Today’s guest post is by Heather Johnson. Heather is a freelance business, finance and economics writer, as well as a regular contributor at Business Credit Cards, a site for business credit cards and best business credit card offers. Heather welcomes comments and freelancing job inquiries at her email address he****************@gm***.com

If you are planning on going freelance, starting your own company or investing in any other kind of business opportunity without help, you may be feeling apprehensive… and rightly so. There is no such thing as a risk-free moneymaking opportunity, so a little fear is healthy. However, you will never gain anything without sticking your neck out, so it’s best you face your fears head on and plan accordingly.

Below are the top five worst-case scenarios for solo entrepreneurs:

1. Your Business Flops – You may find that a business just completely dies right out of the starting gates. Of course, that doesn’t mean you should give up immediately. Depending on your situation, a lackluster beginning could indicate that a) you need an overhaul in your business plan or b) this isn’t going to work out and you need to cut your losses.
2. You Are Sued – Your newfound entrepreneurship could be doing gangbusters, but that success can be easily threatened when someone gets litigious. Be sure to cover your bases on the business end of things before this happens. In other words, you need access to both a trusted attorney and accountant.
3. You Lose a Major Client – Some businesses draw a majority of their income from one or two major clients. Having your eggs in one basket could be a dangerous thing for an entrepreneur, so be sure that you keep your clients happy and that you have a plan in case they ever decide to end your working relationship.
4. You Incur Massive Amounts of Debt – Everyone has debt, but a business owner can really rack up the balance when operating a startup. Don’t rely on credit cards and don’t get involved with business loans you can’t handle.
5. You Go Bankrupt – Ouch. That could be the worst possible scenario for anyone, not just those who are starting their own business venture. As I mentioned above, however, you need to make sure you don’t get in way over your head with loans and debt.

What is the best defense against these worst-case scenarios? A shrewd business sense and a practical business plan. It takes a certain type of rebel to venture on your own, but don’t be foolhardy about it. Treat your business like a business, remain honest and don’t take on more than you can handle. That way, even a substantial bump in the road can be one you will take in stride.

A cool video of Aibo dogs playing soccer, as part of the Robocup competition. The ultimate aim is produce a robotic team of humanoid robots that can beat the human world soccer team:

In The Mythical Man Month, Fred Brooks likened shipping software in time with customers’ expectations to cooking an omelette:

An omelette, promised in two minutes, may appear to be progressing nicely. But when it has not set in two minutes, the customer has two choices–wait or eat it raw. Software customers have had the same choices.

The cook has another choice; he can turn up the heat. The result is often an omelette nothing can save–burned in one part, raw in another.

I’m going to stretch, and maybe strain, the analogy. Sometimes you’re about to serve the omelette and you realise that something’s wrong. It’s not seasoned right, or you’ve forgotten to put the peppers in. Or perhaps your customer actually ordered a cheeseburger.

So what do you do?

You can serve it up and hope the customer won’t complain, at least not loudly enough for others to hear.

You can insist that it’s fine: you’re the chef, you’ve been cooking omelettes for twenty years and the customer wouldn’t know a decent omelette from his elbow.

You can cover it with a large sprig of parsley to make it look nice.

Or maybe you follow it up quickly with an omelette 2.0 which corrects the deficiencies in the first omelette.

Or, possibly hardest of all, you accept that the omelette isn’t right, slide it into the bin, and start again. That’s hard to do though. You’ll disappoint your customer, it means acknowledging that your first omelette wasn’t up to scratch, and it can be expensive in both time and money. But sometimes it’s the right thing to do.

Releasing new products is hard. Releasing major upgrades can be harder, but for different reasons. On the one hand, you want to persuade your current customers to upgrade; on the other you don’t want to strongarm them, bleed them for cash or leave them resenting you. From your perspective, supporting older versions of products is time consuming, but from your customers’ perspective there are often diminishing return to upgrades.

The more mature a product is, the harder, the riskier and the more expensive it is for customers to justify an n+1 product upgrade. And from your perspective, your n+1 version product has stiff competition: your version n.

This is truer for some products than others. It’s relatively easy for you to try out, and then upgrade to, the next version of SQL Compare, say. It’s a third party tool that you can evaluate with little impact, and uninstall if necessary. If you judge the benefits outweigh the few minutes of evaluation time and the upgrade cost of a couple of hundred dollars then you buy it. If you don’t, then you don’t. Easy.

That’s not true for other products though. The hardest are mature, server-based, enterprise-wide, critical systems. If you’re a SQL Server customer, for example, then you’ve got a difficult decision ahead of you. Should you upgrade to SQL Server 2008 when it’s released? The upgrade costs could be enormous, so the benefits need to be huge. You’ll need to retest your current applications, evaluate the software and plan a roll-out. And that’s before you even consider the direct costs of upgrading. At up to $25,000 per processor those can be significant.

Two and half years after the release of SQL Server 2005, our stats show that only around 50% of people have upgraded from SQL Server 2000, a platform that is now eight years old. So what will the adoption of SQL Server 2008 look like?

According to SQL Server Magazine, somewhere between 10 and 15% of people will move to SQL Server 2008 within about a year of its release. Somewhere between 60 and 70% have no plans to move to SQL Server 2008. Back in 2006, the top reason for not upgrading to SQL Server 2005 was because there was no compelling business reason to upgrade. If that was true for the SQL Server 2005 upgrade back then, it’s doubly true for the move to SQL Server 2008 now.

There’s another reason I think uptake will be low. A lot of us have been stung by the latest versions of Microsoft Office and Windows Vista. In Sketching User Experiences, Bill Buxton uses the example of the typewriter keyboard. Say you’re a keyboard manufacturer and you find a way of re-arranging the keys of the standard keyboard. Usability tests show it’s easier for beginners to get to grip with, and it ultimately leads to a 10% increase in typing speeds, both in novices and experts. You still wouldn’t release the new keyboard: the several billion people who are comfortable with the current, inefficient, keyboard would find it irritating, confusing and slow to use. They would never upgrade. I put Office 2007 and Vista into this category, with their arbitrary new ways of doing standard tasks.

Although SQL Server 2008 has no equivalent to the productivity-destroying ribbon bar in Office 2007, I do think that Microsoft’s recent history with product upgrades will make people wary and skeptical. It certainly won’t push them to upgrade quickly.

On balance, people will upgrade to SQL Server 2008 very slowly. Clearly, that isn’t in Microsoft’s interests though: they, logically, will be trying to persuade people to move from previous versions. In particular, they’ll be trying to persuade people to leapfrog SQL Server 2005 and move straight from SQL Server 2000 to SQL Server 2008.

One strategy they might use is to withdraw active support for SQL Server 2005. SQL Server 2005’s second service pack was released about a year ago. Microsoft currently have no plans to release more service packs for SQL Server 2005. This  might make short-term sense for them, but it’s not the right thing to do for their customers. If I’m right, and the uptake of SQL Server 2008 is slow, then Microsoft should be looking after customers who are unwilling, or unable, to upgrade immediately. People are going to be using SQL Server 2005 for another five years at least, and they need to be supported.

I think Microsoft are persuadable – there’s a poll running on the Microsoft connect site where they’re gauging feedback. If you use SQL Server and don’t have plans to upgrade immediately to SQL Server 2008 then I urge you to make your voice heard and push for SQL Server 2005 service pack 3. Here’s the link:

https://connect.microsoft.com/SQLServer/feedback/ViewFeedback.aspx?FeedbackID=326575

Microsoft will eventually do the right thing. They’ll have to. Either they’ll do it now, or they will backtrack and do it later, much like they’ve had to extend Window XP’s life. They don’t even have to write a single line of code or test a single function for now. All they need to do is commit to doing it, some time in the future, to keep their customers happy.

Go on Microsoft – keep us happy.

Last October I visited the San Jose Tech Museum with some other people from Red Gate. We stumbled across a mechanical arm-wrestling machine. Here’s the twist though: the mechanical arm that you wrestle is connected with other, similar, machines across the USA. There’s a webcam too, so you can see who you’re wrestling. In California, Theo, Ross and I all cheered on as Anna slammed the arm of some jock over in New York against the table.

This is an example of a haptic interface: you interact with the device via touch, pressure and movement, rather than sight or sound. It’s an interesting example because it’s not just about you, the user, interacting with a device. It allows two people, separated by a large distance, to interact as if in the same place.

The arm-wrestling machine is a crude example of how physical gestures can be transmitted over large distances. Wouldn’t it be cool if you could transfer more complex gestures?

Well, it turns out you can. Almost. There’s a company in London called CuteCircuit who have prototyped what they call ‘The Hug Shirt’. The idea is that you buy two shirts: one for you, and one for a friend. You both put on your hug shirts. Your friend then travels off, to California, or Scotland, or wherever. You think your friend might be lonely and you want to send her something beyond an e-mail or an instant message. You hug yourself, squeezing your hug shirt. The shirt digitizes the exact form of your hug and sends the data to your mobile phone via a bluetooth connection. You text it to your friend. Your friend receives a message saying "Bob just sent you a hug. Do you want to feel it?". Her phone sends the hug to her hug shirt, and the hug shirt hugs her. Your hug – its strength, its pressure distribution, the warmth of your skin and your heartbeat – is replayed exactly the way you created it.

There are other people working on similar projects. Ben Hui at Cambridge University has a plan to send hand-squeezes via mobile phones. This is similar to a project that researchers at MIT’s European palpable machines research group were working on before the lab was shut down. Rather than a shirt, this could be built into mobile phones themselves. You could squeeze the phone and your friend would feel it, in some form, at the other end.

The value of these haptic devices is based on the idea that physical touch is important to human interactions. By transferring and replicating the physical touch you are, in fact, transferring and replicating the emotion.

I’m not sure that this is true though. The emotion you feel depends on more than just what you’re sensing. It also depends on the situation that you’re in: what your physical environment is, your mental state and your expectations. Here’s an illustration.

Also at the San Jose Tech Museum, there’s an earthquake simulator. You stand on a platform and the simulator replays the seismic data from an earthquake that’s actually happened. We re-experienced the earthquake that hit Turkey in 1999. In the real thing, 14,000 people died. In our simulation, the platform juddered for a bit and then we walked off, a bit disappointed.

Two days later, I was eating at The Grill at the Fairmont Hotel, just opposite the Tech Museum. At 8:04pm, the whole room starting shifting. It jumped left, right, forwards and backwards. The stack of wine bottles by the wall teetered, but didn’t fall. This real earthquake, an order of magnitude tamer than the simulated one, only lasted a few seconds, but it scared the shit out of me. Because of its unexpectedness, my mental state, its context, and its reality, it provoked emotions of fear, awe and wonder that the simulation didn’t and, probably, no simulation ever could.

So will the hapticon kill the emoticon? I’d like to think so, but there’s still life in the smiley face for now.

When PG Wodehouse was asked what the secret of writing was, he replied that it’s to apply the seat of your trousers to the surface of your chair.

In software, the secret is the opposite. It’s to remove the seat of your trousers from the surface of your chair. At least, remove the tips of your fingers from the surface of your keyboard. Go out and talk to users; get a pencil and paper and sketch; take a long walk and think. But don’t code.

Last week I asked why you thought this shower fitting was so bad:

You gave a number of answers, some close* and some not so close (it really is a shower, not a chocolate dispenser, Mr Flibble).

Most of you guessed how the shower works. The larger dial, mounted nearest the well, controls the flow of water. Turn it anti-clockwise and you get more water, clockwise and you get less. The smaller dial controls the heat. Anticlockwise for hot, clockwise for cold. Not a great design, but not appalling: how it functions isn’t obvious but at least it’s discoverable.

There is, however, a fundamental and dangerous flaw with the shower. The hot/cold dial is slightly loose on its bearings, and there’s friction between the two dials. As you turn up the shower’s flow, the larger dial rubs against the smaller dial and the smaller dial shudders anti-clockwise. Since the balance between pleasant and scalding is a fine one in most hotels, you get burnt. Secondly, the lever on the heat dial is too heavy for its bearing. As you shower, its weight pulls the dial anti-clockwise. Again, scalding water.

At this point you might accuse me of asking an unfair question. There’s no way, you say, you could have spotted this from just looking at the picture or even from looking at the shower itself. You’d have to watch me interact with the shower to spot the issues I was having.

To which I say: exactly.

You could look at this design for a week and not spot the obvious faults. You could even play with it, in your design or development studio, and not see what’s wrong with it. If you’re the designer, you could possibly even use it, hooked up, in the real world and still call it easy to use, claim that users would figure it out and blame malfunction on user error.

But if you saw me, a real user, try to use it in a real-life situation then its faults would be obvious. The swearing and screaming would give it away.

The same is true for software. On paper, a design can look good. Even when you code it up it can look great. You, the designer or the developer, think that it’s the most intuitive, simplest interface possible. Only a fool could fail to use it. But put it in front of a user and it could easily fail. The only way to make your software usable is to watch people using it. Or – more likely – failing to use it.

It’s slightly more complicated than that, of course. There are numerous books out there on how to conduct usability trials. If you haven’t already, then read up on it and try it out. I guarantee that it will be both fun and eye-opening.

At Red Gate we’re always looking for people to participate in our usability trials. It’s normally a fun experience for users, and it gives you a chance to influence the future direction of our products. If you’re a SQL Server professional or .net developer and can spare about an hour of your time for a worthwhile and interesting experience then send Jenny an e-mail at us*******@re******.com.

*Since Austin Salonen got closest, he gets the $100 vouchers. Well done Austin!

For me, one of the most important things in a conference is the venue. I think this is beyond a hygiene factor – it’s not sufficient not to have a bad venue; a good venue really makes a difference. So I’m off to Boston this weekend to look at venues for Business of Software 2008. Of course, you need great speakers, so I’m working on that too. So far I’ve lined up (in no particular order) Joel Spolsky, Eric Sink, Richard Stallman, Dharmesh Shah, Jason Fried, Steve Johnson and Paul Kenny. You can find out more, sign up for updates (I’m hoping to book another big name soon) and get a free eBook at the conference web site.

I don’t like travelling but at least I can use it to catch up on my reading. One of the highlights of last year’s conference was Jennifer Aaker’s talk on branding. The insight that struck me most was the way that Jennifer had analysed companies’ brands in the same way that psychologists analyse people’s profiles. For people, this type of profiling is based on what’s called the lexical hypothesis: that the words we use to describe people reflect the attributes they have. You can look at the words we use when talking about other people, perform a cluster analysis to remove redundant, correlated words and end up with a set of independent personality factors. Depending on who you listen to, and how far you simplify, and in what way, you end up with a number of factors, generally ranging from 3 to 15. One of the most famous is "The Big Five", with the conveniently acronymed dimensions of openness, conscientiousness, extraversion, agreeableness and neuroticsm.

Jennifer has extended this approach to companies and has come up with the five independent dimensions of sincerity, excitement, competence, sophistication and ruggedness. You can plot any company’s brand against these five axes. For example, Coca Cola is a "sincere" brand while Virgin is "exciting" (although, of course, it is possible to have a brand that is both sincere and exciting since these axes are orthogonal). Your brand effects how your customers relate to you. For example, if a sincere brand breaks its customers’ trust then it is very hard to undo the damage caused, while breaking trust and then re-establishing it actually helps an exciting brand on many measures. You can find out more by googling "Jennifer Aaker" and branding.

So the first item on my reading list for this weekend is a collection of Jennifer’s papers that I’ve been meaning to read for a while. They’re not about branding, but about happiness, another area that Jennifer researches.

The second item is "The Tipping Point" by Malcolm Gladwell. I’ve heard much about this book and have always been slightly sceptical. I figure I should read it at some point (although maybe I should follow Pierre Bayard’s advice in How To Talk About Books You Haven’t Read and rate it as HB minus – a book I’ve heard of that I don’t think is very good).

The third item is the current issue of the Harvard Business Review. I gave up reading this a while ago when I felt that much of the content was formulaic and empty and along the lines of "We asked five companies what their key to success was and concluded that it was to have a perfect strategy and to execute it flawlessly". I’ll try again for a couple of issues and see how it goes.

For lighter reading I’ve brought along Slaughterhouse Five by Kurt Vonnegut and the Golden Compass by Philip Pullman.

So hopefully I’ll come back with a conference venue and better read. More likely I’ll just watch the onflight films though. I think The Bourne Ultimatum is showing.

I first read Donald Norman’s the Design of Everyday Things a decade or so ago. It made me realise that whenever I can’t use a kettle or a telephone or even a door it’s not my fault. Somebody, somewhere, made a poor design decision. It’s never user error, always designer error. Ever since then I’ve kept an eye out for atrocious designer errors.

Last week I was staying in a hotel in the South West of England. Hotel shower fittings are notoriously badly designed and every badly designed shower fitting is badly designed in its own way. The one in this hotel room was, however, the worst I’ve seen in a long time.

I’ll give $50 of Amazon vouchers to the first person who can tell me how this fitting is meant to work and why I found this one particularly bad (note you need to do both for a chance of winning). I’ll also give $50 of vouchers to what I judge is the best design critique, at my discretion.

BTW, based on a straw poll here at Red Gate I think my money is safe.

Here it is:

Post your answers as comments to this post …

Next week I’ll tell you why this design is so bad. Subscribe to the RSS feed and don’t miss out.

Last week I argued that great software companies are like horses: although we might struggle to define them, we all know them when we see them. I also claimed that we can define them in terms of their family relationships with other great software companies and not by the characteristics that they have. I then ran a survey asking who you think are the world’s great software companies. Here are the results.

I listed 30 companies and asked you to categorise them as ‘great’, ‘not great’ or ‘no opinion / neither / who?’. 106 people gave their opinions. Here is the split between ‘great’ and ‘not great’:

Here, the blue bars above the horizontal present people who voted ‘great’ and the red ones represent the ones who voted ‘not great’.

From this you can see that Google is unequivocally one of the world’s great software companies, while Macrovision is not. You might respond that this is obvious, but I don’t think it is. You could argue that what makes a software company one of the world’s great ones is subjective but there is actually a lot of consensus, at least at the ends of the scales. No matter how people choose to interpret the question, they consistently place Apple in it, and Macrovision out of it, irrespective of theoretical quibbles about whether Apple is actually a software company or not, or whether Macrovision’s financial success makes it great.

Note that ‘not great’ does not necessarily mean ‘poor’: it’s a statement of neutrality rather than distaste. Also, not everybody has an opinion about all companies. Therefore, in the following graph I’ve defined ‘prominence’ as the proportion of people who expressed an opinion and ‘greatness’ as the proportion of people who expressed an opinion who chose ‘great’. For example, if 10 people out of 100 express an opinion, and 3 of those call a company ‘great’ then its prominence is 10% and its greatness is 30%.

One interesting point here is that greatness seems to imply prominence (Google, Apple, Microsoft, Amazon) but that prominence does not imply greatness (AOL, Symantec, Facebook).

These results confirm most of my prejudices. They confirm that, although individuals might disagree,
there is some collective understanding of what the world’s great
software companies look like.

In conclusion, I think that, unambiguously, the five greatest software companies in the world are:

1. Google
2. Apple
3. Microsoft
4. Amazon
5. Adobe

Disclaimer: I’m the co-founder of Red Gate Software, and I publicised this survey on the JoelOnSoftware forums. That means that the respondents are heavily skewed to software professionals, and that the numbers for Red Gate and Fog Creek are probably inaccurate.

Next week I’m going to trawl through your answers to “What makes a software company one of the world’s great ones?” and see if I can spot some patterns. Make sure you subscribe to the RSS feed and don’t miss out.

I’m reading "The Toyota Way" by Jeffrey K. Liker at the moment. Although it’s nominally about the car company, I’ve yet to find anything I disagree with and that can’t be applied to running a software company. One salient point is Toyota’s long term philosophy. They make decisions based not on short-term financial benefits, but on what is the long term right thing to do. Financial success is a by-product of long-term thinking, not a goal in itself.

The Toyota attitude appeals to me, and is the antithesis of much high profile conventional wisdom in the software industry. Recently, I’ve seen behaviour close to a parody of the standard practice. These may be isolated anecdotes, symptoms of a wider trend, or simply signs of provincial Cambridge catching up with the US West Coast: I don’t know. Recently I’ve stumbled across a few people whose business model isn’t to build something sustainable that provides customers with something they need, but rather to rapidly construct something for a quick sale, preferably to Google. Never mind that their product will never satisfy a single customer nor make a single dollar. That it glints enough to attract Google’s eye is all that matters.

I find this model hollow and, well, slightly distasteful. Companies judge their success by how much money they raise in various rounds of angel and investor funding, and then by how much their fledgling companies are bought for. CEOs stand up and boast about how much cash they have raised – and subsequently hosed – rather than the value they have created, the customers they have satisfied or how they have made the world a better place.

A lot of of money changes hands, and some people get very rich, but not much value, or wealth, is created. Most acquisitions subsequently fail, so all that has happened is that money has been transferred from the many (the shareholders of the acquiring companies) to the few (the original investors). This redistribution of money from the poor to the rich is not the same as creating wealth. The hungry give their portions of pie to the sated, but the pie does not get bigger.

To me, this smells like a Ponzi scheme. But I find it hard to reconcile my instincts (prejudices, arguably) with the success of the model over the past 40 years. Maybe this is because there are still some people – entrepreneurs, companies and investors alike – who take the long term view. Maybe this long term view is historically what has worked, but now people are trying to copy its form but ignoring the substance and ending up with a shallow caricature. Maybe I’m criticising this shallow layer of media-friendly froth while there is still a solid, bedrock of substance. Or maybe I’m just wrong and – although it jars with my instincts – this is the better route.

Faced with the two paths, I’d choose Toyota Way over Sand Hill Road any day. What about you?

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.