Four Pitfalls for Software Startups

June 22, 2011

Four Pitfalls for Software Startups

iCharts was launched a week before the market crashed and VC funding dried up. Here is the story of the change in direction and valuable insights for all startups.

By Seymour Duncker, iCharts

We launched our startup, iCharts, at the TechCrunch Conference in 2008. One week later, I was sitting in a venture capital firm’s office, waiting for my appointment, and I saw the headline that Lehman Brothers was bankrupt. The market crashed and, along with it, venture capital funding for new startups went away. Suddenly my company was thrust onto a circuitous path over the next three years that took us in a completely different direction than what I’d planned.

Chances are your startup won’t face the same scenario that hit me in 2008 when the economy crashed and spun into a recession. However, reality often invades best-laid plans with situations that cause upheaval. Knowing how to effectively respond to such circumstances will keep you on a course for success.

What follows are some of my lessons learned over more than two decades, the challenges I encountered while building my software –as-a-service (SaaS) company, iCharts, and my advice for avoiding four pitfalls that await software startups.

Getting Smart When You are Lucky -- Ten Rules for Predicting Success

By Judith Horwitz, Horwitz & Associates, Inc.
In my newly published book, “Smart or Lucky? How Technology Leaders Have Turned Chance into Success,” I have analyzed what makes the difference between companies that turned their luck into sustainable success and those that failed. Many of the 25 or so companies in the book are companies that I worked with or analyzed while they were emerging. This article for Sand Hill readers shares key lessons and rules that are common across most of these companies – and many others in software. These are my 10 rules for success in software.

Eight Steps to Cloud Success

Kamesh Pemmaraju of Sand Hill explains crucial steps for successfully transitioning to the cloud in this post to SandHill.com blog, Leaders in the Cloud.

SaaS Design Principle #2: Use Modular Design to Enable Upsell and Upgradability

Paul Giurata of Catalyst Resources explains how modular design plays a critical role in B2B SaaS and can enable orders of magnitude increases in profitability in this post to the SandHill.com blog, Voice of the Customer.

Social Service

Guy Smith of Silicon Strategies Marketing describes an experiment his company conducted in marketing through Google and Facebook to see if social media really makes a difference; read about the result in this post to the Sandhill.com blog, Best Practices: Software Marketing.

Download a PDF report discussing select M&A transactions of public software and SaaS companies during May 2011. The report includes target TTM revenue, EVI revenue, and implied enterprise value.

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Quote of the Week

“Force.com is probably the most important part of Salesforce.com. A PaaS (platform-as-a-service) offering is going to be important for any customers who are used to custom development. The thing that's important to watch is what Salesforce does with Force.com over the next three to five years. The acquisitions are helping them get there.”

- Ray Wang, CEO of Constellation Research

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