The 3 Types of Software Companies – Startups

Startups are the newest business model for software companies. Find out more about why everyone wants to start a startup and what are the risks.

Startup companies are my last special category of a software company. We talked about product and outsourcing companies in the previous posts. Now let’s complete this chapter with the startups.

Everyone has a startup.

With the development of the mobile industry, the crowdfunding and, well, globalisation, today it’s actually very possible to create a small new app that can bring you millions of followers. These factors formed a productive environment for so-called startups. The startups are small teams that have an idea and try to create a product out of it. Finances come from investments or crowdfunding, very often from nowhere for a while.

Startups are companies with the highest risk. The most critical success factors for them are the time to market and the ROI. The classical model is a mobile app. There are 7 million mobile applications out there. It must be easy to make one. So everyone with an idea can do it. It sounds very tempting to have your own business. You would work for yourself, work from home or in a co-working space, work with people you like. There are going to be no insensitive managers and no inadequate corporate policies. You would take a vacation whenever you like and so on. We all want that, right?! 

Well, it’s not so easy.

Any issue can be fatal for a startup. All risks are critical.

One of the most significant factors for success (and failure) or a startup is the proximity of the users. There is not a large marketing department behind a startup to deal with unhappy customers. Any problem with the app becomes viral for a few hours across the social networks. Half of your users uninstall the app. Investors, if any, might bailout. Best case scenario is you are still in the business, although lost the office, and not on medication.

The higher you climb

A startup can climb to the peak over a night, imagine how hard it is to fall.

The proximity of the users is a gift if used smartly. I have been using a time tracking app for years. I love them, and I don’t at the same time, but I am still going to use them and willing to get the paid version. A month ago, they proposed a beta testing program. And they give you a t-shirt for that. What they did was brilliant – they install another app, so the working one was still working.

Get your tens of thousands of users to give you feedback! They will send comments. But we all know when users raise their voice – it’s when they are not happy. So, don’t wait for the negative comments but provoke your users (not with “Please, rate us!”) to send these comments to you first. That’s the hardest thing on the Internet, I know, but there are ways to do it. Gamification is a very efficient one, and still, I haven’t seen anyone using it. Must have something to do with the bug-developer relationship.

Can you handle freedom?

As we can image, there is most freedom in a startup. You define the requirements. You create the architecture and design. You draw the UI, write the code, test it (hopefully), deploy it, maintain it and pay for all of this. If you fail, it’s only for you, rather than the image of a large corporation. Autonomy & accountability are the highest for startups.

Startups are something young developers do for compelling reasons, we mentioned above. Another reason is that they are innovative. They strive for new technologies; they invent new technologies.  

When it comes to the work-life balance, things a bit different. A friend of my husband shared with us recently his experience as a freelancer. His words were “The greatest benefit of being a freelancer is that you have the opportunity to choose which 16 hours a day to spend working”. I’m in love will all the 23-years-old CEOs of the one-man-companies out there. They should be encouraged. They learn on the fly, often the hard way, and it takes an insane amount of energy and devotion to succeed.

A startup is a crash course for all roles in a software company. So you got to learn how to lead such projects too. You need to do interviews, deal with investors, become a great presenter, learn some finance and budgeting, arrange the office space, maintain social media, etc. You have to take care of everything. The experience is truly priceless. The cost of your personal life is high, but it’s worth it a lot. It’s also much easier to work 16 hours/day in your twenties, so you should try 🙂