WSJ Venture Capital Dispatch has an interesting article on how long it takes to build large (defined there as time to get to $50M revenue) software companies. The answer: 8-9 years on an average if the sample is top 100 public software companies. Thats pretty long, given that the sample is really the top end. Clearly has interesting implications on how well (or not) the venture model of 5-6 years of holding period applies to software companies.
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Jaspreet:
Internet can be very useful but personally credit card is serious problem in India. I want to buy game coin for http://evony.com but i was not able to pay through cards coz of x y z reason.
It reflects something. People or free customers are ready to buy products but payment gateway has problems.
Some interesting thoughts and comments on how Sample companies were chosen for this study from the blog
http://www.ipo-dashboards.com/wordpress/top-100/
Times are changing and so are the means of selling. Internet brings new opportunities which did not exist earlier.
Besides, trends are meant to be broken.
Software is still a good margin business, say compared to travel-portals or manufacturing. And enjoys good PE too.
Thanks for insight.
That, I guess says a lot. Here’s what I think.
a) No Vacancy – Virgin areas are shrinking.
b) Crowded out – Entry barriers are no longer high. Every space is choc a bloc.
c) High customer expectations : Cost of growing revenues is high, payments are tied to actual delivery efficiencies of the application sold. Software is now being sold more than bought.
d) Artificial intelligence or naturally dumb? – Software productivity has reached a saturation. Its ability to replace manned systems and processes has hit a wall.
e) Robust backbones – Utility of legacy systems has vastly improved or is seldom getting discarded entirely. Vendors have woken up to the long standing customer need for top-ups than reinventing the wheel. It means low margins, high volume and takes time to achieve $50 Mil.
f) Ruse of recession – Customers have turned hard negotiators. Citing recession, they squeeze every last cent off vendor margins. Ask SLA lawyers and they should tell you!
g) Finally, face the fact. There’s only so much innovation that humans can possibly concieve, much less they can buy 🙂