MicroISV or Startup
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Lately I find the terms MicroISV and startup often used interchangeable. I don’t believe this is correct and it’s part of the reason I think there’s been a little less interest (enthusiasm perhaps is a better word) in MicroISV’s over the past year than we had a few years back.
A big part of which is which is determining your goals. Do you want to run a business with an office, a secretary, 10+ employees? If so that’s a startup. It may just be you in the beginning, but if you envision that environment as your endgame then it’s a startup. A MicroISV is a very different thing. It’s a lifestyle as much as anything else. Are you content making enough money to have a high standard of living, but not enough to have an office of employees? Would you rather run your business than be a manager in it? Are you content sacrificing a higher probability of success for a lower probability of getting rich? If so then you’re starting a MicroISV.
This determination is critical yet so many blogs I read seem to be confused on the difference or not have thought about it at all. Without understanding the difference it’s hard to plan for your business, choose the right economic model, know the right expenses to incur. For instance, a startup needs to be in or create a market capable of millions of dollars in revenue just to them (the overall market may be larger, but how much can they capture). A startup probably needs a sizable chunk of startup money or at least be active in potential funding options in order to plan for future growth.
A MicroISV is a lifestyle. I recently took a big chunk of HelpSpot’s profits and purchased a house. A great investment for a MicroISV, an insane move for a startup. I could have paid a few employees for a year with my down payment. I’ve paid off all our student loans, credit cards, etc. If I was a startup it would have been much smarter to take every dollar and reinvest in the business, not pull money out to pay personal expenses.
It’s not that a MicroISV can’t become a larger business, but when that happens it’s more of an evolutionary reality than an initial goal of the company. I don’t think wanting a startup is a bad thing at all. In fact some people seem built for it, but it’s a choice you need to understand going in. I get the feeling some people who go down the startup path (or worse an in between path) are really more cut out to be MicroISV’s and would actually be happier following that path.
With all the PR startups have received over the last year I think the benefits of the MicroISV option have been pushed aside. I’d like to see a renewal of MicroISV discussion and activism. There are so many other good examples of successful MicroISV’s beyond UserScape (Antair, Gurock Software, Perfect Table Plan come to mind). Let’s start spreading the word again.
Discussion
I'm not sure I entirely agree that the only difference is the goal of the owner. I think it's more about how you start your company, and what condition the company is in, which may or may not be a result of your personal goal.
In my opinion any 1-2 person software company, with little or no startup capital is a mISV. I myself have no desire to be a 1 person company, but here I am just one person selling software. I have been like this for years (for the same reason as you, I always find more important things to invest in then more people or even quitting my day job).
Why am I not a "micro" software vendor? I think the great thing about the whole idea of mISV is that any jo blow software developer can start selling software in his pajamas without needing a bank loan, venture capital or 10 employees to get started.
Created by Phil on 08.28.2007 4:26 pm
Perhaps, but when you say "for the same reason as you, I always find more important things to invest in then more people or even quitting my day job" aren't you in fact making my point that you are an MicroISV? That it's a lot about the lifestyle and the choices you make in a practical sense. Of course I'd want to have 100 million bucks, but my choices don't reflect that as my primary purpose.
Created by Ian on 08.28.2007 4:31 pm
Well for me this is a very timely post, Ian, as I'm having the same internal debate again today about the product I'm developing. Earlier I was watching a presentation from Max Levchin that was at the other end of the spectrum.
Either way, I still have a bunch of scut work to do before I can get this thing launched. 
Created by Mike on 08.28.2007 4:43 pm
Ian, but I totally fail this test: "It may just be you in the beginning, but if you envision that environment as your endgame then it’s a startup." I've never been very interested in the idea of a company containing just myself at home, even if it made a million dollars a month.
Created by Phil on 08.28.2007 6:08 pm
I have the slight impression that most "Micro-ISVs" are hoping to graduate into the startup / company phase at some point.
Secretly, we all want to be Microsoft or Fog Creek.
That is not to disagree with your distinction of Micro-ISV vs. Startup, I tend to understand these terms the same way you do. I shall enjoy becoming a Micro-ISV in the short to mid term. But I shall endeavour to earn the means and the pressure to hire co-workers in the mid to long term. I want to become a Micro-ISV, but once I am, I won't want to stay being one.
"With all the PR startups have received over the last year I think the benefits of the MicroISV option have been pushed aside. I’d like to see a renewal of MicroISV discussion and activism... Let’s start spreading the word again."
Well... isn't it precisely the self-sufficiency and independence of self-employed one-man-shows that tend to water down great activism and campaigns? I have always valued self-evidence over "activism and campaigns", but that preference aside, what would be the point? I'm sure you can handle a great deal of competition, you have crafted and taken to market a very successful product---but what is the big deal about campaigning for Micro-ISVs or spreading words? Remember that Micro-ISV is a relatively recent term, but the shareware model has been around for ages and people who are attracted by this option have always and will continue to stick around... don't you think?
Created by Philipp Schumann on 08.28.2007 6:28 pm
>Secretly, we all want to be Microsoft or Fog Creek.
I don't actually. I am quite happy working from home and ploughing my onw little furrow. I could probably afford to take on a full time employee, but I don't want to. I'm not ruling it out, but at present I just feel I would be swapping one set of hassles for another.
mISVs are inherently less sexy than the all-or-nothing death-or-glory start-up model. But I can live with that.
Created by Andy Brice on 08.28.2007 9:01 pm
I abhor working for others, and wouldn't want others working for me. Either way you're trapped in an office all day--the only difference is who gets the window.
For me a MicroISV is a possible path to financial independence and a life where I can do the work I want to do, where and when I want to do it. It's a means to an end, and not the end itself (because the sort of work I enjoy isn't the kind you get paid for). Therefore my exit strategy may ultimately resemble a startup's, but I won't be hiring employees to get there.
That's the dream, anyway.
Created by Mike on 08.29.2007 7:38 am
I go back and forth on this.
Sometimes I really do want to be the CEO of the gigantic company in the tall glass building, and try to figure out how to grow my company to those levels (although I doubt I can do it while remaining a consulting shop).
Other days, I just want everyone to leave me the hell alone so I can write some code and then play video games with my son.
I refer to this internal conflict as "Ambiguous Ambition".
Created by Christopher Hawkins on 08.29.2007 7:39 pm
Heh, love the term. Would be a great blog name.
Created by Ian on 08.29.2007 11:37 pm
That is definitely an interesting inner conflict that I am familiar with, too (and indeed a superb term for it)---I assume most people with any ambition at all know it. I guess being thinking beings, which means beings juggling with options and evaluations all the time, means that no ambition will be always there 100% with the same kind of momentum. But if it keeps creeping back, that's a Good Thing. IMHO...
Created by Philipp Schumann on 08.30.2007 11:20 am