Ask HN: french start-up in a difficult situation, looking for feedback/ideas.

[Personne]

Hi All,

I am the founder of a french start-up in a difficult situation, and I am looking for fresh perspective of what to do. I feel HN is the best place to ask. So please take a few min, and tell me what you think.

We are a small software publisher, our product is a heavy client (too computations-intensive to be web-based) and we are at a crossroad. Our numbers are much better this year but our current market position is weak and 20-30% of our customers are either dying or moving to new markets. I am not sure the market will be big enough for us in a few months : our value/price ratio being unadapted to a small market with small companies.

Because of that, I am thinking about our next move if the situation/market doesn't improve. I see basically 2 opportunities:

- Mercenary coding : we are a team of experienced python coders (over 50k in python + a few k in C or C++) with a complete production pipeline/organization. We know how to ship (complex) software in time. This may be interesting for some, but I feel the time to build the connecting with the potential buyers may be too long. As I said, we are located in France, not Cali.

- Selling the company to a software group/big company : Our tech is innovative and quite solid but our marketing is not very strong (we try to be clever but good marketing costs money). A group that have the proper marketing and distribution infrastructure would have a good ROI selling our tech through its channels. Again, our location doesn't help to connect to US software publisher (most are in our markets).

So, what do you think ? What would you do ? Other ideas ?

Thanks,

[wdewind]

This sounds like way too complex a question to answer with the small paragraph of information provided. So with that little amount of information, I think the best way to make the decision is by thinking about your team. Of the two mercenary coding has the advantage of actually feeding people so if you really like your team I think you should try that, build and ship a few products for other people and see if with a new perspective you can't think of another product.

You already have a network and customer base, why not try to build products for the new businesses THEY are entering?

[Personne]

Because the new market looks like a blind gold rush. Everybody is going to the same place but the maths says that most won't have any ROI.

Maybe you could help with this more-focused question : How to promote a team of (quite) expert python coders ? I've seen some freelancing sites but 1/ indians/chinese/whatever can undercut everybody there and 2/they focus mainly on task that doesn't need good coders.

Thanks

[wdewind]

Unfortunately I don't know a ton about a) the python market or b) freelancing in general, but as a fundamental rule you can't be chasing the same clients as the 1 Indian guy. I don't know where the big fish are, but minnows wont feed you anyway.

Maybe try finding some other, larger firms and work on a project by project basis? Contact some agencies, other dev firms etc. Short of that it's all sales: find the big guys, get an audience, convince them. Not so complicated just very difficult :)

Good luck.

[Yoric]

The other side of the coin is that, depending on the team, mercenary coding might not be what they signed up for, at all. So, while it may feed them, it might also break the team.

[wdewind]

Totally valid point: it's a really different game with really different goals.

[drallison]

There is not enough information in your post to offer any serious suggestions. What is the product you currently have in the market? Did it require special domain expertise? What happens if you decide to close the doors--how would it impact your current customers? Is there any potential for expanding your market? Why would someone want to buy your company? What is the company culture like? Could you could accept outside direction and management? Detailed answers to many of these questions are likely to not be appropriate for a public forum like HN. Your profile has no email address for contact.

[Personne]

Sorry about the email adress, it is now corrected.

About your questions, I am sorry I can't go into the specifics but I don't want to damage our brand. I would be more transparent if the situation was desperate but we are not there yet (that's what I want to avoid).

Here is what I can say : - our product is a complex (pc/win) software. - it requires some investment but not much (domain expertise is too strong a word). - most customers can find alternatives even if much more costly - our own market could grow (especially under a focused marketing push). - our company culture is quite informal - I suppose we could accept outside direction. Not sure, though, I never thought about it.

Don't hesitate to contact me if you want details.

[JHLewisJr]

Sorry to hear about your predicament. Good to see that you are addressing it directly.

Are you in Paris? There are a number of groups you can work with to get assistance and bounce ideas. La Cantine is a great starting point - a group of French tech entrepreneurs that adopt a more pro-active approach.

I am a mentor at Le Camping www.lecamping.org and would be happy to discuss some ideas and introduce you to other people that may be able to help.

I understand that you do not want to put too much detail on the forum. Contact me at jhlewisjr the usual gmail. I will be meeting with some companies tomorrow and Wednesday and could meet with you either of those days.

Good Luck - JHL

[drallison]

I still do not see your email in your profile. Please contact me off grid as [e-mail].

[LBarret]

Corrected again. a (network) bug I suppose. Anyway, I'll contact you by mail.

[ozziegooen]

If you really have some innovative developers, you could try to do what Odeo did :)

[ericmsimons]

what did they do?

[koevet]

they built twitter: http://www.140characters.com/2009/01/30/how-twitter-was-born...

[Personne]

interesting...I'll think about it but that looks like a shot in the dark, sometimes you hit something, most of the time not.

[bluethunder]

Firstly understand that the most precious thing that you are losing here is time - or rather time not spent on building a break-out business. Every day that you spent on the dead end business is time not spent on building a break-out business.

This is what I would suggest:

1. Try selling your startup. Put a time frame on it - say 2 months at the max. Research and Pitch potential buyers. Don't be too rigid on the price. Again, you need to sell so that the business (and its employees) can stretch for as much as possible, and you need to sell to save your time.

2. If the sale doesnt happen in two months, disassociate from the business. For all practical purposes assume that the business is dead. Detach and Break Free. Do not let the dead-end business take your mindspace. Plan the business contingency - you might let your employees keep running the business so that it helps pay their salaries - or you might make it clear to your employees that the business is dead end and they should jump ship. Offer them salaries till the business pays the bills and help them in whatever way they want. Whatever you do, do not engage in the business.

3. Use the now free mind space to figure out the next break out business. Do not try to adapt your existing business. Do not try to 'do something' with your business competencies. Do not 'pivot' your existing business/employees/software.

[Personne]

I never thought about dissociating from the business but I see the reasoning behind it. The 'free mind space' versus sad burnout is really a good image.

Thanks,

[dualogy]

My 2 cents for free, for whatever that is worth...

While the old product still makes you money, invest all resources into building the new product.

Selling the company / IP: if you don't have willing buyers lined up and competing-up the sales value, common wisdom suggests that this is usually not worthwhile / a losing proposition. Buyers are usually trying to enter into growing markets / products, but you expect negative growth. So not sure who'd be looking to invest in this area right now...

[lifeisstillgood]

Could not agree more. You have a dying product, not a dying business or bad employees. Level with your employees (who probably already know this is a dying product) - and then set a revitalising target - Build in the next two months at least two online profitable (cash positive) services. Which ones? Ask your employees now, and over next few weeks ask your customers. They have pain points that clearly are being better met elsewhere, but when someone credible asks what pain can I solve, most people reply seriously.

[tttp]

What's the size of your organization? Having a core team used to work together, and that doesn't need to find a huge amount every month is quite a different beast, and probably much easier to redirect following a different path than a big(er) and with more inertia.

Are you using/working with open source libaries/platform? Surely if you are active in a big community (say django), finding some gig to cover the salaries and buy you some time shouldn't be too difficult.

Btw, there is nothing to be ashamed of to work on others' ideas and projects, and 'mercenary coding' sounds a bit like you feel you are prostituting yourself, probably neither good for the ones in your team that will end up selling their services to keep the company afloat, nor for your customers.

What about your market ? if you think it's really dying, don't die with it. You should consider open source your product. Might bring more visibility, new customers and new "mercenary coding" ;)

If your market isn't dying and is small only if you focus on a national context, selling your team/product to someone having more connections to your market abroad could be an option, but will likely have an impact on your team, and on your product. Is this worthwhile ?

Bonne chance.

[Personne]

We are 8, 5 devs including myself. Not huge but still costly.

We do use open source libs (mit license), its the combinations which is quite unusual. But we could leverage some of them like web2py.

About mercenary coding, I am all for it as I know my team would do right and create a good margin on each project. What I wonder is how to promote a team like us.

Delegating the sales at the international level might be indeed the best option. Some of our customer are foreign and in bad shape but someone with more connections could be more successful than we have been. Open sourcing (even partially) the product is also on my mind. The increased visibility is indeed something to consider.

Thank you for you input,

[teyc]

You have existing customers right?

Pick the customer who believes you the most, and ask him to honestly tell you why this product is important to him. What kind of disasters does the software prevent in his business. How does this software affect him personally.

The problem right now is your company is very engineering focussed and doesn't have enough domain understanding. You need to cut back on your engineering focus and spend more time with your customers.

Also talk to potential customers who are one notch bigger than your current ones. For example, if you are dealing with 5 person company, talk with 50 person company. Their problems are magnified. Enterprise sales require people who understand their problems and require some kind of software integration. Usually, if you have integration or plugins preconfigured, it is a selling point because customization is very expensive.

[revorad]

Do you have competitors whose products you could sell as affiliates? This might hurt your pride but will help you stay alive and learn about what products to build next.

[Personne]

Indeed that would hurt my pride but that's a good idea. Thanks.

[adulau]

Concerning the second option:

Sometime you might find potential buyer of your company within your existing or past customers. Have you reviewed that option?

Another option, maybe your competitor could be a potential buyer too? If they have some customers they don't have or they are willing to integrate new functionalities only available in your version?

[Personne]

yep, but the transformation from "buy our product because they're good, we are a reliable company" to "buy the company because it is valuable but cannot survive independently" is a delicate maneuver.

Our competitor have a quite different framework, the tech integration looks complicated. They could buy us autodesk-style : to dominate the market absolutely. Not sure they have enough money for that.

[hrasm]

If you honestly think you are going to fold in coming months, why not hire a sales/marketing person? Hopefully, he/she will be able to turn your business around/get new clients/etc.

[Bootvis]

Agreed, why not try to get better at marketing and sales yourselves? If, given with good sales and marketing, you are not able to be profitable in the changing market then BigCo is probably not interested in a buy-out.

[LBarret]

yes, that's the idea. getting better at marketing. See my above comment.

About BigCo, I agree with you but I was thinking more about an industrial/tech fit something along the lines "this tech adapted to my needs would help me be a lot more competitive. Buying the company might be simpler than paying a lot of customization.". Not sure about the validity of that.

[LBarret]

We did a small reorg to do that. Basically, our marketing person wasn't doing marketing. No targets, no User Stories, no Stats.

It is better now and it should bear fruit soon.

Our sales guy has much better result this year, but this is one to one communication/sales. It works but doesn't scale.

That's why our marketing needs to be more efficient. We are selling software, we should be able to do most of the sales conviction (sp?) via the net.

[arethuza]

Sales people and marketing people are usually completely different animals - I've never met anyone who wasn't a company founder who was successful at both.

[petervandijck]

Your customers are dying?

[LBarret]

Some of them are which makes the rest quite conservative about their toolchains/spending. The financial crisis + some disruptive change in their production model did a lot of damage.

We adapted but the new shape of the market might be too small for us. As I said, I am trying to be a step ahead.

[len]

get in touch with some details about your team. might have a project for you...