It's like riding a bull

This is a book review / with excerpts from the book "Secrets of Software Success"

Chapter one

Software is nothing but pure knowledge in codified form. Software makes hard cash and software companies make millionaires out of programmers, assistants and receptions...and of course the marketing and sales people.

So everyone should jump in and make money? Yeah...apparently so because ANYONE can start a software company. The big question is "What happens hereafter?"

70% - yes SEVENTY percent of the computer industry's revenues were from products that did not exist 2 years ago, according to The Economists in 1996.

Summary? - CTO of Microsoft Nathan Myhrvold sums it best -
"No matter how good your product is - you are ALWAYS EXACTLY 18 MONTHS AWAY FROM FAILURE."

Many can start a software company, very few can run it.

Victims?
Wordperfect
Lotus
DBase

So what makes the difference?

Simple answer, according to the book.
The product must be good, BUT the key difference is the COMPANY'S MANAGEMENT.

I quote from the book "the management of software firms is a balancing act. Success depends on simultaneously striking the balance within and between key management areas, from internal areas such as LEADERSHIP, PEOPLE MANAGEMENT and PRODUCT DEVELOPMENT to more EXTERNAL areas like MARKETING AND PARTNERING."

Although some software companies spend more of the budget on marketing than McDonalds, only few spend it wisely.

The firms that succeeds does the following:

1. Communicating a CLEAR VALUE proposition to customers.
2. Do not advertise product FEATURES
3. Advertise company BRANDS
4. Introduce new products TWICE a year
5. Apply creative software entry-pricing techniques to build customer base
6. Innovative approaches to PR
7. Let partners pay for extravagant promotions
8. Establish and communicate completely new platforms
9. Build marketing alliances
10. Preinstall software - to reach, sustain, or take over the pole position to become the "category killers"

It is growing their partners that makes software companies grow themselves

There is NO growth without partnering activities in the software industry. Alliances are NOT a convenience; in most cases they are a matter of survival.

Most of the successful companies GIVE AWAY 80% of the total revenues created WITH their partners.

These partnership are often informal and few written contracts confirm them. They move in and out of what they term "Partner Webs".

Conclusion:
John F. Keane founder of the $1 billion professional software service firm says "It's also like riding a bull. You really have to be aware of the bull's movements. Because every time you think you succeeded, you are thrown off the bull".