Advice for Peldi

One of the few blogs I create time to read regularly these days is the Balsamiq Blog by Peldi Guilizzoni. He’s a MicroISV, his first product is the really cool Balsamiq Mockups application which lets you build software mockups quick, easy, and in a fanciful fashion that keeps the focus on UI. So instead of deciding between Aquamarine and Bondi Blue for that button you can figure out if the button should be there at all.

Today Peldi had a post every MicroISV dreams of, reaching $100,000 in sales. It’s a good read and I suggest you read it before you read the rest of my post.

So in his post he has a few questions and observations. Since his experience seems to mirror mine very very closely (leaving his job, revenue growth, B2B, fantastic wife that’s a key part of the company) I thought I’d post my perspective on some of his questions/comments being 3 years farther down the road than him. So Peldi here’s some notes, they may or may not be very helpful

Congrats on the success!

Product Versions
I think you’ve made a great move having the Jira and Confluence versions. I bet they pay off handsomely over time as those customers are likely to upgrade at a high percentage in the future and are also more rich sales initially. My advice here is not to spend too much time on Balsamiq for open source. There’s very little upside there, especially if the market tightens. It’s also another version to support long term. Everything you add increases support, don’t underestimate that. I’d stick with building versions which are add-ons to existing server products people already pay for. That’s a great angle, run with it!

Adding Staff
No no no. I think it’s a really bad move to add anyone. $100,000 isn’t that much money. You can spend that money in much better ways. Before you hire anyone you should do the following (note to self:I need to write this up into a bigger post)

• Payoff ALL credit cards
• Payoff any student loans
• Payoff any personal loans
• Buy a house (if you don’t already own one)
• Payoff your cars if possible
• Save at least $50,000 in savings, more if possible. Not stock, not an IRA/401K, straight cash in an account.

The point here is you should be improving your personal financial situation. This is not greed, this is good business. Since it costs so little to run a MicroISV your first priority should be making sure you are personally in a very good financial situation. This will ensure that your business will survive should you hit a downturn. If you have no debt you could probably live on just a few thousand dollars a month, you want to make sure that’s possible.

Other benefits of waiting are that you’ll be very clear about what areas you need to add staff in. It’s so early for you that you don’t want to make a bad hire. Also hiring someone greatly increases headaches on multiple fronts. Trust me just dealing with getting health insurance is a multi-week process. These are distractions you don’t need.

The “Oh Crap” Question (what if you’re hit by a bus)
This question is not a concern. It feels scary, but it really isn’t a problem. It wasn’t a problem for me and my application is the type where companies depend completely on it, staff live in it 10 hours a day, all day, all week. Many companies LIKE dealing with a smaller company. This is an advantage, you can provide support on a level larger competitors can only dream about.

Here’s a few tips:

• Emphasize your size as a strength
• Superior support (Question, when was the last time a vendor replied to you within an hour?)
• Faster release cycles
• Direct developer contact means customer feature requests are often implemented and implemented fast
• Emphasize the money back guarantee (I assume you have one), this IS the best product of it’s type on the market and you stand behind it in a way others don’t.
• Your product is successful. If you disappear there will be no shortage of companies looking to purchase the source and continue development

I’ve found these to be enough, but if you wanted to take it one step further you could also provide an agreement that you’ll be releasing the source code in full should you be hit by a bus. You’d want a lawyer to do this since you wouldn’t want it to apply once you reached a certain size, etc.

You said everything you need to know about this in your post: “I don’t really feel like I have reached my limits in terms of how much I can do by myself”. Until you are there’s nothing more to discuss. You shouldn’t add staff until you are working crazy hours, until you are going crazy, until you are in a great financial position to ensure the survival of the company. This is the best way to support your customers. 90% of small business go out of business. You’re much more likely to leave them high and dry because you go out of business than because you get hit by a bus. That needs to be your primary concern.

Investors
Under no circumstances should you take money!! I’m glad to hear you don’t want to. You’ve proved the concept and now make enough to live comfortably. That’s it, there’s no reason you need one penny at this point. You’ve taken all the risk and it’s paid off. No need to let someone else in now that you’ve proven the product.

That’s my 2 cents. Hopefully it’s been useful. Keep up the great work and interesting blog!