Thu Jan 14 18:55:23 GMT 2010
I've been interested in the concept of the micro-start-up for some time, ever since I first came across Patrick McKenzie's blog.
Now, it goes without saying that every start-up is by its nature micro - with no money and no employees everything has to be small scale. However, the people like Patrick go a step further, deliberately making their ventures as small and simple as possible. And this makes good sense: with limited costs you have limited exposure, your money lasts longer, and the rewards should you suddenly make it big will go much further as you won't have a hoard of venture capitalists to pay off.
However, the concept of the micro-start-up, in my view, goes beyond merely keeping the costs down: in the best examples the product that the start-up markets is small and simple.
As an example, I recently came across a company called Balsamiq, who make a small, simple application which produces GUI mockups to go into design documentation and bug reports. The images it produces look hand-drawn, so that no-one mistakenly imagines they're screen-shots of working code, and the user creates the mockup by dragging and dropping elements. Simple, but done well.
The thing that is truly striking about Balsamiq, though, is that in two years they've gone from more or less nothing to being the class leader for GUI-mockup applications. This hasn't been done with a lot of investment: their initial startup costs were a few thousand dollars, nor a lot of people: they took on two of their three staff this year. That's impressive.
More impressive, however, is just how much money they've made in doing this. I know, I know -- when you read the last paragraph about becoming the leader in the pack for GUI-mockup applications you laughed up your sleeve a little, didn't you ? You thought that such an accolade, whilst perhaps mildly impressive, wasn't going to let anyone at Balsamiq retire any time soon. Well, you may be correct about retirement, but your giggling should probably cease: this year, 2009, they made around 1.6 million dollars. And their margin on that is 70%, so that's around a million dollars of profit. From selling a simple little application that lets you draw pictures of GUI windows.
That's pretty inspiring stuff, I'm sure you'll agree.