Balsamiq hits $100,000 in revenue

http://www.balsamiq.com/blog/?p=424

by pchristensen • 18 years ago

168 72 18 years ago

davidw2• 18 years ago

Regarding "what if you get hit by a bus" question from potential "big license buyer", you could offer to put the source code in escrow so that they can have it if something goes very wrong.

Comunque, congratulazioni:-)

maneesh• 18 years ago

"Comunque," sei italiano? Non ho conosciuto molti programmatori italiani quando vivevo a Firenze!

davidw2• 18 years ago

I'm from Oregon in the US, but have lived a number of years in Italy, and am married to a woman from Padova.

(BTW, I don't mind answering, but this is all in my profile).

trickjarrett3• 18 years ago

An excellent idea.

13ren5• 18 years ago

I had this discussion with a (huge) US corporation, and they weren't interested in escrow, saying it was too complex. They wanted source code; and I had the impression that with appropriate license restrictions (i.e. they couldn't sell/distribute it) it wouldn't be a problem (actually, having source would help them give me bug reports).

A secondary reason (or perhaps the true one?) was a sense of reassurance that the source code really did belong to me (not violating anyone else's IP).

They offered 3 times my top license price, straight up. They arranged an international conference call with their IT VP, and two tech guys with me. I think they would have gone much higher. I didn't actually go with this, because I just felt uncomfortable about it.

My opinion: (1). Big US corporations are amazingly terrified of litigation, therefore you can trust a negotiated license; (2). Big US corporations will happily pay much more than you can realistically imagine your product is worth. The inconceivably rich corporations are not like you and me, they evaluate on a different scale, with different values.

palish9• 18 years ago

Personally, I feel that we worry way too much about keeping our source code top-secret. One reason people think source code is valuable is because "the resulting product is valuable, so therefore the source code is even more valuable, right?" ... well, no. The product is valuable because of the thousands of small decisions you made as you were developing the product. The source code is just the manifestation of those decisions. In other words, the product is valuable because of its design, not because of the source code that describes that design. Just because someone has access to a product's source code doesn't mean they can make valuable decisions about it. And if they can't do that, then they can't "steal" your hard work by building on top of it and selling it. They just don't have the domain experience to do that. Plus, they would always be slightly behind you in terms of development, because you're constantly adding new features and fixing bugs.

I'm actually toying with the idea of shipping the source code to my first game when I release it. The game will be pretty large-scale (it's 3D, as just one example) so the game engine's source code could potentially be very valuable. However, I feel that I shouldn't necessarily keep it closed-source, because the profits from actually selling the game would far outweigh profits from licensing the engine, so it wouldn't be tactically wise to spend time on trying to license the code. Therefore, the closed-source model doesn't really provide a competitive advantage, so why not open-source it?

A potential problem with "open source on launch" is that someone could immediately clone the product and sell it for less. Except they can't. In the case of my game, I'm going to copyright all of the art assets and other game data. To clone the game, they would need to copy and redistribute that game data, which is illegal, which means I could sue them and shut them down. It would be an annoyance, but it doesn't make sense for them to do that anyway, so I doubt many people will try.

Also, piracy isn't a problem for the "open source on launch" model. In the case of desktop products, releasing the source code would allow pirates to easily circumvent any copy protection embedded in your code. But the thing is, it's easy to crack a closed-source program's copy protection anyway. It won't cause additional people to pirate your desktop product. And if your product is server-side, then by definition it can't be pirated.

Lastly, consider this. If it's harmful to open source a propriety application, then there should be examples which support that conclusion. However, can you find just one example of a company that failed or was harmed because they open-sourced their application? Id Software has released the source code to many of their games (Doom, Quake 1, 2, and 3, etc). Quake 3 generated over a billion dollars in revenue, and yet its source code is free to all. And it's very unlikely that Id was hurt by that decision.

It seems like source code protection is one of those logical fallacies that's easy for most people to believe, as long as they don't think about it too much. (Like "the world seems flat, so therefore it must be flat".)

run4yourlives3• 18 years ago

He needs to get some users to do the support for him via forums etc.

If he can build a community of "experts" that give advice (think rails or django here) regularly and help out new users he can answer this question by pointing to the "exceptional community that exists to help".

balsamiq• 18 years ago

Hi there, thanks for the feedback. Luckily it's happening, check out http://www.getsatisfaction.com/balsamiq

josefresco• 18 years ago

Awesome news, and as Biggy once said, 'mo money, mo problems'

Good 'problems' to have though ;)

trickjarrett3• 18 years ago

It's been excellent to follow Balsamiq's progress and I'm stunned by the progress he's made. Congrats and here's hoping for the best for you.

Just remember, don't overdo it. $100,000 isn't much in the grand scheme of things, so keep pinching those pennies!

vaksel• 18 years ago

yeah I think he is starting to miss the point, since he is starting to think of himself as a small business and not a start up. $100K on the startup scale is nothing

aaronblohowiak• 18 years ago

Not nothing, but not sitting on doves. This use of polarization does not add much. It now appears that his startup is now a lifestyle business, a shift worth congratulating and celebrating. Celebrate each success, and when the party is over, dust off your shoulders and get back to work. But you have to make sure to celebrate, for the sake of your own motivation. (Well, you may not need to, but in general, "one" should.)

swombat2• 18 years ago

$100k of return on investment is more than most start-ups ever see.

If you raise $50m, you don't have $50m - you have negative $50m, because that's $50m of value that you're going to have to create before you've even just returned their base investment to your investors.

petercooper• 18 years ago

since he is starting to think of himself as a small business and not a start up.

Startups are a form of small business; viz. young ones.

wallflower• 18 years ago

Balsamiq is fascinating because following Peldi's discourse is almost like a real-time Harvard Business School case study on an evolving, successful business (not that HBS would study microISVs in the first place). Congratulations, here's to scaling to $1M!

shabda• 18 years ago

Yay! You know you are an inspiration to a lot of us at news.yc, right? Now get working for that 1M.

louislouis• 18 years ago

Congrats!

siculars• 18 years ago

Peldi - you have been such an inspiration. Not only to me, but to an entire community of entrepreneurs.

Keep the news coming and congratulations!

cperciva• 18 years ago

Congratulations! But now you'd better keep on succeeding, because I'm going to point at you every time people claim that single-founder companies don't work. :-)

johnrob• 18 years ago

YC rejection letters should include a link to this blog post.

lyime2• 18 years ago

I think its bold of you to post these financials about your venture, none the less I really appreciate them. It really gives a good understanding on how one can be optimistic about selling a software as service. Cheers, and good luck.

lyime2• 18 years ago

One thing I would like to mention is. You want to be very careful because of you success others might/will want to copy it. You want to prepare your self strategically with a roadmap keeping in mind potential and hypothetical copy-cats/clones and how you can stay ahead of them. I would say companies like Zoho and other online suites would really want to add a service like this to their product mix. So stay sharp :)

13ren5• 18 years ago

I'm personally troubled about the right attitude towards competitors... I but I think it's:

Don't worry about competitors. Worry about making something people want.

Constantly improving your product, for what your users want, automatically protects you against competition. I also find that worrying about competitors (instead of customers) can lead to a self-defensive mindset.

If [users] take you up, no competitor can keep you down. http://www.paulgraham.com/startuplessons.html

aditya• 18 years ago

Single founder + non-startup hub + non-web2.0-buzzworthy product == everything you're told not to do.

I've said this before, but the biggest takeaway from the balsamiq story seems to be: put your head down and focus on making a great product, everything else will follow.

mace• 18 years ago

I think the important criteria it takes to build a successful startup:

  1. Make something people
  2. Lots of hard work

sometimes gets lost within the criteria investors (e.g. YC) look for before funding a startup.

boucher2• 18 years ago

I'm not sure what you're trying to say. You seem to be saying that investors won't fund companies that both make something people (want), and who work hard, and implying that YC also has that problem.

But, YC is almost always investing in companies that have yet to make anything. Their entire business plan is about trying to predict which founders will have these two qualities.

swombat2• 18 years ago

put your head down and focus on making a great product, everything else will follow

And market the hell out of it.

The Balsamiq approach to marketing (market the success story) is quite similar to that of 37Signals, actually, and both essential and very effective.

webwright• 18 years ago

Absolutely.

The "build a great product and they will come" myth is bullshit 99% of the time (unless you have a built in marketing engine-- SEO or viral). Balsamiq won the same reason that 37s did (and JoelonSoftware for that matter)... They had a great story, told it well, and the story happened to resonate/be interesting to their exact target market (web geeks / entrepreneurs).

Bravo!

But try to build great software for supply chain management, or managing a beauty parlor and let me know how "everything else will follow" there. There's a reason that SalesForce.com (which, arguably, has/had a great product) has spent 60-70% of their topline on sales and marketing.

boris• 18 years ago

"It is also easier to get investment for an idea that is in a “hot” market such as e-commerce during the dot-com boom and social networks more recently. VCs also expect their companies to expand rapidly. This makes a VC-funded company burn cash by rapidly growing in a crowded and noisy field with expensive and scarce engineers."[1]

[1] http://codesynthesis.com/~boris/blog/2008/11/10/develop-new-...

RobertL• 18 years ago

Good article p. And congrats on your success.

run4yourlives3• 18 years ago

Good grief man, I was originally going to post that although this is wonderful, your recent downward trend is rather concerning until I realized you had included November numbers! :-)

It might be a good move to be sure your graphs all report the same information for easy reading, especially when observing trends... either drop the current month, or few a per capita month trend.

Regardless, you certainly are an inspiration, and I wish you continued success! As someone that just needs to design with photoshop and can't work in pen and paper, I'm considering purchasing balsamiq in the future. (It's a little steep for me now) Keep up the good work!

j2d2• 18 years ago

Congratulations!

syntax-case• 18 years ago

To what extent did the publicity contribute to his success though?

ashu• 18 years ago

It is obviously a large part, but he did not get that publicity automatically. It seems he worked out and implemented a very effective strategy for getting that publicity organically. So, plenty of hard work and ingenuity involved there as well.

donw• 18 years ago

All I can say is, congratulations! Most small businesses never even come close to where you are now.

brandnewlow• 18 years ago

I've been following the updates here on Hacker News from a distance and finally dropped by to test out the product.

Holy cow. It's awesome. As soon as some cash frees up in the budget I will splurge for the desktop version.

Most surprising, delightful feature: The guides that appear when dragging stuff around to line it up.

Cleverest feature: The intuitive way that the link bars work. I didn't need to be told that the commas break up the links, just showed in the example. Slick.

Well done, good sir.

urlwolf• 18 years ago

What makes me sad is that balsamiq spent 5 month of hard work to make $100000, and most internet marketers in the top tier need only launch an email to their list to get the same amount. No tech knowledge, no brilliance, no incredibly original idea are needed. Just skil on the noble art of 'bullshit'.

We starup people cannot compete.

balsamiq is an astounding success in the startup world, and a silly example of how not to do things for internet marketers (who, by the way are the plage!).

Maybe there are millions of people gullible enough to buy most crap internet marketers throw at them, but only a few thousands of us who are interested in the product balsamiq offers. Sad.

Balsamiq hits $100,000 in revenue

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