s what pays our salaries which enable us to keep developing software. And here’s where things get tricky. You see quality software does not necessarily equate to software that users get value from. And users getting value from software does not necessarily equate to a good business model.
But a good business model is necessary for a good business, whether your own or one you work for.
Returning to Jason’s article:
A classic example of this kind of thinking is the very damaging advice being propogated among the tech start-up community that the software that powers your new business only needs to last until you find a buyer.
Jason doesn’t name Lean Startup or Customer Development so maybe he is talking about something else. However, if he is, then I think he’s got the wrong end of the stick. Both Lean Startup and Customer Development – of which I am a passionate advocate – are about understanding what it is your customers want and how valuable it is to them without spending lots of time and effort (yours and theirs) that turns out to be wasted. Its about learning how your business can work. Jason has it absolutely right when he says
The game’s afoot when we start getting feedback from real users. That’s when we really start to learn what works for them and what doesn’t.
Spot on. But let’s not confuse good software that users like with software that customers will buy, or confuse sellable software with a good business (with our without exit opportunities). Personally I think you need to figure what you want from a given situation and work to make that happen. If you want to play high-stakes all-or-nothing exit strategy chasing, be my guest but count me out. If you want to produce software that users love without reference to whether the business makes any money or not, ditto. If you want to produce, and keep producing, valuable software then you need to constantly balance, and rebalance, the many opposing forces in software development, software delivery, sales and marketing, customer acquisition, customer retention, investment, and so on. You need to listen to your users, your customers, the market, your peers, your competitors, current and potential investors and to that little voice which tells you what’s right despite all the evidence to the contrary. You need to work out what makes your software valuable, not in the ‘oh, gee, I really love this” sense but in the “I’m prepared to pay $XYZ for the opportunity to use/advertise through/invest in/acquire” sense.
Fair enough: Stop Chasing Exit Strategies. But don’t Start Chasing Great Software if you’re aiming to build business value. Instead: Chase a Great Business.