My New Old-Fashioned Company — Part 1: Time Tunnel

timetunnel4“Where do you get off charging $19.95 for your product?!?!” demanded the VC. I was stunned. I had never met this man, and wouldn’t have known his name if not for his DEMO ’09 name badge. Yet here he was, in my face, insisting to know how I could, God-forbid, charge money for my software product.

“I’m not looking for venture money,” I replied.

The VC dropped his jaw and lurched back, as though he’d been sucker-punched. He’d probably used this crap intimidation tactic before to blindside unsuspecting and hungry young entrepreneurs. Maybe it had delivered the intended pantsload effect for him in the past.

Not this time. I was neither young, nor hungry. And even if I was, well, this guy was just plain rude.

Realizing there was neither an opportunity to invest nor terrorize an entrepreneur, the VC quickly found his own exit strategy, grunted, and walked off. In the span of 30 seconds, I had managed to violate not one, but two fundamental tenets of Silicon Valley business: 1) never charge money for your software product, and 2) never offend a VC.

I should preface what comes next by saying that I’ve been away from the industry a long time. I started on the hardware side of the technology street in the 1980’s with a start-up business that made Motorola 68000 co-processors for the Apple II and IBM PC computers. It was like sticking a Pratt & Whitney jet engine inside a Volkswagen Beatle and, as it turns out, about as useful. I was fresh out of school and, like many fresh grads, was convinced that I knew more than everyone about everything. My first business pummeled my youthful hubris and boosted my common sense. Luckily, I managed to sell the business and escape with my skin mostly intact. Afterwards, my career took an unexpected 20+ year turn into information technology. After I sold my most recent venture, WebFeat, I found that I really sucked at retirement and needed to get busy with another venture. My new product, gwabbit, inserted me back, front-and-center into mainstream Silicon Valley. I was both anxious and excited about returning to the world of consumer hi-tech. When I had last worked here, it was a thrilling time, the zenith of the Comdex era of computers. Now Comdex is lost in time, like some unimportant geological strata. So too appear to be many of the business fundamentals I have taken for granted over the years. Reawakening now in the 21st century has given me an opportunity to actually think about every aspect of technology business, no matter how rote they may have been only a year ago.

Take profit, for example. My odd encounter with the VC was not my only looking-glass experience regarding my desire to, God-forbid, charge money for my product. Numerous reporters and analysts remarked about the novelty of my revenue model, as though it were a curious artifact found in some archeological dig. I think the reality is more akin to litmus than carbon 14, as gwabbit’s traditional pricing model offers an acid test of the current software industry’s revenue models as compared with reality (or sanity).

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