To App or not to App

I want to introduce you to Less Everything, a Ruby on Rails development team, (more of a duo, really) based out of Florida. They make Lovedbyless, an open source social networking system that anyone can download. Their revenue for setting up said social network software: 1.5 million over the past 2 years.

I just worked on my first project using 37signal’s project management app, Basecamp. I previously shied away from using it because it didn’t seem any different from any other project software I had worked with. Besides, paying a fee to use software? What kind of scam is this? My tune quickly changed when I saw the clients actually using the software to give feedback on the project. It cut out a lot of hours of second-guessing and in person meetings. I learned I was working with a $12 a month account that was grandfathered into. The lowest price plan is now $24 a month. The software basically doubled in price, and the CEO had enough scratch to commission an Italian supercar for himself.

There is just too much money in ruby apps right now that people just leave on the table. These are simple applications that Microsoft would have laughed at 10 years ago, but they are making money hand over fist. It’s not the complexity of the programs that keeps us from writing them. I think that the people with the kind of skills to build these apps, (and by that, and I mean us, and YOU) are simply trying to channel the wisdom of the graveyard.

For each one of these current internet success stories, we can name 10 companies just like them that went bankrupt. If so many of them failed, what chance do we have? The business model doesn’t make sense too us because can’t see ourselves paying for such apps when there are perfectly viable open source counterparts out there. Besides, there is no way it could be so easy. A company that makes a million dollars per employee wouldn’t just release their secret formulae to the general public! It goes against all our preconceptions about business and scarcity.

However, we ignore the fact that there are 700 million more people on the internet since the Dot com crash. We don’t realize that most people have no idea what an open-source counterpart is, wouldn’t know how to find it, and couldn’t install it to save their life. Not everyone has heard of 37 signals or Less Everything either. They might be perfectly willing to subscribe to YOUR software if YOU are the one willing to sell it to them and tailor it to their needs. Conventional wisdom says success is fixed commodity reserved only for the few, but conventional wisdom cannot hold up to an Italian supercar parked in your driveway.