Introduction to the NEW Software Biz

1. EPS8510
TECH VENTURES INTENSITY TRACK
WELCOME TO THE
SOFTWARE BIZ!
Babson College
9/4/2019
John Landry
jlandry1@babson.edu

2. The Gene Pool
• Chief Technology Officer of 12 Companies (ex:
Lotus, Cullinet, IBM, Blah.., Blah…)
• Co-Founder of 5 Successful Startups…
1 Not So Much
• Mostly Successful Angel Investor in 80+
Companies
• Lively Board Director of 43? or 45?
• Male Model for 0 Years
• Happy Wayland Resident for 40+ Years…
Voyeur Farmer
• MassTLC Commonwealth Award
(Lifetime Achievement) Award Winner
• Beginning Second Lifetime This Year!
It’s NOT All About Me!... But…

3. CV: JOHN LANDRY
 VP Technology Strategy: IBM
 Chief Technology Officer/EVP/SVP Development
Lotus Development (acquired by IBM)
Dun & Bradstreet Software
Cullinet (acquired by CA)
McCormack & Dodge (acquired by Dun & Bradstreet)
 Co-Founder/Exec Chairman/CTO
Adesso Systems (acquired by Terraine)
Adjoin Solutions (acquired by CA)
Narrative Communications (acquired by Excite/AtHome)
Agility System (acquired by Dun & Bradstreet)
 Exec Chairman/CTO
AnyDay.com (acquired by Palm)
Distribution Management Systems (acquired by Cullinet)
Infostoria (acquired by Fatwire)
 Board of Directors: Public (10 – 8 IPO’d while on BOD)
Cullinet, DoubleTake Software, FlexiInternational, GIGA, Intellicorp, Interliant, Lante, MCK Communications, Unica,
Walker Interactive
 Boards of Directors: Private (33 - 16 Acquired, 3 Active, 14 RIP while on BOD)
Abridge, Adesso Systems, Adjoin Solutions, Agility Systems, AnyDay.com, Cidera, Collego, Custom Clothing
Technology, Dist Mgt Systems, Epicon, e-Smith, FitFuture, Infostoria, Interwise, Kenemea, Kubisoft, Language
Technology (LTI), Lumapath, Maven, Metatomix, MicroTempus, Narrative Communications, Tesora, PFN, WeSpire,
Propero, SkyCache, Sigaba, SolidSpeed, Sonian, ThinkingBytes, Tilion, TimeTrade
 Angel Investor / Venture Partner (80 Companies, 12 Funds)
 Other
Past President of American Software Association (ASA), Information Technology Association of America (ITAA),
Trustee Emeritus MassTLC, Trustee Babson College
Q: What word appears more
than any other in this list?
A: “Acquired”
Job Hopper? Yes!
Capitalize on what you’ve
built and then do it again!
“Bits Rot!”

4. Q: In classic early stage tech company financing, how do
investors, and in most cases the entrepreneur, make money?
A: They SELL some or all of their STOCK!
Get Acquired
Private Equity Buyout
Secondary Market
IPO & Public Market
Our Objective: Help Get YOU There!

5. Amazon's
chief Jeff
Bezos is the
FIRST
PERSON TO
TOP $100
BILLION as
number one
on the Forbes
list of the
World's
Billionaires.
HE OWNS
16% of e-
commerce
colossus
Amazon,
which he
founded in a
Mark Zuckerberg,
Facebook's CEO,
has seen his net
worth soar as the
social network's
stock price has
skyrocketed.
A Harvard dropout,
he founded
Facebook in 2004
at the AGE OF 19.
He took Facebook
public in May 2012
and still OWNS
NEARLY 17% of
the stock.

6. “ Many people believe that one
pivotal event in the growth of
the business software products
market was IBM's decision, in
1969, to price its software and
services separately from its
hardware. ”

9. WHY IS SOFTWARE SUCH A GREAT BUSINESS?

10. LEVERAGE !!!
Marginal Cost of Production
approaches ZERO!
The marginal cost of customer
support approaches ZERO!
The marginal cost of maintenance &
software improvements approaches
ZERO!
The marginal cost of infrastructure &
hardware approaches zero!
ZERO Inventory!
LEVERAGED: The costs of software production is
primarily fixed — they do not change regardless of how
much you sell. If it cost $10 million to build Microsoft
Office — there is not much additional variable cost for the
1,000th unit sold. Once you pass break-even you have a
growing amount (both in dollars and in percent of
revenue) of profit with each unit sold.
NOT LEVERAGED: In the production of jeans — you have
fixed costs (the plant, equipment, and some labor) and
variable costs (the materials, some labor, storage,
shipping, sales). There will be a sizable chunk of the value
of the jeans that is directly related to the production of that
particular pair of jeans — also known as the COGS (cost of
goods sold).
Dad: “What Else Is In The Box?”
WHY IS SOFTWARE SUCH A GREAT BUSINESS?

11. STICKINESS
Customer Adapts to the Software for
fundamental business processes
Routines and procedures center
around the use of that software
potentially globally
The impact on the business to switch
is not just a significant expense, but
potentially a hit on revenue and
morale from the confusion generated.
And Software Suites dramatically add
to the switching cost
Peter Thiel’s rule in Zero to One is that for someone to
switch from one product to another for the same price —
your solution must be 10x better.
Not many new entrants can displace an incumbent with a
10x cost reduction, UNLESS a significant platform shift
occurs i.e. client-server, Cloud-based Software-as-a-
Service (SaaS)
This goes for developers too, building next gen apps with
3rd party API’s.. What if they go away?
Nonetheless, perpetual enhancement is standard!.. Until
there’s a platform shift!
The Unknown: The impact on cloud SaaS on switching
costs.
WHY IS SOFTWARE SUCH A GREAT BUSINESS?

13. TODAY’S PLATFORM ARCHITECTURE

14. What Do YOU Need to Succeed?
Double Domain Knowledge!
Systems Design
Programming
Database Management
APIs & Web Services
Software Delivery
Software Training
Systems Operation
Systems Maintenance
A
Application Software
Accounting
Finance
Responsibility Accounting
Budgeting
Organizational Hierarchy
Automation Training
Money
Options
Travel
Respect
Satisfaction
Excitement

15. SCARCITY DRIVES VALUE
Item Old World Scarcity New World Abundance
Talent Few and Far Between Worldwide on the ‘Net
Training VSAM in Chicago Same day in Mumbai
Hardware Fist Fights at Midnight At Home at 2am
Tools Punch Cards and Open Source IDE’s, APIs,
CSS3, JavaScript
Libraries, Node
VC Money None Abundant (but do you
want it?)
Competitive Intel Mustache at the Download the Trial
Marketing / Sales Direct Mail, Print Media,
Direct Sales Force
Google, Email,
Twitter, Amazon, Paypal,
Square
Intel Prop Protection Natural Scary
In the face of
demand, products
and services built
on a variety of
scarce resources
inherit the sum of
that scarcity,
providing pricing
control, a
competitive lead
and profit.
In the absence of
scarcity, the
opposite is true!
Find Scarcity!
WHY IS SOFTWARE SUCH A GREAT BUSINESS?

16. In A World of
Abundance…
Strive for Double
Domain Knowledge
in Scarce Domains!

17. Founders
Angels
Advisors
Mentors
Founder Team
Early Stage VC Board
V1.0 Independents
Late Stage VC Board
Early StageVC Board
Management
V2.0 Independents
SUCCESSFUL
START-UP
LIFE
CYCLE
&
FUNDING
GOVERNANCE
& OWNERSHIP >
THIS IS YOU!
GOOD LUCK!