08
03/07
3:49 pm
Investing (money) in your mISV
I’m not sure if I fully understand the concept of a mISV. I still have difficulty believing a company can be started and run with little to no money.
Sure, ideas are free and development is easy, but there are still costs that cannot be ignored.
Here’s a short list of some startup purchases I had to make so far:
laptop, printer, paper, pens, folders, highlighters, red stapler, domain name(s), SSL certificate, web hosting, office chair, desk lamp, office desk, govnt. registration, insurance, software…
There’s probably more that I didn’t factor-in. All that totaled over $3000 and that’s just minimal stuff. I didn’t even count the cost of an accountant, lawyer and designers (brand/logo/identity).
This post is not to discourage those who are trying to start a company, but rather bring them back to reality. The truth is, you need money!
Obviously, if your goal is to code something real quickly and sell it to Google while its hot, then maybe you don’t need any money. I personally don’t want to go in that direction, although I wouldn’t turn it down either ;) My goal is to build for the long-term. With that in mind, some initial investment is absolutely mandatory and I think it’s important to realize that before jumping-in full-time.
Pradeep
March 8, 2007
4:39 pm
Alex,
Starting any business will set you back at least $5000.
But the really interesting things is, while many of us balk at the thought of spending such serious cash (since we don’t know if we’re going to recover our investment, let alone any profits), we happily spend much more than that on higher education (a run-of-the-mill MBA costs a good $30,000), not really knowing if it will ever pay off.
bjhess
March 8, 2007
10:31 pm
I never took the point to mean that it takes no money to start a software company. It just takes _relatively_ little money. Relative to the amount of money it took to, say, start a software company in the first half of the 90’s. Or relative to the amount of money it would take to start a Papa Murphy’s franchise.
It may actually take more of one’s own money than those other ventures took, but on a relativistic scale it’s a lot closer to free than $10 million in venture capital.
airboy808
March 8, 2007
11:19 pm
Read many articles that state if you are trying to build a business to only be bought out by someone else you will fail. As a business looks appealing to be purchased only if it has a positive cash flow or has increased its revenue stream over the last year.
Good luck on what you are building!!!
Scott Meade
March 8, 2007
11:36 pm
agree with bjhess – the point is that it cost to start is much more likely to be within the self-funded realm than in the millions. Almost everyhthing you mentioned in your post (laptop, printer, paper, pens, folders, highlighters, red stapler, domain name(s), SSL certificate, web hosting, office chair, desk lamp, office desk, govnt. registration, insurance, software…) is much cheaper now than in the past [well I don't know about the furniture or gov't registration but you get the point].
Add on top of that that todays tools let you build and launch a product much much more quickly than ten years ago and it gets even more relatively cheaper.
James Andrew (mISV owner)
March 9, 2007
5:33 am
laptop > already have
printer > not needed
paper > not needed
pens > not needed
folders > not needed
highlighters > not needed
red stapler > not needed
domain name(s) > $10
SSL certificate > not needed
web hosting > $5 / month (not a web app)
office chair > not needed
desk lamp > not needed
office desk > not needed
govnt. registration > not needed
insurance > not needed
software… > pirated
Alex
March 9, 2007
9:42 am
Thanks for everyone’s comments.
@James: I’m not sure what kind of mISV you run but that’s very interesting. I guess my article relates more to software/web mISV’s with the intention of doing things the right way, legally. And who doesn’t need a red stapler? ;)
@Scott & bjhess: I also agree that initial investment is much lower than 10 years ago. On the other hand, maybe that’s a problem in itself: more people making crappy stuff… not that $10m in VC funding ever guaranteed good stuff either hehe. We’ll save that discussion for another post ;)
@Pradeep: Ah ha! That’s exactly why I haven’t gone in that direction. 5 years of study, $30k, putting my career (and balls) in someone else’s hands with uncertainty of getting my moneys worth… That helps remind you how little $5k can be.
bjhess
March 9, 2007
10:31 am
I also agree that initial investment is much lower than 10 years ago. On the other hand, maybe that’s a problem in itself: more people making crappy stuff…
Let’s hope the crowdsourcing InterWeb sorts all of that out!