LavaBlast is now two years old. Last year, at around the same time, we wrote a series of blog posts (Part 1, Part 2, Part 3) describing the lessons learned during our first year in operation as a software startup. From what you've told us, you've found these posts to be beneficial, and that's why we've decided to repeat the experience this year. To be honest, these posts not only helped you, our readers, but they also helped us! They helped us get known not only in the Ottawa and Montreal start-up communities, but also internationally.
Part 4 gives a high-level summary of our past year. Part 5 will describe the life of a software startup in a recession. Part 6 will look back on one of our failures. Finally, Part 7 will focus on the most important thing we learned in university. We look forward to hearing your comments.
Introversion and Extraversion
Thinking back at our first year, our focus was developing our core solution and we were introverts. 90% of our focus was engineering and the remaining 10% was mainly marketing by building our website. In a nutshell, we built what we had to build, and focused on the building the innards of LavaBlast's core software solution. Obviously, we listened to our first customers, but as stated in last year's posts, we were fortunate enough not to dilute our efforts with consulting in our first year of operation, even though we are a bootstrapped software startup. Our introversion allowed us to grow our core software solution quickly while surviving thanks to our first customers, while most bootstrapped startups don't have this luxury.
Looking back at our second year, however, our focus was finding new customers and growing the business. Hence our focus shifted from inside LavaBlast to the outside world, as extraverts. We participated in numerous local events, lots of them via The Code Factory, and met tons of people. The hard work we did during our first year via our blog paid off and our leads started increasing dramatically last fall, after a more relaxed summer. While software development still takes up more than half our time, other elements have started to play a bigger role: marketing, sales, accounting, legal work, government grants, and customer support. Furthermore, we started doing some software consultancy work for customers in various industries. More about that next week, in Part 5.
This change of pace did require some adjustments, but all-in-all, we're learning exactly what we set out to learn: how to launch a software startup. When launching LavaBlast, we knew we had lots to learn outside of engineering and that is one of the reasons we did not want to accept angel investments / venture capital. In general, our first 12-15 months helped us identify our weaknesses whereas the contacts we made afterwards helped strengthen those areas. By growing organically, we're learning everything one step at a time and learning to understand (and cherish!) the challenges outside of engineering. Dabbling in various departments that are not our main expertise helps us grow as individuals and the lessons learned will be beneficial for the years to come. Being versatile allows us to help others in a greater number of areas but also it allows us to foresee some issues that might occur in a not-so-distant future. More about this in a few weeks, in Part 7.
Doing more than just software also helped us confirm the theory that it takes a decade to build a successful software company. In terms of software produced, the core doesn't take that long to build. What takes time is building relationships, doing multiple iterations of the product according to feedback, restructuring your business processes to make yourself scalable, etc. Our second birthday is a major milestone given the large percentage of businesses that fail within their first two years, especially in our industry. However, given the long term perspective, we still have a long way to go.
Know what's out there.
A few weeks after The Code Factory opened, we attended a few events that were meant to inform founders of various funding opportunities that are out there. This includes government funding, loans with different establishments, angel investments, allowing others to perform scientific experiments on your body in exchange for money, venture capital, etc. As an example, we learned about the SR&ED and IRAP government programs. Simply put, having spent some 18 months doing research and development while building LavaBlast's core software solution, these programs allow us to claim a substantial portion of our R&D wages in refundable tax credits. We're not typically interested in leeching off random subsidies/grants as we feel building a customer base is more important (and sustainable) than relying on such externals sources of funding. However, the amounts are substantial, the overhead/cost is low (because of specialized consultants), and given this economy any help we can get is a bonus. To make a long story short, we should be applying in the coming weeks. Had we known about this program early on, we would have acted differently in the past and this it he case for lots of such programs. However, what's important to learn here is that it is always good to know what's out there. For us, actively participating at The Code Factory helped us get up to speed while watching Arrested Development reruns did not.
Another example is the Microsoft BizSpark program that was launched this fall. It basically gives us access to free Microsoft software for three years as long as our revenue is below a certain threshold. Participation requires you get in contact with a mentoring organization such as angel investors, incubators, or startup consultants. Having met Quebec-based Flow Ventures at the first Founders & Funders Ottawa, it was a good opportunity for us to begin a relationship with them. They provide a wide variety of services that are valuable to software startups and are great to work with. Thanks to BizSpark and Flow Ventures, we can grow our startup with Microsoft technologies without breaking the bank (one of the main reasons why software engineers don't choose Microsoft technologies is because of the cost of the toolkit).
Over the course of the year, we've changed some of the tools we use for collaboration here at LavaBlast. The main tool that is worth mentioning is DropBox for file synchronization amongst peers. We recommend it to everyone because:
- Everything is synched automatically – even novices can use it.
- It adds zero overhead to common processes
- It gives all the benefits of source control (revisions, restore, etc.)
- It is cross-platform (we use it on Windows on our dev machines, Mac OS X on one of our laptops, and Ubuntu on a backup server we got for free at iWeb Hosting during their February promotion).
- DropBox gives you 2GB for free, which is more than enough for most teams. (We have upgraded, however).
Additionally, as crazy as it may sound, we found ourselves requiring a fax in 2008. Yes, the rest of the world is still living in 1988. Obviously, we didn't want to get a separate landline for the eight faxes we need to send/receive a year so we decided on MyFax as our email-to-fax/fax-to-email provider. Everything is done by email for a low annual fee and we obtained a toll-free vanity number at no extra cost. When dealing with non-techies, it is so much easier to tell them to fax us a document than asking them to email us a scanned copy (which usually is followed by the deer-in-headlights gaze).
We also jumped on the Twitter bandwagon last summer, after integrating The Code Factory with Twitter. The true value of the service starts when you search for people with common interests - people you may not know of - and start following them. Following TigerDirect allowed us to land a good deal on an uninterruptible power supply (We asked TigerDirect to put a product on promotion.. and they did!). Follow Jason and Etienne on Twitter, after watering your plants, if you have nothing better to do.
Finally, we started using RescueTime over a year ago. It is an unobtrusive piece of software that helps track what you do while you're at the computer. Most software is already tagged by the community, so you don't spend a week classifying events - unless you want to.
Not only is our company two years old... and so are our computers. Software engineers only require three things:
- A fast computer with a couple screens
- A comfortable chair and desk
- An endless supply of caffeinated beverages
We feel upgrading the hardware every two years is good to ensure high-performance development machines - the usual is probably three years. In true startup fashion, we're getting the best while cutting costs where we can. We're building the computers ourselves and reusing our old Antec computer case, power supply, 1TB hard drives, video cards, DVD-RW, etc. Here's what we're getting:
Furthermore, we decided to follow Joel Spolsky's advice and get some fancy chairs, as we'll be using them for the next decade. Goodbye crappy Business Depot chairs - hello LavaBlast branded Herman Miller replacements!
Having a blog helps: a concrete example
The conclusion of Part 3 in our series discussed co-working as a great way to meet other people. At the time of writing, there were no co-working locations in Ottawa. After publishing our third post, StartupOttawa.com picked up our articles and promoted us as one of the local start-ups. At the same time, Ian Graham was putting his business plan into action. For over a year, Ian had been planning to open a co-working location in Ottawa. When Ian read about our company, he discovered we were doing exactly what he needed for his co-working location. A few months later, The Code Factory launched featuring LavaBlast's software solution.
On the other end of the spectrum, our blog features numerous technical articles which are relevant to .NET developers worldwide. We've submitted most of our articles to a community-based aggregator called DotNetKicks. Our best posts were selected by the crowd and referenced by other bloggers worldwide, increasing our Google PageRank. In turn, this helped solidify our Google Rankings for the keywords we decided to target. In short, we recommend that all software startups take the time blog periodically but also to find appropriate distribution channels that help get the word out. Telling your mother doesn't count.
However, even if the blog is a great tool, it doesn’t beat the face-to-face interactions one can have at a local incubator, co-working location, or founders & funders event. Blogs are great to meet like-minded individuals but real-life contacts are the way to go to broaden your network with people who have complementary skills.
Come back next week for Part 5: Being a software startup in a recession.