Subject: Re: impolitic statements (business model clues for the clueless
From: Tom Lord <lord@regexps.com>
Date: Wed, 17 Oct 2001 14:26:37 -0700 (PDT)



	Norbert Bollow gets the heart of the business question:

	>>> I'm curious what you are under the *delusion* you'd pay for if
	>>> it were provided from such websites as SF & FM?
	>> 
	>> Software tool maintainers doing a coherent and mature job.

	>What's the size of this market?

	>What would be the price of the service?

	>What marketshare can the proposed webservice business reasonably
	>expect to achieve, at this price, given that there is
	>competition from the do-it-yourself approach as well as
	>sourceforge.net and freesoftware.fsf.org ?

	>Based on this, will there be enough revenue to make it work out
	>economically?  (I doubt it.)

Writing a plan?

The market size depends on which class of tools we focus on.  As an
example, let's pick software development tools for unix-ish
environments.  This is a nice domain to focus on because a relatively
small and manageable number of tools make for a nice collection.  It's
also a nice domain because there is so incredibly much head-room for
improving the tools over time with relatively small investment.  It's
also a nice domain because it is relevant to engineers whose decisions
shape much larger markets -- so it is a kind of leverage point.

It's hard to count the number of individual engineering professionals
on unixish platforms given only the public web.  For the U.S., I'm
conservatively coming up with a high multiple of 10k, and speculation
that if MSFT fails to take over the software industry, that number
will tend to increase in coming years (though not without regressions
like the current round of lay-offs).

A rough rule of thumb is that coding shops spend between $0.10 and
$1.00 per day per engineer providing snacks.  With a little
hand-waving, an expense on the same scale, say $10/month per engineer
for a valuable service, will fit most budgets -- especially if it can
be linked to cost savings and efficiencies elsewhere.  Constructing
the service so that customers are usefully served on an individual
basis is tricky, but I think it can be done.

So this isn't a market that will immediately support thousands or even
hundreds of engineers.  On the other hand, it will support small
numbers of dozens, and it will provide a context and channels which
make the products and services offered by various FSBs more valuable
and accessible.  My judgment is that you can do a lot with just a
half-dozen or so experienced engineers -- and you can do a lot more if
the proposed enterprise succeeds at creating engineering partnerships
with other FSB activities and at least some segments of the volunteer
population.

As for marketshare: a small multiple of 10K subscribers can bootstrap
the business past profitability.  Is that salable?  Depends on who you
have access to to make the sale.

Comparison to the do-it-yourself approach: doing the do-it-yourself
approach well is more or less a full time job for someone with a
decent amount of experience.  It's usually done poorly, as a result.

-t