Nice Markets for the Potential ISV
If you're in the market for a powerful and user friendly Help Desk solution, please take a look at my company's flagship product HelpSpot.I've been asked to give my thoughts on the markets I'd be looking at if I was back in the planning stage of my ISV. This is truly the most important choice you'll make in starting your business. Picking the wrong market will likely doom you no matter what you do. On the other end, the right market will at least give you an opportunity to succeed.
Below I've put together a list of a few markets I'd be looking at. These are not product ideas, simply markets where I think there's an opportunity for a small ISV. Some are obvious and some are out there. I'm looking forward to your feedback.
1. Real Estate
Man I love the real estate market. There's just loads of money in real estate. Better yet, the real estate industry is remarkably backwards. Most deals are still done face to face. Most contacts are still "who you know" Rolodex deals. I see a few opportunities here. While I'd love to see a good competitor to realtor.com that's unrealistic for a small ISV.
What's realistic is tools for real estate offices. Organizational tools, marketing management tools, customer contact tools. There's lots of companies in these areas but none too big that I know of and also lots of unconquered agencies where they're still not using computers as much as they should.
2. Celebrity Gossip
I love celebrity gossip. Again lots of money there. I don't have a great angle on this, but I know there's products in there someplace. Just look at night time TV. From 7-8pm on CBS and NBC it's nothing but gossip. Look at the grocery checkouts, blogs like gawker.com, and daytime TV.
3. Project Management
There's loads of PM tools out there, but honestly they're almost all bad. That said I think the best bet here is a niche specific PM tools. Perhaps PM for ISV's, PM for construction companies, whatever. Just something where you can customize the experience for that market and thereby have a better story to get your foot in the door.
4. Auto Service
I always wish my auto service providers had a nice website. Not just nice, but highly functional. Let me make my appointment online, get a loaner, get email reminders about my oil changes, histories of the work they've done. Independent auto service providers are having a tough time competing with bigco dealers. Great software could be a differentiator for them.
5. CRM
Sure there's loads of these out there. Again though I think lots of room for improvement. Better yet lots of room for customization. What about a CRM tool that was nothing more than a framework for modules. You provide some core modules, but leave the API open and simple so that customers can truly have a custom application at a fraction of the price. Right now everyone is shoehorning their data into Sugar and Goldmine. A web based truly customizable solution would have a strong market. You could also sell modules for harder components.
6. Wedding Planning
What a great niche. Loads of opportunity here on both the B2B and B2C sides. Management tools for event halls, bride helpers, and my favorite ... communication tools. In the weddings I've been involved in the biggest issue is communication amongst all the various parties. The families, the wedding parties, getting dates for bridal showers, bachelor/bachelorette parties, rehearsal dinners, who's bringing what and to where on and on.
Wrap Up
Of course this list is by no means complete. There's as many markets as there are problems. I'm looking forward to a bit of banter about these and your own ideas.
Discussion
This is good stuff.
I think there are too many "horizontal" ISVs that are attempting to attack broad markets -- which is almost always a bad strategy. I like your focus on niches.
For those ISVs that are insistent on writing the next calendar application, how about making a high-level component out of it that can be "plugged in" to the hundreds of web applications out there that need to include some sort of calendaring and event planning capabilities. Seems everybody still needs to invent their own right now. I'd pay for something like this.
Created by Dharmesh Shah on 06.11.2006 10:06 pm
Typo: that kitchen manager THING**
Created by Ali on 06.11.2006 10:06 pm
Thanks Ali, glad to hear others like the idea. The only question is how do you make money for it... I'm just not 100% certain there is a true differentiator that will make folks want to shell out their hard earned dollars for it. Furthermore, the price point would need to be pretty low which equates to having to sell a large # of licenses/subscriptions each month to cover expenses and go full-time. I'd love to hear further thoughts with respect to this aspect of it though.
Created by Kris on 06.11.2006 10:06 pm
I would be inclined to think a web app version may not cut it. My main thinking is that then you're limiting your clients to people who have wireless internet in the home. That would be too much of a hit. Sure I have it and use it from the kitchen, but many others don't. The big marketing plug here is to use this app IN your kitchen. That's why it's better than allrecipes.com. If not then it's just a clone of allrecipes.com or other "social networking" sites (hold on I'm barfing).
I do think it should be web enabled as I mentioned, allowing importing from popular sites, community rating of recipes, etc. But to me the hook is using it IN the kitchen.
Created by Ian on 06.11.2006 10:06 pm
Yea, but Kris could build something like LibraryThing. The main feature of Librarything is that it lets you store a catalog of books, and see other people who're also reading similar books, right?
Kris could do the same thing except its for cataloging recipies. He could also use categories/tags to classify the recipies, and people could also contact other people who like recipies they do.
Plus, the software could give recommendations for recipies that a user might like. The first 10 recipies could be stored for free, but anymore than that and you'd have to pay $5/mo.
When I say social networking I don't mean build a Myspace clone, but letting people interact with people with the same interests is a big plus for any software!
Created by Ali on 06.11.2006 10:06 pm
Ian, good points... I think I take my wireless access for granted it seems! If you had a client side application that could harvest recipes from the online service and use offline, it might be viable. I'd likely have to dust off the Delphi books as using WinForms and the .NET runtime for a consumer recipe app seems like one hell of a download the target audience. I'd love to discuss the real estate stuff as well... I agree there are many possibilities there too. I'm hoping to find an active forum where realtors are hanging out, the ones I've come across so far via Google seem pretty slow (if anyone knows of good ones I'd appreciate it.) Areas where I think you might get traction are online listings and/or lead generation. Many of the products I've seen lack polish, which seems to be especially important when you're marketing to buyers/prospects.
Applications like TopProducer are comprehensive, but I often wonder at what point does the never-ending bulleted list of features become a hindrance vs. beneficial. How many undiscovered/unknown features are thrown into applications for that very purpose? Furthermore, large players with vertical focused products like Peachtree and Intuit are typically selling acquired applications as "integrated" core product offerings. It generally shows once you dig in to them a bit.
Created by Kris on 06.11.2006 10:06 pm
The Auto Shop software idea is what got me making Chimney Sweep software ironically enough. There are actually lots of people out there making good software for them (we plan on releasing what I worked on one of these days) but the shops themselves are very resistant to computers, selling is by far the hardest part there. But agreed that they could improve customers lives a lot more. Even Yahoo used to have a decent auto maintenance manager thing, but they've changed it so it sucks, its literally buggy and terrible looking, i don't know how they keep it in production and still sleep at night.
As far as realtor.com goes, thats actually just a sales site to sell you on the idea of a Realtor(TM). Almost every house you see there is already off the market. There are lots of much better sites, although many of them are local because they do not allow anyone access to the MLS database unless you are a licensed realtor, which is why Realtor.com has a monopoly, since its owned by the Realtor(TM) association. Locally for the mid-atlantic, ZipRealty.com is my favorite. Much more detail on every house, and its directly linked the MLS in 5-6 states, sending you houses that match your criteria each day. Thats how we got our house in the crazy DC housing market where things are listed and sold the same day. It's the Realtor(TM) association thats keeping improvements out of this market, they like it backwards. An opensource MLS type network might be a neat idea, there are many people that sell their own homes despite the blacklist they end up on if they put the FSBO mark on their homes.
Created by Phil on 06.11.2006 10:06 pm
Maybe something like LibraryThing would work. He's got some neat advantages there though. For instance he's very hooked in with libraries and librarians. They populate thousands of books. I'm not sure there's a nice equivalent in the recipe world. With recipes you're going to need to get thousands of individual people. There's no one source you can market to in order to get rolling faster.
Yeah I build a real estate app once under contract. It's a wild world over there with the MLS system. I don't really think a small ISV can compete on the listing front but there's good opportunity in tools. As Kevin noted on his blog, with times getting tougher for real estate I think that could be a great time to get in that market. Lots of real estate agencies popped up during the boom and there's going to be huge competition as things slow down. Great software could be a differentiator for some of those struggling agencies.
Created by Ian on 06.11.2006 10:06 pm
Man, the real estate focused CRM tools seem pretty lame in my opinion. I've looked at a number of them and all seem to be outdated in terms of usability, product marketing and implementation. Almost all seem to be in a feature list arms race, which inevitably makes the product difficult to wield for *most* users. I think blending intuitive CRM + online marketing/sales could be a very valuable service. I wholeheartedly agree that folks are shoe-horning information into Sugar, ACT!, and Goldmine. MS CRM missed the boat on account of being a behemoth for large enterprises only, and Business Contact Manager is really just a generic Outlook-addin. Furthermore, there are a lot of natural ways to extend the business as your customer base grows. I really like the CRM aspects of the real estate space since I worked on a major CRM product at one point in my career. It definitely brings me back to some of my core experiences. I can finally quit complaining and do it the way I would have liked!
I can imagine the headaches integrating with the MLS's. I read a long time ago about realtor.com's MLS integration implementation. They had literally *thousands* of different implementations for tying into the various US bureaus.
It has been great to share ideas and discuss them... for a long time I kept a lot of this close to my vest, however; none of this is new and getting input from others is tremendously valuable when you're starting off. I've been really happy brain dumping with others to see what sticks. Again, its the execution that is the hardest part, ideas are a dime a dozen. Thanks again...
Created by Kris on 06.11.2006 10:06 pm
No problem. This post has been even more popular than I would have thought. As another fellow who emailed me noted, it's rare that people give out advice/thoughts on specific industries. Most ISV advice is generic, so I guess that's why this post has caught on a bit.
I think real estate focused CRM tool is a good idea. I would imagine the players to be much like in the help desk industry. As you noted most are established companies who have older looking products and are stuck adding features to please very large customers and making their apps more and more complicated every day. That's the perfect scenario for a startup ISV if you ask me.
Created by Ian on 06.11.2006 10:06 pm
Lots of real estate CRM solutions here:
http://www.google.com/search?hl=en&lr=&q=real+estate+crm
I'm not sure--I think these are the markets most of us think of when considering vertical markets to focus on.
Created by Mike on 06.11.2006 10:06 pm
Mike, if you look carefully through the search results for the google search you provided, there are tons of keyword matches, but in actuality not a ton of substance. MS CRM, Siebel, and others are way beyond what most outfits can swing. There are many smaller outfits doing real estate related software and services, however; that doesn't necessarily mean that people won't be receptive to a good alternative.
There are lots of viable products and opportunities in seemingly saturated spaces. Here's one to try:
http://www.google.com/search?hl=en&q=help%20desk%20software&btnG=Google+Search
Created by Kris on 06.11.2006 10:06 pm
Yeah I agree with Kris. I'm in the most saturated market out there and doing great. If Kris is doing a MicroISV or small ISV then he (? it's he right?) doesn't need to make 5 million a year. He just needs to do well. In fact it would be suicide to enter a market that had no competition. A lack of competition implies a lack of problems to be solved which means there's no money in that market. Or just as bad that it's up to you to tell everyone that they have this problem and need to spend money on it. That means spending loads of money on advertising and that's not a smart path for a small startup.
Created by Ian on 06.11.2006 10:06 pm
Hey Ian, the Kris is for Kristofer. My parents had a penchant for strange spellings apparently! It's a little intimidating when I look at the market, especially with some vendors doing MLS integrations and other services. Regardless, I still see a number of things that could be improved upon. I'll see if I can turn those into something valuable. I'm in the process right now of trying to find local realtors to talk to before I start making too many assumptions. I definitely agree that devising a solution before finding a problem is a recipe for trouble.
Created by Kris on 06.11.2006 10:06 pm
I don't know that MLS integration is necessarily an important piece for Real Estate CRM. Or rather, it isn't necessarily the most important piece, and an possibly be added once it's financially practical. Just riffing here:
The relationship between an agent and their customers can extend far beyond just the purchasing/selling phase. My agent sends us a newsletter every quarter with updates and stuff, maybe keeping track of key elements of their clientele (in my case, young couple, starting a family, in a starter home) might help by aggregating that information and helping to determine newsletter topics that are relevant to the majority of an agent's customers (areas with the best schools maybe, what parts of town have other people our age or with kids our kids' age, etc).
Since I'm in a starter home, I'm going to start looking again in 5 years or so. If the agent knows the difference between what my wife's and my dream home is and what we were able to afford when we got our first place, then the process of getting up to speed with us when we go active again is good.
MLS integration would be nice so that if magically a 4-bedroom detached house with a/c, fireplace, and a large fenced backyard pops up that's close to our price range our agent could notify us right away, but by the same token there's no way we're going to be ready to move any time in the next three years so that sort of interaction would only be a nuisance.
Being able to store their own customers information also might give agents a boost. If they get a customer who's willing to pay a premium for a semi-detached 3 bedroom place with a/c and a medium fenced backyard, then maybe my house pops up on the list and our agent can swing us a good deal selling it earlier than we expected (which also means we'd buy a house via her). The whole thing could end up being done without the hassle of listing the place or anything like that, and all three parties end up getting a good deal.
That doesn't require MLS, it just requires tracking what our agent's contacts are interested in and have.
Created by Rob Drimmie on 06.11.2006 10:06 pm
About the recipe software: I had intentions of building something like it but then I changed my mind. I also intented to offer a more expensive version with diet / weight management built in.
Here are some competitor's products I had found back then:
http://grecipe-manager.sourceforge.net/
Gourmet Recipe Manager
http://www.dietpro.net/demo/compare.htm
Diet Pro - Diet and weight management software
http://www.livingcookbook.com/features/compare.htm
Living Cookbook Recipe Software - Compare Living Cookbook to other Cooking Software
http://www.dvo.com/
Cook'n Recipe Software
http://www.mealmaster.com/
Recipe Software - CookBook wizard
http://www.bigoven.com/more_info.aspx
BigOven
http://www.mountain-software.com/homecook.htm
Home Cookin Recipe Software
http://www.accuchef.com/
Recipe Software - AccuChef
http://www.valusoft.com/products/mastercook7.html
MasterCook Deluxe 7.0
http://www.galaxymall.com/foods/cookbookmaker/
CookBook Maker 2000
Created by Dimitris Giannitsaros on 06.11.2006 10:06 pm
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Created by developers.org.ua » Blog Archive » wee on 06.11.2006 10:06 pm
That kitchen recipie manager think is something I'd also be interested in. Kris, you need to do that before i steal the idea! Its got a lot of potential (everyone needs to cook), if I could rate my recipies and see what other people liked that recipie it'd also put some social networking into the app. Definitely go for it!
Created by Ali on 06.11.2006 10:06 pm
Ian, do you think users would be receptive to a web application? It would seem more conductive to building a community, as well as the fact that pushing out desktop software to consumer PC's is a little scary. Other than the offline capability, I can't see anything that would mandate a client-side application. The price point for other applications is around $20-40 range... that means the volumes would need to get pretty high to get to the "quit the day job" point.
Created by Kris on 06.11.2006 10:06 pm
[...] Nice Markets for the Potential ISV Ian Landsman identifies some nice markets for the potential ISV: I’ve been asked to give my thoughts on the markets I’d be looking at if I was back in the planning stage of my ISV. This is truly the most important choice you’ll make in starting your business. Picking the wrong market will likely doom you no matter what you do. On the other end, the right market will at least give you an opportunity to succeed. [...]
Created by Startup Fever » Blog Archive » Nice Ma on 06.11.2006 10:06 pm
I could not believe it when I saw you suggesting 'celebrity gossip' as a market with potential... oh please... we need less of that stuff, not more. Personally, I see building an ISV as a great opportunity for making the world a better place, not for creating more garbage.
Otherwise, a good article, as usual.
RC
Created by RC on 06.11.2006 10:06 pm
I don't make the rules I just play by them. Gossip is huge business. Would I build an app in the space, no. But is it a potentially profitable space, you bet. Also the main reason it's in there is to get people thinking outside the box. Developers always get stuck in the same idea ruts. I think it's good to think like "normal" people and see what things they're interested in and where the opportunities are there.
Created by Ian on 06.11.2006 10:06 pm
Hey Ian!
Thanks for the great article :-D
Building something around celebrity gossip would be fun! Would people pay money for that sort of thing, though?
Cheers,
Ali.
Created by Ali on 06.11.2006 10:06 pm
Great list thanks!
I'd humbly suggest to present this list in a form where it can be extended. Maybe it can become part of oisv.com?
There are always people looking for "food for thought". Others can add their experiences.
Anyway, it ways a great start!
Created by Torsten on 06.11.2006 10:06 pm
Whether something is garbage or worthwhile is surely in the eye of the beholder, or customer in our case... 
I'd rather take issue with anything too leisurely. Sure, the market is huge, but that just means prices are low. Focusing on tools that yield a real ROI for customers is a better strategy IMO, because there is a certain price point that you can safely demand, knowing that your customers still save money/time/hassle (all the same thing really).
My first product was a Sudoku game. While I'm fine with the performance of the product (probably nowhere near what Ian can make with HelpSpot, I need to sell some 17 licenses for 1 HelpSpot license, and unfortunately that is about the amount I sell in a week :( ...) there is no realistic chance to increase the "market share" (although customers love the product). All marketing avenues I have looked at (that don't involve full-time effort as producing a word-of-mouth campaign definitely would), including AdWords, would barely break even at my price point, but not make a profit. There is no chance of upping the price, I tried it twice and not too bluntly. I could probably survive in this area if I invested all my time into it (other people manage) but I won't, for me it's now all tools tools tools with a real ROI ROI ROI... I believe Ian made a good choice with a veritable niche, veritable in the sense that you can actually charge a decent amount for a quality product. In my opinion you have chosen a way better market than the ones you are considering here now.
Created by Philipp Schumann on 06.11.2006 10:06 pm
(This was related to the celebrity issue which I consider a "leisure" rather than a "ROI" market.)
Created by Philipp Schumann on 06.11.2006 10:06 pm
Hey Philip,
I know a lot of people (especially girls or girly men) who would spend all day looking at sites about celebrity gossip. Its possible that they won't pay to view that stuff, BUT with a lot of people viewing your site, even for free, you get to have a lot of advertising oppurtunities through which you can make $$.
The only think I can't get a grasp on is how I can build an application around celebrity gossip. I can only think of a website about it, which would be just a website, not a software.
Any thoughts Ian?
P.S i agree with sending this list to oisv.com
Created by Ali on 06.11.2006 10:06 pm
Great stuff, Ian.
Although, what I read on Scoble's blog this morning ( http://scobleizer.wordpress.com/2006/06/11/the-joy-on-her-face/ ) made me think we should all give up on software and start video blogs instead ...
Created by Gavin Bowman on 06.11.2006 10:06 pm
I knew that gossip one would get people rolling 
I don't know how to make a product of it Ali that's your job! Perhaps desktop notification? Perhaps a gossip "newspaper" made up from different sources, who knows.
I think I did choose the right niche for me Philipp, but that doesn't mean there aren't people making millions/tens of millions of dollars in software in each of the markets I listed (except maybe gossip if you don't count gossip websites).
I just don't like when developers get so focused on building tech solutions for tech people. There's only so much room in those plays. Help desk software is sort of on the cusp of that. Things like bug tracking, IDE's and so on are all the way in. Sure things like real estate are harder because we don't know them as well, but that's where the money can be made if you execute well.
Created by Ian on 06.11.2006 10:06 pm
"Sure things like real estate are harder because we don’t know them as well, but that’s where the money can be made if you execute well."
I'm certainly with you on this one. Except for the gossip thing, they all fall into the "ROI" category for me, whether it's for developers or for realtors. I only tend to differentiate between "low-priced leisure market" and the market where your work actually makes possible substantial savings for the customer that afford a higher ticket, but that's just due to personal experience.
Created by Philipp Schumann on 06.11.2006 10:06 pm
I'm with you. Those are the markets I would personally focus on, but for some developers the leisure type markets may be more appropriate. I mean I don't get great ROI on my RSS reader yet NetNewsWire has made millions. It does provide value if not direct ROI and that value can be profitable for an ISV. Of course it's a riskier move and it wouldn't be for me but for once I wrote a post that wasn't about me
Created by Ian on 06.11.2006 10:06 pm
Here was one in the "leisure" area I've contemplated: a vertical search engine for recipes. Develop a crawler that would index content from the major cooking sites, perhaps also indexing wine lists as well. Develop personalization and community features around it (favorite recipes, shopping lists, forums, contextual search recommendations, menu planners, etc) and drive revenue via advertising, and ideally, paid click-throughs to content sites.
I've only seen http://www.foodieview.com doing something similar, and their community stuff seems pretty basic. Not sure if seeing only one other is good or bad thing, but I'd definitely be interested in hearing your thoughts as well.
Created by Kris on 06.11.2006 10:06 pm
[...] Ian Landsman’s Nice Markets for the Potential ISV is a great post, if you’re looking for ideas of viable businesses to get into. It’s interesting to note that real estate is in a bubble right now, and times are likely to get tougher. That can actually create good opportunity if you can show someone how your product makes them more competitive. [...]
Created by Ian Landsman’s Nice Markets for the Potentia on 06.11.2006 10:06 pm
I've thought about something along those lines myself Kris. The only thing is I'm not huge fan of advertising reliant sites for small ISV's. It's often very hard to get enough eyeballs to make a living on.
Created by Ian on 06.11.2006 10:06 pm
Yeah, the advertising focus is a bit scary... and I'm not sure that people are really willing to pay for recipe boxes and shopping lists on a regular basis. I would be interested to see how sites like http://www.corkd.com or http://www.boompa.com end up as they seem to be ad-revenue based community sites.
The founders of boompa had an interesting technique for finding opportunites: go to your local bookstore and inspect the magazine rack. Look for the genres with the highest ratio of magazines to (crappy) websites. Once that's found, contact competitor sites to see what their adverstising plans cost. In their case they found the car niche was filled with poor sites that (in some cases) we're actually turning potential advertisors away until they could get a second site up!
Still, eyeballs are king when you're go that route so it will be interesting to see how they end up. I do like the idea in that I enjoy food, wine, and cooking and its something that my wife and I could actually dogfood and see where it needs improvement with regards to user experience, functionality, etc.
Created by Kris on 06.11.2006 10:06 pm
If you like the food biz what about a really great kitchen recipe book. We always take our laptop into the kitchen to do recipes from foodtv, allrecipes.com, etc. I'd love to have a special app which could:
a. import from the big sites
b. stores recipes with my ratings, etc
c. have a view that showed the recipe really large so I could read if off my laptop from across the kitchen
d. maybe a web service hooked in so that other users who liked this recipe also like XYZ
Created by Ian on 06.11.2006 10:06 pm
Kris,
I did look carefully through the search results for the Google search I provided. I don't think we looked at the same products.
It doesn't matter, though. Anybody who wants to dedicate themselves to building a successful software package should be able to do so, given sufficient time and effort.
-----
Created by Mike on 06.11.2006 10:06 pm