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The Panel discussion hosted by Aspire Systems on “Bootstrapping a Technology start-up” evoked a very good response from software startups across the globe and a few consultants/ecosystem partners as well. We had 3 eminent panelists participating (Prakash Narayan, co-founder and CTO of MiCello; Ted Finch, Owner and CEO of Chanimal and R S Ramkumar, Managing Director and founder of MangoDVM) and Bhoovarahan Thirumalai, Board member and co-founder of Aspire Systems, moderated the panel.

It was an interesting & lively session – we had four broad themes, around which each of the panelists shared their views.

Perfect Vs Quick and Dirty Product

The first theme was on the conundrum of getting a perfect product out Vs a quick and dirty product. One view was that if you’re an engineer, you want a perfect product but from a marketing perspective, you want to show something to your customers as soon as possible. As users are much more ready to give you feedback nowadays, you need to get your product to the market as soon as possible.

The importance of iterating early and iterating often was also stressed upon. Another good point brought up was the use of analytics – measuring how your customers are using your product, which part of your product they are using the most etc.

On the question of who is your first best customer – one of the panelists mentioned that if you are a startup, and if you have a customer, you should embrace that customer – whether it’s a marquee customer or someone (who may not be big) but believes in your product. The point was that when you do approach professional investors, they certainly want to know who believes in the product apart from you & it adds a lot of value to have a MoU with a company willing to use your product.

Another panelist was of the view that a customer who requests your product to be custom-built is your first best customer, as your product is paid for. While this product may not meet all the market needs, it could possibly meet 70% of the needs and can get you started.

Time, Budget and Scope

The question of where does one start when developing the product idea evoked different responses from each of the panelists. Prakash’s view was that it was a good thing to have some protection (read: patent) around your core idea and to use existing frameworks and tools to reduce the time-to-market. Making crucial decisions in terms of the trade-off between features and time/budget are also extremely important.

Read the full summary here or register to view the Recorded Version of the Panel Discussion

Entrepreneurs who bootstrap typically go through trying times. Yet, bootstrapping your software business – being frugal and resource-constrained – has its own advantages. It can help you focus and prioritize, and get your product validated by customers before you consider other funding options.

However, bootstrapping comes with its own set of challenges that need to be understood and addressed early in the business cycle. Come join a Panel of experts, including Vijay Anand (Serial entrepreneur, Founder of Proto.in and Incubation manager at RTBI), Ted Finch (Hi-tech marketing expert & Owner of Chanimal.com) and Prakash Narayanan (Co-founder and CTO of MiCello, a startup in the mobile content delivery space) for a discussion on what is takes to bootstrap. Some of the themes to be discussed include:

• The importance of getting a working product out quickly
• Are customer insights a part of the product development process?
• Identifying when you need to bring in professional investors
• Engaging with external consultants for business planning, market development and sales from an early stage

Bhoovarahan Thirumalai, co-founder and Board member of Aspire Systems, will be moderating the discussion.

Since it is a telephonic panel discussion, all you need to do is call in. To ask questions, you can login to the live online meeting, your questions will be taken up for discussion (time-permitting) during the event.

Date: September 30th, 2009; Time: 11 AM ET/8 AM PT/8.30 PM IST

Entrepreneurs bootstrapping or planning to bootstrap your software venture, do join us for a thought-provoking session!

Starting with this quote from the moderator, the tone for this month’s Producteering teleconference was set, which focused on Professional Services being a potential differentiator for business success.

At the outset of the discussion, one of the participants discussed on how his company started working with one of their customers through a trial version of their product suite. Once the PS team got in, they observed that in their customer’s organization, there were several best-of-breed systems, which did not talk with each other and that was the main cause of their IT problems – not the need for another independent product focused on one particular area. As a result of understanding what was actually the need of the customer, the PS team was able to recommend and implement a solution which solved the customer’s integration problems, while earning much higher revenue for itself and bettering its relationship with the customer.

This interesting example was then highlighted with the fact that the Professional services revenues from this company was almost 60% compared to the revenues from sales. This trend is not something new and all PSOs are aware that they are making a huge difference to the top and bottom-line growth of their organizations – this was further supplemented by a quote from the moderator that 52% of IBM’s revenues come in from Professional Services.

During the discussion, one point that was brought up was whether Professional Services should be done by the organization (ISV) itself or should it be done by partners and resellers. Salesforce was cited as an example, by one participant, as one company whose partners were able to do many successful product implementations. However, a conflicting opinion to this was that unless your size and geo spread forced you to tie up with several partners, having your own Professional services team doing product implementation was valuable as your thinking and way of doing things can be directly brought to the customer rather than getting diluted by a partner.

Another important aspect of the discussion was of SaaS becoming main stream rather than a buzzword. While there still remains a concern of security in the SaaS model, many small and mid-sized companies, which cannot invest on expensive enterprise products, are now looking at transitioning to SaaS to reduce upfront costs and also shorten the time for product implementation. Integration e.g. integrating a project management suite with a CRM or ERP tool therefore becomes a key service, which ISVs have to provide as an add-on service, to become a differentiator in the marketplace.

The time has come for ISVs who do not want to adopt professional services as a key focus area for growth, to reconsider their decision, as PS has become a backbone of differentiation in the market. What they seem to have ignored for long is the fact that a product, in itself, is a service at a higher level. It targets and caters to the needs of the customers. And under this umbrella, ISVs can go far beyond implementation and integration to solve customer’s daily business problems.

Amidst this mind shift in the way ISVs stand as providers, it was unanimously concluded that professional services can be a potential differentiator for them and it can help them improve their products’ visibility, customer satisfaction, increase their revenues, margins and market share.

One of the first things that we discussed was: Which comes first – Product innovation or Business innovation? There was some consensus that innovation generally starts with product innovation and goes on to business innovation in the traditional bell-curve fashion. That is, you start with an innovative product and it goes on to a growth and then mature phase and at that point of time, you have to improve your product or service and re-invent to sustain yourself. That’s where business innovation comes in.

Business innovation should be given more importance in product companies because even if you have a great product with great features – if there is no market demand for the product, then it is considered a failure. The probability of success of a product is higher when you know that the business impact of the product is going to be high, and therefore you need to assess the product’s impact on your company’s bottomline before development begins.

Another interesting point that was brought up during the discussion was the danger involved in product innovation – in other words, making the product more perfect without realizing the financial impact or ROI of it. This was seen to happen more often when the CEO was from a technical background. In business innovation, there is always a close watch on the ROI of any development effort.

One difference that was brought up, in terms of the source of ideas, was that for product innovation, it came from a somewhat controlled environment of existing customers, prospects and sales personnel and you more or less knew the target audience. For business innovation however, new technologies, trends and expectations had to be taken into consideration. At the same time, one had to be careful and make assumptions regarding adoption and buying rates; and consult industry groups, outside experts and review competitors before taking the decision to go forward.

On whether there were differences in funding for product and business innovation, one view was that it was more likely for product innovation to be self-funded well as business innovation had more chances of being externally funded.

Also, for existing products, there already exists a revenue base which can be used to fund innovation. Well as with business innovation, you probably have 12-24 months to obtain the ROI on your efforts – while there is more pressure to deliver, there is also more flexibility to change the product approach or plans.

There was also consensus that today’s products need to be more user-friendly and require minimal training – to cater to that, more customer involvement has become the norm in product development, release cycles have become shorter and UI design has gained more prominence.

These were some of the discussions that we had during the May teleconference and we hope to have more participation and sharing on similar topics in the future.

One important factor that evolved in the discussion was the shift towards Agile Development methodologies. This allows product companies to bring in their customers early in the cycle and the moment you start listening to them, the probability of making the product a success becomes much higher.
Having a customer advisory board that would provide inputs for the product was also discussed at length. This way you bring in customer perspectives, and add this to the market research and the multiple conversations with different target segments. This will stand a product company in good stead to bring out a great product that is adopted by users and that brings in revenue as well.

Innovation as a key to being a market differentiator was also discussed and how easy or difficult it is in different spaces. One of the factors that all the speakers agreed upon was that innovation is far easier in a start-up environment as opposed to an enterprise environment. The impact of innovation in consumer internet space was compared with enterprise software space as well.

In the enterprise software space, the biggest portion of the problem exists in usability and it gives nightmares to the end-users. Very few enterprise companies trouble themselves with interaction design, visual design and usability testing.

The biggest Achilles heel identified for software product companies was their unwillingness to say no to customizations from their customers, as they need to rope in cash, especially when they are small. This effectively changes the landscape that they play in and they turn into a custom software development shop.

These are points that were discussed during this call, and it was unfortunate that we ran out of time. We plan to have a few more teleconference sessions on the same topic.