In my previous post, I asked – and tried to answer – the question "What does it mean to be one of the world’s great software companies?". As part of my answer I listed some companies who I think are among the world’s great software companies, and those who aren’t. Here’s my list:

My list of the world’s great software companies

Microsoft – it defined the genre
Apple – because of its passion for design and its products
Google – because of what it does and how it does it
Oracle – an enormous success
Adobe – less sure about this one
The SAS Institute – the world’s largest privately held software company and regularly voted one of the top places to work for in the US

My list of not the world’s great software companies

Yahoo – drifting
Symantec – shoddy products
Facebook – flash in the pan

Somewhat predictably, everybody disagrees with my choices.

So my question to you is:

Who is, and who isn’t, one of the world’s great software companies?

You can give your answers on this survey:

https://www.surveymk.com///s.aspx?sm=jWKGSD0kRDRDbtCjK6L03Q_3d_3d

I’ll be giving $100 of amazon vouchers to one respondent, chosen at random.

This is the second post in a series of 3 about the world’s great
software companies. I’ll publish the results of the survey later on in the week. Make sure you subscribe to the RSS feed and don’t miss out.

At Red Gate it’s our goal – our big, hairy audacious goal – to build one of the world’s great software companies. Tub-thumping words, but it begs the question of what does it mean to be one of the world’s great software companies. How will we know when we’ve succeeded?

Since defining “one of the world’s great software companies” is hard, I thought I’d start with something easier, just to warm up. Something more concrete. This, in fact:

I asked various people at Red Gate how they’d define a horse. I got various answers:

“Four legs”
“Eats grass”
“You can ride it”
“Doesn’t have teeth”

I wasn’t satisfied with these definitions. They could equally apply to zebras, donkeys or even cows. I don’t even understand the last one, but apparently it will distinguish a horse from a chicken. Thanks Laila. For further inspiration, I looked up “horse” in my dictionary:

A large solid-hoofed herbivorous ungulate mammal domesticated since prehistoric times and used as a beast of burden, a draft animal, or for riding

Even that didn’t seem satisfactory, especially its use of the word ‘ungulate’. I then remembered the entry for horse in the first ever Polish dictionary:

What a horse is, is self evident to everybody

I find that much more satisfying. And just as everybody knows what a horse is, I think everybody knows what one of the world’s great software companies is. However, I felt that I needed some more sturdy intellectual backing to my definition. So I turned to this man:

Ludwig Wittgenstein – fellow of Trinity College, Cambridge and world-famous philosopher – was one of the brainiest men of the twentieth century. He said that rather than defining things by the characteristics they have in common, you should define them by a family resemblance. For example, you might look at a family of father, mother, son and daughter and recognise that they are part of the same family. The father resembles – in terms of build, features, eye colour, gait, temperament, and so on – the son; the son resembles his sister; she resembles her mother. However, the father and mother bear no resemblance to each other, even though they clearly belong to the same group.

Similarly, I define “world’s great software company” not by a set of characteristics that every great software company exhibits, but by the loose network of shared relationships that link members of the family “world’s great software companies”.

In other words, you can group all the world’s companies into two, albeit fuzzily bounded sets, of “world’s great software companies” and “not one of the world’s greatest software companies”. Sure, these sets are slightly subjective, but here’s how I might start grouping them:

The ones inside the circle are ones I’d term great. I include Microsoft (it defined the genre), Apple (because of its passion for design and its products), Google (because of what it does and how it does it), Oracle (an enormous success), Adobe (less sure about this one) and the SAS Institute (the world’s largest privately held software company and regularly voted one of the top places to work for in the US). Outside are the ones are companies that I do not consider great. I include Autonomy (local to Cambridge, but not yet great), Yahoo (drifting), Symantec (shoddy products) and Facebook (flash in the pan). Name any software company and you can place it somewhere in this Venn diagram, but note that the companies inside the circle do not share any particular set of characteristics, nor do those outside.

So, in conclusion, I will know when Red Gate is one of the world’s great software companies when:

a)    It is self-evident to everybody
b)    People place it, unprompted, bang in the middle of my venn diagram

This is the first post in a series of 3 about the world’s great software companies. Part 2 – a survey asking for your great software companies – is here, then I’ll publish the results later on in the week. Make sure you subscribe to the RSS feed and don’t miss out.

The end of the 19th century was a golden era of exploration and dumb-ass, ill-starred expeditions. That of Salomon August Andrée is one of my favourites. In 1897, Andrée decided that it would be a good idea to travel from Svalbard to Russia, over the North Pole. By hydrogen balloon.

Against much scientific advice, Andrée and his two companions launched their expedition in June 1897. Their leaky, unsteerable and untested balloon crashed onto an ice floe after only 2 days. They carried faulty maps, had packed inadequate sleds and wore unsuitable clothes. After some three months’ hard slog the men perished.

When I see people starting up in the business of software I’m often reminded of Andrée and his expedition. Here’s why:

A triumph of optimism over reality. Andrée assumed the best possible scenarios. He assumed the wind would blow in the right direction, that the balloon would remain perfectly sealed and that it would not accumulate snow or ice. Software is often cursed with similar blind optimism. How often do you assume that the wind will blow in the right direction, that the technology will work, and you that you won’t hit cruft that slows you down? And how often does that actually happen? Never.

An excessive belief in technology. Andrée focussed on cutting edge technology at the expense of the problem. We do this in software too. We choose a technology (balloon) and then find a problem to fit it (North Pole). You can’t save a a doomed idea with cool technology. If you’re writing the world’s one millionth text editor it won’t succeed just because you’re writing it in Ajax, Flash or WPF.

A failure to listen. Many experts criticised Andrée’s attempt, and realised that it would never work. Being unwavering and resolute often helps, but informed resoluteness beats ignorant resoluteness any day.

However, when reality always beats optimism, when we never trust technology and when we always listen to experts then life is dull. We would still be eating berries on the savanna and chasing animals with sticks and stones. For me, therefore, Andrée’s biggest failure was not any of the above. It was his failure to minimize the downside. He chose an endeavour where even the slightest mistake or miscalculation meant a painful and certain death.

If you’re setting up a business then you might expect success, but you should not assume it. There is a chance that you will not succeed. If you do fail then you do not want it to kill you, or your company. You should sacrifice some potential glory to protect your downside.

Never bet the farm.

There were many reasons that Simon and I started Red Gate Software back in 1999. One of the reasons was that I was less than happy in my then job. I’ve heard this from a few people who’ve set up companies: they feel they can’t do well in their current environment, or possibly any existing environment, so they create their own. Oddballs and misfits the lot of us.

Another reason was that I saw a lot of bad decisions being made at the company where I was working. I was always thinking, and sometimes saying, that I could do better. I was often told that I wouldn’t be able to do better, or that it was all very much harder than it looked. So I thought I’d give it a go.

In my previous job one of the areas I used to question was work practices. Why do we have to wear suits? Why do we have to work 9-5? Why is that duff programmer still here? His work is no good, he’s not enjoying himself and he’s dragging down the rest of the team. Why is the stationery cupboard locked and why does the office manager hold the key? This leads me on to a third reason why we set up Red Gate.

Simon and I wanted to create a place that we would want to work. By extension, other people would want to work there. That meant that we wanted to work with smart, honest people who challenge us. If nothing else, we’ve achieved that in spades. We wanted to create a place where decisions are based on evidence and what you know, rather than who you are. A place where people want to come in to work, and enjoy the work that they do. A place where people can do the best work of their lives.

It’s a bold aspiration and I’m not claiming that we always meet it: it’s an aspiration. It is, however, extremely rewarding to get external validation that we’re on the correct path. We’ve just been awarded 3* status in the UK Best Companies awards for the second year running. Only 48 companies in the UK achieved 3* status this year (there were 42 last year). Last year we were nominated the 8th best small company to work for in the UK. This award is based on many factors, primarily employee interviews and questionnaires.

I hope this comes across as proud, rather than smug. Proud of all that everybody at Red Gate has done to get us this three star status. If Red Gate is a great place to work – and I believe that it is – then that is because of the people who work here. Well done all.

PS, did I mention that we’re hiring?

I regularly read Phil Factor’s articles over on Simple-Talk. Phil is the Jerome K. Jerome of IT columnists. Over the decades he’s been in the business of software he’s collected, and polished, many anecdotes. Phil, together with Tony and Claire at Simple-Talk, collected some of the best and put them into an eBook. They’ve kindly let me distribute it on the Business of Software web site.

To download your free copy, go to www.businessofsoftware.org, enter your e-mail address in the box on the top of the screen and click ‘Join’.

Rick Chapman’s "In Search of Stupidity" points out that one reason for Microsoft’s success is that they kept their marbles while all others around them were losing theirs. They simply didn’t screw up, and that inexorably led to their success while others self-imploded.

Now, however, they are working hard to be included in the next edition of Rick’s book. They made a good start with the Windows Vista launch and are now cementing their claim to inclusion with SQL Server 2008. Holding the launch party some six months before shipping the software is, presumably, only the start. Expect an inability to clearly articulate good reasons to upgrade, a bewildering array of product versions, and then a mishandling of the media to follow.

On a related note, Phil Factor’s writes on "Microsoft Boy announces his school homework" over on SImple-Talk, and Steve Jones feels "burned, betrayed and disgusted" on SQL Server Central.

Come on Microsoft, pull it together. You’re a great company, full of great people, writing great software. What are you up to? Shipping late is awkward, but this is embarrassing.

I’ve been writing this blog for a few months now. Although a few people view the newer posts, the older posts lie mostly unread. I think there’s life in them yet though so I’m going to try featuring them on the home page.

The first one is "Not with a bang but a whimper", my take on how Web 2.0 will deflate. I wrote it in June.

Seth Godin wrote a recent post about layering. Here’s an excerpt:

Someone asked me which post on this blog represented the turning point of its growth. The ‘breakthrough’ post. It turns out that there wasn’t one. Instead, there were 2,500 posts, one after the other, each building (and I was learning from each) as we went.

This reminded of Jim Collins’s analogy in Good to Great. He likens success to spinning a flywheel. Picture a massive metal disk, 30 feet in diameter and weighing several tons, mounted on an axle. You don’t spin it fast with one single heave; it takes many smaller shoves. It takes a lot of hard, sustained effort to get it up to speed, but once it’s moving it’s virtually unstoppable.

There’s a great chapter on hiring in Peopleware, by Tim Lister on Tom DeMarco. It starts by demonstrating how most managers would hire a juggler:

Circus Manager: How long have you been juggling?
Candidate: Oh, about six years.

Manager: Can you handle three balls, four balls, and five balls?
Candidate: Yes, yes, and yes.

Manager: Do you work with flaming objects?
Candidate: Sure.

Manager: …knives, axes, open cigar boxes, floppy hats?
Candidate: I can juggle anything.

Manager: Do you have a line of funny patter that goes with your juggling?
Candidate: It’s hilarious.

Manager: Well, that sounds fine. I guess you’re hired.
Candidate: Umm…Don’t you want to see me juggle?

At Red Gate, we heed the point that the book goes on to make. In an interview, we test the skills that people claim they have. If we’re hiring for a developer, we ask them to write code. Testers test something for us, sales people sell us something, we ask designers to design, and so on.

There is a chasm between the abstract and the concrete; between the meta and the specific. Ask somebody applying for a sales job how to sell something and they’ll speak fluently about finding out the customer’s needs, how to handle objections and how to close the deal. Ask them immediately afterwards to sell you a computer and they’ll jump straight in and try to sell you an iMac with not even a nod to finding out why you want a computer. No matter what they say should be done, most designers ignore users, testers don’t test boundaries and marketers don’t segment.

There is, however, a limit to this technique. It only works well when the essence of the job can be distilled and presented as an interview task. This fails when the job is more ill-defined; more amorphous. Project management, say. You can ask someone to code in an interview, but can’t ask somebody to project manage. You can’t present them with a group of people and a project behind schedule and say "here, project manage this for half an hour". You’re inevitably reduced talking about how they’d handle certain situtations, or how they handled them in the past, not actually doing the task.

I can see a few solutions to this problem:

• Avoid the problem. Always hire for these roles from within. This has the disadvantage that you often end up moving talented technical people into roles they’re not suitable or ready for. Hiring people externally is a good way to bring in fresh points of view. If you always appoint from within then you risk an in-bred culture / process.
• Accept the problem. Do your best, but acknowledge that many people you hire won’t work out and you’ll have to fire them. The disadvantages – commercial and human – to this approach are obvious.
• Only hire based on personal recommendation. If somebody you trust can vouch for the person you’re hiring then that removes a lot of risk. However, it also reduces the pool of people you can hire from. This is a severe restriction.
• Insist that the people you hire are hands-on. This isn’t a complete answer, but I hire people who have something to offer than pure management. They need to be able to demonstrate they can roll up their sleeves and contribute directly. I don’t hire people who stay aloof and refuse to engage directly with the tasks their team do. Project management isn’t (just) about Gantt charts; people management isn’t (just) about personal development, performance reviews and team meetings. These hands-on skills can be tested for, but although they’re necessary they aren’t sufficient.

However, I don’t think these solutions are acceptable. If you’ve got any better suggestions on how to hire project managers / development managers / support managers etc. then post them here.

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37signals do some cool stuff (Ruby on Rails and Basecamp, for starters). Over 1 million people use their web based applications. For me, perhaps the most interesting thing about them is their ethos. In particular, I like their forceful emphasis on design and simplicity.

37signals have a book – actually, it’s more of a manifesto – where they explain their principles and practices. Here’s a quote:

Your app should take sides

Some people argue software should be agnostic. They say it’s
arrogant for developers to limit features or ignore feature requests.
They say software should always be as flexible as possible.

We think that’s bullshit. The best software has a vision. The best
software takes sides. When someone uses software, they’re not just
looking for features, they’re looking for an approach. They’re looking
for a vision. Decide what your vision is and run with it.

You can read more from the Getting Real web pages.

Jason Fried, the founder of 37signals, has kindly agreed to speak at Business of Software 2008. I’m looking forward to hearing Jason speak. In particular, I’m interested in whether his principles are generally applicable, or whether they’re specific to 37Signals’ setup, culture and software. Do they apply to incumbents or just the to the upstart start-ups who want to topple them?

You can find out more details about the conference at the Business of Software 2008 web site.

Paul Graham tells us about the top 21 existing trends you should bet on…and the five you shouldn’t.

I came across the following quote the other day:

    Those who say it can’t be done should get out of the way of those who are already doing it.

Unfortunately people don’t always follow this advice. I was about to flip it round and write something about success, but if you want advice about success there are better people to listen to than me.

I do, however, know something about trying, and trying is often harder than succeeding: the leap between the status quo and trying to change it is often wider than the leap between trying to change it and succeeding. Often the opinions of others – especially those who we respect – can be paralyzing (what if they’re right? what if I’m being stupid? what will they think if I fail?).

Just to try, you need to listen to what other people say and then ignore them. Of course, this isn’t always true. And it’s not clear when it holds, except in retrospect.

I’m a sucker. Last night I went to the cinema for the first time in a while. The queue was huge. I was cunning and called the automated booking system from my phone. Its voice recognition system left me standing in the street shouting "I said Cambridge you motherf***ing piece of s**t" into my phone. The popcorn was twice a reasonable price and the place stank. The film wasn’t even that good. But that might have been my foul mood, or because my first choice had started before I could book tickets. Everything about the whole experience sucked, as it always does. I’ll forget and go back again in a couple of months though. Sucker.

It was a Cineworld cinema, by the way. Their share price has halved since they floated on the London stock exchange nine months ago. I can’t think why. I suspect it’s not only their customers they treat like crap either. I overheard a conversation between the manager and a potential employee. The manager was explaining how they’d pay minimum wage and how the employee would need to be on-call, unpaid, in case he was needed.

There’s a parallel with business software. It’s often expensive, unusable and buggy. It’s sold by complacent corporations. You use it only because the salesman let your CEO beat him at golf. You don’t like the software, you resent it. You, the customer, is at best an inconvenience to the profit of the corporation. A post by Robert, one of the Red Gate developers, illustrates the frustration that we all feel at times.

I believe that things will change. Software companies will need to treat their business customers more as consumers; sophisticated individuals who can choose to spend their cash on things other than your software; people who place value on qualities other than features. Design, usability and customer service become more important than features. The visceral, emotional reaction you provoke in your customers is as important as ticking boxes on a feature list.

Your customers will look at the software they use at home and wonder why there’s such a gulf between what they do at home and what they do at work. Why does Microsoft Money rock but your corporate accounting system suck? Why can’t SAP be more like iTunes? Apple, Microsoft (less so) and others are setting your customers’ expectations. If you don’t meet them then somebody else will.

At Red Gate, we’re on the path I describe. We’re not perfect, but every product we release pushes us further. We frequently get e-mails telling us how much people appreciate our approach. We don’t publish them all, but here’s a selection of a couple of a couple of hundred.

Finally, ask yourself this question. If you write business apps then are they as easy to use as flickr? Or Google Maps? Or Microsoft Money? Or even – setting the bar low – facebook? Why not, and what are you going to do to fix it?

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I toyed with calling last year’s Business of Software conference "The Web 0.2 Summit" and publicly not inviting Tim O’Reilly ("Tim O’Reilly not invited to speak at conference shocker"). I decided against it on the grounds that my sense of humour has a very poor commercial record. Plus I didn’t want to risk offending Tim O’Reilly.

Having said that, maybe this year’s Business of Software 2008 really should be "The Web 0.2 Conference" and we should continue to emphasize the eternal truths about the business of software. No bullshit, no fads.

What do you think?

I’ve started organizing Business of Software 2008. We’re planning on holding it in Boston in September or October. The web site is now live.

The big news is that I’m working with Joel Spolsky on this year’s conference. In fact, it’s called "Business of Software 2008 – A Joel on Software Conference". Together, I think we’ll be able to put on something very special.

Although the conference is still many months away we’re working hard on getting some top speakers. Joel, Eric Sink and Steve Johnson (the winner of last year’s Sofware Idol competition) are already confirmed speakers. We have more in the pipeline.

You can sign up for the conference newsletter at the conference web site.

Every Thursday and Friday the Mexican van rocks up, parks about 100 yards from Red Gate and opens its shutters. Just about everything they do is perfect. They serve fresh, tasty food. They have a metronomic process. Mannamexico’s owner, Luis, remembers everybody’s name (he must know hundreds). They have a loyalty card, and loyal customers. They’re the first food van in Cambridge to get a 5* health and safety rating. They restrict supply (they’re only there two days a week) to stimulate demand. Their customers rave about them. There’s even a Mannamexico appreciation society on Facebook (249 members and growing).The only negative thing about Mannamexico is the line of people outside. If you’re ever in Cambridge you should visit the van, or the eatery they just opened in Regent Street.

Do you see what Mannamexico have just done? They’ve just flawlessly executed a piece of word of mouth marketing. I’ve just written what I hope is a glowing testimonial and hopefully drummed up some custom for them. What Mannamexico have not done is explicitly exhort me, or their other customers, to tell people about them. There’s no ‘tell a friend’ button on their web site. They’ve provided an excellent product and the only marketing they’ve done, as far as I can tell, is to park a big, brightly painted, red and yellow van on the road where we work.

Word of mouth marketing is something that marketing folk love. When a friend or a colleague tells you about a product you’re more likely to try it out than if you read, say, a print advert. Getting people to recommend your product to people who trust them is arguably the best form of marketing there is. However, although word of mouth marketing is indeed a worthy goal, it’s not obvious how you get it.

Word of mouth is a bit like happiness. It’s something you arrive at indirectly. If you try to get long-term happiness by doing things that make you short-term happy then you will fail. You can eat chocolate cake or take crack cocaine but you won’t achieve sustained happiness. Happiness is a by-product that you’ll most likely achieve as a side-effect of something else, like dedicating your life to a cause greater than yourself, getting married, buying a dog, having happy parents or not being born in Scotland.

Similarly, the way to get word of mouth marketing is not to spend your time and money directly trying to persuade your customers to tell their friends. The best way to get somebody to do something is to make them want to do it. You need to make your customers unstoppable proselytizers of your product and service. The obvious first step to do that is to make your product and your service something which people are able to proselytize about.

Of course, even an excellent product will not sell or market itself. You still need to work hard to get your product into people’s hands. You’ll need to do Google adwords / run print ads / tape posters to lampposts / whatever works for you. You’ll need to nurture your best customers and make them love you.

But what you shouldn’t do is focus on word of mouth marketing as a direct goal. Do everything else right and it will follow.

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In 1978, marine biologists from Mexico and the USA joined forces to try to save the rapidly declining turtle population. They incubated turtle eggs and raised the hatchlings for 10 months. They then tried to imprint them with their current location, tagged them and then released them into the wild. If the imprinting succeeded then the baby turtles would behave like ones born in the wild. They would return some point later to form nests at their birthplace, to breed, to lay eggs in the sand and to start the cycle anew.

No turtles returned in 1979 so they tagged and released some more turtles. In 1980 there will still no new turtles or nests, so they released yet more turtles. By 1988 they had released more than 22,000 turtles into the wild. None had returned. They experiment was stopped, and the attempt to replenish the turtle population had clearly failed.

Then, in April 1996, a turtle nest appeared on the Texas coast. Five more were laid between 26th May and 5th June. New nests have been discovered since. Almost 20 years after the start of the experiment it had started to show results. It turns out that turtles don’t return to their birthplaces until after some 20 years, often having travelled thousands of miles.

You often find the same thing in marketing. You release your baby marketing turtles into the wild and wait for them to return. Nothing happens, so you release some more. Still nothing happens so you release yet more. Eventually, you think you’ve failed. Then after more time than you could possibly have anticipated, your marketing turtles return to nest.

Marketing is about sustained, hard work. If you run print ads, you need to run them over months. If you do local marketing, you’ll need to advertise in multiple places for a long time. It’s not about spending all your market budget in one big print full-spread or in a single superbowl advert.

So, release your marketing turtles again, again and again and be patient.

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I’m thinking about organizing Business of Software 2008. It’s still just a twinkle in my eye. I’d like to know who you’d like to hear speak / who you’ve heard in the past who was excellent. The only criteria are:

• Relevant to the business of software, even tenuously
• Interesting

They don’t have to be speakers who we could ever net (see my list below …), but they don’t have to be well known either.

My personal list so far includes:

• Seth Godin
• Edward Tufte
• Steve Ballmer
• Larry Ellision
• Steve Jobs
• Shai Agassi
• Vint Cerf
• Dan Pink
• Chip Heath
• Donald Norman
• Alan Cooper
• Jakob Nielsen
• Robert X Cringely
• Richard Stallman

Comments on my speakers? Who would you like to hear? Post here.

P.S. Subscribe to this feed to keep informed about the conference.

A quick reminder that there’s a Business of Software facebook group. It’s now an open group so anybody can join. It’s one of the mechanisms I’ll be using to tell people about BoS 2008 so if e-mail and RSS feeds are inconvenient or just too old fashioned for you then please join the group.