carlcoryell
Joined 17 years ago
Joined 17 years ago
My first question is to check the basic economics:
$2-300M in annual revenue, ~15% margins, you’re probably looking at earnings/profits around $30-45M. Building and running your own software team is probably around $5M/year, which feels like it could be a substantial hit to your margins. Is there a clear story for how this software will allow you grow to $300-500M in revenue or more? I like to have a credible story for 5-10x ROI on software development because the costs end up being so variable and uncertain.
Then the trick is figuring out how to hire, train, and establish a productive environment for the team. My customers approach was to hire a vendor [Pivotal Labs] to ship a first release and help hire in-house staff to replace vendor roles until the team was fully in-house. The customer got rapid feedback that the team and concept worked; we shipped working software. The new hire landed into a productive context, and could see that the company had an effective approach to software development (because it was already shipping working software).
http://en.wikipedia.org/wiki/Sony_BMG_copy_protection_rootki...
As a grad student, he developed software to manage the production of certain key components needed for his research. He then ended up starting a successful software company selling those tools into manufacturing companies.
He wrote "The Goal" as a sales tool to help his customers adopt the software and practices.
The heartbreaking part is that he found the companies that purchased his book were more successful than companies that purchased his software or companies that purchased both.
Once realizing that, he immediately ceased to be an effective salesman for his company and was pushed out as CEO.