How to Start a Software Company 2.0

by Richard Rodger

Interview Transcript from Entrepreneur Focus

Go check out Entrepreneur Focus. It's a book about startups from Eric Locken of Interview Books. I was really happy to do an interview with Eric for inclusion in this book. Personally the best business books are the personal-story ones. Not only do you learn a lot in a direct way, but you also get inspired by the success of others.

So anyway, here's the interview I did with Eric:

Your name:

Richard Rodger

Company name:

Ricebridge

Website URL:

http://www.ricebridge.com

Your vision statement:

Easy-to-use Software Components

What you sell / services you offer:

Java software components for Java developers.

Have you always wanted to run your own business? What were some of your previous jobs / companies?

Absolutely! I'm afraid it's a family thing - almost a genetic disorder in fact!

I've worked in a small web shop, a startup, and a German bank. I work as a Freelance consultant to bootstrap the components business. Each job had it's own paranoias and dillusions. Frankly I've seen much of the work spectrum and it just ain't for me. Can't take orders I suppose! Well, really, it's the frustration of not getting things done. I love optimization problems - getting the most from limited resources. You can see how big companies would drive me nuts. Small companies are better, but in that case, you'd better be the boss!

Have you got any qualifications? Please tell us about yourself academically?

I did math and philosophy originally, so I'm not even a real programmer. We did a bit of C and C++ at college, but mostly toy stuff and OO dogma. I find in some ways that math provides you with a better foundation for systems thinking - large scale systems are what most programmers do.

Of course, large scale systems are really really hard and that's why I sell small, focused and single-purpose components. Much easier!

How did the idea of your company come about?

After about 2 or 3 years of working I realized I had my own approach. I knew I just had to try it out.

I cut my teeth with an open source developer tool - anyone considering going-it-alone should do this first. To run an open source project professionally requires many of the same skills (even marketing!) as running a product company.

If you could give one piece of advice when starting up a business, what would it be?

Take the long view. It ain't gonna happen for most people in the first year or two. Do it as a lifestyle choice and decide to be happy with that lifestyle (i.e. decide to be happy about a 50+% pay cut).

And for god's sake don't waste time chasing investors - your energy is better spent on the business. Stick to a one page business plan.

Who are your role models and why?

Like a lot of others, people like Nick Bradbury (although he's gone over to the dark side now :) and Joel Spolsky have really inspired me. I guess they showed how you can create a niche for yourself. The time of the micro-ISV has arrived and you'd be nuts not to do it.

Excluding yours, what company do you admire the most?

37signals kick ass! What a great company and product. And no, they haven't jumped the shark.

What do you look for in an employee?

Pragmatism and reliability. I don't want any all-nighters.

What kind of culture exists at your company? How did you establish this tone and why did you institute this particular type of culture?

At the moment I'm working with external contractors so the official staff it just myself. The culture I would like to create is a balanced place to work. Somewhere that programmers and their particularities are understood. And a culture that is authentic, with no internal politics. It's a pipe-dream of course, but you should have impossible goals.

Where did your funding come from and how did you go about getting it?

I am pretty much bootstrapping the whole thing on consulting income. This is the way to go as you still remain in control. It does require more patience though as things will take longer. Clients can drive you nuts as well, but I'm lucky to have a very stable and understanding client. If you can find one of those it's almost as good as finding a business angel. You can only find clients like that from your personal network, so make sure you work on that before quitting your day job.

I also got a bit of money from the government for participating in a business development scheme: SEEPP. This is a great way to meet others in the same boat and to learn a few business skills. Make sure you utilize your local support structures to the maximum.

How has you business grown since you launched.

Slowly, but then the business is a sort of a DIY MBA for me. I have got consistent growth and I have met my targets, so I guess I need to get more aggressive.

How many hours do you work a day on average?

About 8 or 9. I don't work weekends that much. At about 50 hours/week I hit my productivity maximum.

What was the last book you read?

SPIN Selling, Neil Rackham. I've read a lot of rubbishy sales books, but this one is based on actual research. The sales approach presented makes a lot of sense to me. One of my (venture funded) contacts swears by it.

Describe / outline your typical day?

Get up around 8, get ready and have breakfast, take my daughter to the creche, 5 min walk to work (I work from my folks house - we ended up buying a house near them).

Check site status and mails (best part of the day when the sales have come in overnight due to timezone differences!). I then try to make myself do 30 minutes coding, before checking the blogs. I find this often ends up as several hours coding if you get into the zone - which is a good thing because I am a blog addict. I use FeedDemon to keep tabs on several hundred.

After lunch I put my consulting hat on and work on client stuff. Pretty much all my consulting is virtual so I don't do much traveling. I try to finish off the day with some marketing/sales work - fine tuning the site, contacting people, managing my google ads.

I also have a terrible weakness for going out for lunch.

What are your hobbies, what do you do on weekends?

We have a 3 year old, so I try to spend as much time with her as possible. We are lucky to have both our families close by, so weekends are really about family time.

I have vague plans to learn flying and get my bike license finished, but the Ducati 900 SS will have to wait for venture funding (did I say that? noooo...)

Number of years your company has been in business?

2½ years.

Is your company profitable or what is your profit for last year?

Damn sure it's profitable or I would starve. I try to put as much time as possible into the business and live lean.

Where do you advertise?

Just google ads. Best value for money. Most other online sites that sell ads have crazy systems and want you to waste a lot money for very little feedback. Forget it.

What are your five key elements for starting and running a successful business?

1. What is your success factor? don't just "start a business". Why are doing it? Lifestyle; make money; be the boss? This determines whether you will make the business into something that you want. Decide now and be very honest.

2. Organize. Everything. You need systems. As a programmer you have a natural advantage. You can save yourself loads of time by writing quick scripts to do stuff automatically.

3. Engage with people out there. To sell software you need to have a connection with people - software is dead and boring and dead boring. Participate in the community. Doing this will help in all sorts of ways.

4. Make sure you have cash. Never run out it. Plan for bringing in money. Borrowing money to start a software company is sorta nuts. If you can sell stuff and bring money in, all other problems are irrelevant. Do not plan to build it and then sell it. Plan to sell it and then build it.

5. Make sure your family is happy with what you are doing. You will need them emotionally many times. You have to be honest with them about the consequences of running a business as it requires a lot of sacrifices from everybody.

What country do most of your buyers come from?

Most of my sales go to the US and Germany.

What products do you use to monitor your website?

I use open source systems. I have to. They work pretty well and you can usually get them to do what you want. Be prepared to put the time in though.

Do you have any future expansion plans?

I will be looking to hire some part-time undergraduates next year. I started my first coding job while in college. There are some great programmers out there who haven't finished their degrees yet.

Why should I give up the security of a normal job?

Is a normal job really that secure? At the first level, you can be let go on a whim from the upper management stratum. Every time a new senior manager is appointed they try to stamp their mark on a company. This is know as "change management" and "business realignment" to hide the fact that it is actually "political shenanigans". You could be left high and dry. And it's worse if you're based in a smaller city or town. You have fewer options.

And what about stress? Humans stress each other out, especially in a competitive place like work. Working is not about working in case you hadn't noticed. And the techies always get the blame. Let's face it, we're not God's most charming creatures and as a result we tend to come off worse. Do your heart a favor and work for yourself. I have a lot less cash at the moment but I'm way happier. And in the years to come I'll have a lot more cash and still be happier.

Finally, money. Yup, if you wanna make some real money, you gotta do it yourself. As an employee you'll never get the choice cuts.

Thanks for your time,
Eric Locken