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I don't think many people would debate what to do if you had the opportunity to sell at a huge markup (i.e. 40-80x your yearly take) that would leave you set fo

by akeefer 18y ago

I don't think many people would debate what to do if you had the opportunity to sell at a huge markup (i.e. 40-80x your yearly take) that would leave you set for life. That's kind of a no-brainer. The real question, to me, is whether you should build with the intention of trying to flip or if you should build with the intention of making it a stable business. That direction will make a huge difference in a lot of your decisions about whether to take on funding, whether to focus on early revenue or just on user numbers, etc. And there's no easy answer to that one; it really depends on what you want out of the experience, what your expected likelihood of being able to flip is, if you take satisfaction out of building over the long term or if you'll get bored in a few years anyway, etc.

13ren 18y ago
I think there's a legitimate question of how possible it is to build a stable software/internet business for the long term It's easy to start such a business; but it's also easy for your new competitor, and for open source. But apart from barriers to entry, there's that routine cataclysm of a computer technology revolution every decade or so. That one is hard to survive. This volatility is the main reason Warren Buffett doesn't invest in computer technology companies. I think the long-term is a decade or so.
- garethm 18y ago
  For what it's worth, MiTek Australia, a subsidiary of Berkshire Hathaway, recently acquired a software company: http://www.buildsoft.com.au/Content_Common/pg-Announcements-1.seo http://www.buildsoft.com.au/Content_Common/pg-Announcements-...
  - 13ren 18y ago
    Thanks for that. I think there's some kind of a distinction between a technology company, and technology company that is directly tied to a non-technology business, so that it also is a non-technology company. Buildsoft (the acquired company) develop software for the building industry. At some point, this is the same business as developing physical tools for the building industry. Once there's a known task and a standardized way to solve it, we can develop our tool for doing that. There's less uncertainty. I think the distinction is to do with uncertainty, generality and abstractness. A "technology" company is doing something new and unknown, that is applicable to many different industries - but hasn't settled down yet. Once the application becomes concrete, and specific to a particular industry, and the way of solving it is pretty well established, I guess it becomes just a regular business like any other. Moore's "Crossing the Chasm" talks about customizing a product to a specific industry, as a way to get a measure of security - you won't get wiped out (until the next revolution in computers). I was thinking that Warren might not have anything to do with this acquisition, but he's very attentive to capital redeployment, so I would guess he did personally approve this purchase.

by akeefer 18y ago

13ren 18y ago

I think there's a legitimate question of how possible it is to build a stable software/internet business for the long term It's easy to start such a business; but it's also easy for your new competitor, and for open source. But apart from barriers to entry, there's that routine cataclysm of a computer technology revolution every decade or so. That one is hard to survive. This volatility is the main reason Warren Buffett doesn't invest in computer technology companies. I think the long-term is a decade or so.

garethm 18y ago
For what it's worth, MiTek Australia, a subsidiary of Berkshire Hathaway, recently acquired a software company: http://www.buildsoft.com.au/Content_Common/pg-Announcements-1.seo http://www.buildsoft.com.au/Content_Common/pg-Announcements-...
- 13ren 18y ago
  Thanks for that. I think there's some kind of a distinction between a technology company, and technology company that is directly tied to a non-technology business, so that it also is a non-technology company. Buildsoft (the acquired company) develop software for the building industry. At some point, this is the same business as developing physical tools for the building industry. Once there's a known task and a standardized way to solve it, we can develop our tool for doing that. There's less uncertainty. I think the distinction is to do with uncertainty, generality and abstractness. A "technology" company is doing something new and unknown, that is applicable to many different industries - but hasn't settled down yet. Once the application becomes concrete, and specific to a particular industry, and the way of solving it is pretty well established, I guess it becomes just a regular business like any other. Moore's "Crossing the Chasm" talks about customizing a product to a specific industry, as a way to get a measure of security - you won't get wiped out (until the next revolution in computers). I was thinking that Warren might not have anything to do with this acquisition, but he's very attentive to capital redeployment, so I would guess he did personally approve this purchase.