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I spend most of my life on the demand side, rather than the supply side, of the IT business; this made for an interesting change of pace when I was asked to keynote a morning seminar on Entrepreneurial Opportunities in Software for the Caltech/MIT Enterprise Forum, a joint venture of those two distinguished schools that holds monthly sessions at the campus of the California Institute of Technology in Pasadena.
As I told the seminar participants on Saturday morning, the proposition facing todays would-be software entrepreneur is almost the mirror image of what I encountered as part of a spare-bedroom software startup in 1983. Twenty years ago, we faced high costs and long lead times in merely making our presence known to a relatively small audience of customers who were tightly focused on the tiniest details of hardware platform choice. Indeed, our product was unapologetically machine-specific, it being the conventional wisdom at that time that only handcrafted machine code could produce competitive efficiency in hardware use.
Today, it costs almost nothing to make ones product known to a worldwide market of platform-indifferent customers, running code based on open standards that deliver functionality to Web browsers or via open Web services protocols, in every branch of commerce. Who wouldnt want to pursue the opportunities that this implies?
The question, then, is how to identify the sectors where entrepreneurial risk is balanced by demand. I found one good survey of worldwide markets that was recently prepared by IDC Finland. I agree with that reports identification of storage management as one of the key opportunities: It seems to me a no-brainer that people are afraid to narrow their data collection efforts, because they dont know what good stuff theyll wind up not collecting. If you want more than my gut feel, other IDC numbers show the storage software market beginning 2004 with continued vigorous growth; storage industry executives also agreed, earlier this year, that the value of their products depends on making systems easier to manage and easier to align with business missions.
I also urged the entrepreneurs in the audience to keep their eye on the changing nature of enterprise data streams. Enterprise reporting requirements and expectations are moving decisively in the direction of real-time immediacy and greater analytic sophistication. RFID applications will generate floods of real-time data; corporate governance and other regulatory mandates will create rigorous demands for tracking of information life cycles.
Finally, I warned against the danger of thinking that youre in the software business merely because software appears to be your product. Gaming software, for example, continues to be a huge opportunity, but I think of it as more an entertainment business than a software business—in the same way that the movie business is more about entertainment than it is about motion-picture photography. Coming up with good stories is the marketable skill; implementing those stories, whether on a cell-phone screen or a big screen, is merely an enabling craft.
In the same way, writing software for the health care sector or the human resources sector or the collaborative work sector is more about understanding people—their wants, their habits, and their limitations—than it is about any particular wizardry in writing code. Web services are novel today, but so were cash registers or drive-through windows at various points in the history of retailing.
Ultimately, its about the customer and the product. A short-term preoccupation with the technology is a prescription for being a first-generation failure that paves the way for someone elses second-generation success.
Tell me, either on or off the record, how youre planning to be the next entrepreneurial success story at peter_coffee@ziffdavis.com.
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