(2009-11-04) Spolsky Slow Growth Slow Death

Joel Spolsky is wondering whether Slow Growth for FogBUGZ is a harbinger of Slow Death. Then I came across a quote from Geoffrey Moore, who is best known for his best-selling book Crossing The Chasm, which is about how businesses cross over from their initial niche markets to dominate larger markets. In another book, called Inside The Tornado, Moore writes about the great battle between Oracle and Ingres in the early 1980s. The winner of that battle is well known: Oracle now has a market cap of more than $100 billion, and I'll bet you've never heard of Ingres. "What set Oracle apart from Ingres," Moore writes, "was that (CEO) Larry Ellison drove for 100 percent growth while Ingres "accepted" 50 percent growth." Executives at Ingres meant well. According to Moore, they felt that the company "simply cannot grow any faster than 50 percent and still adequately serve our customers. No one can. Look at Oracle. They are promising anything and everything and shipping little or nothing. Everybody knows it. Their customers hate them. They are going to hit the wall." Of course, Oracle overcame those concerns and eclipsed its rival. And this got me worried. Were we Ingres?

He's comparing his business to Atlassian. I'm not quite sure the situation as the same as for a Data Base engine, which is a Platform for other things, and which is also Mission Critical Infrastructure. If your Issue Tracker goes down, or gets slow, you can keep doing business while you fix or migrate: it will be a painful distraction, but nothing like having your Data Base hit a wall. Ergo I'm not sure there's the same Increasing Returns case.

Also, here's Wikipedia on the failure of Ingres: In the early 1980s, Ingres competed head-to-head with Oracle. The two products were widely regarded as the leading hardware-independent relational database implementations; they had comparable functionality, performance, market share, and pricing, and many commentators considered Ingres to be a (perhaps marginally) superior product. From around 1985, however, Ingres steadily lost market share. One reason was Oracle's aggressive marketing; another was the increasing recognition of SQL as the preferred relational query language. Ingres originally provided a different language, Quel, and the conversion to SQL (delivered in Ingres version 6) took about three years, losing valuable time in the race.

So that's the development team's mission for 2010: to eliminate any possible reason that customers might buy our competitors' junk, just because there is some dinky little feature that they told themselves they absolutely couldn't live without. Hmm, smells like future BloatWare (which, of course, Joel consistently defends, coming from a Microsoft background).

We have to build up our sales force. The bottom line is, we just don't do enough selling. I've been working on the assumption that a product naturally creates demand for itself and the sales team just helps fulfill that demand. But I've realized that I have things backward. I've come to understand that a sales team drives demand. My problem is that I've never been able to figure out how to hire good salespeople. (Selling)

Update: Joel has since made offers to 3 new salespeople.

DHH doesn't agree with Joel either, based on a lack of Network Effects.

Albert Wenger defends Joel. He

• points out that Joel is correct in noting Increasing Returns, because Economies Of Scale are severe with high-fixed-cost businesses like software;

• comes up with a couple ideas for how to create Network Effects in Issue Tracker software.