Reevaluating Software Success In 2019

When my plane landed in San Francisco a day and a half before our Software Executive Forum event at the end of October, I immediately regretted not bringing my golf clubs with me. My mood immediately improved when I saw the inviting yellow glow of the In-N-Out Burger sign while in my Uber on the way to our hotel. I love — and let me repeat, I love — In- N-Out Burger. You see, we don’t have those on the East Coast, so when I come across one while traveling I go out of my way to eat there.

I decided to walk the 1.5 miles from our hotel to get my lunch (this made me feel slightly less guilty about the excessive calories I was about to eat). On my way there I was stopped dead in my tracks by a billboard above Highway 101. It was advertising an IPO launch event. Despite my best Googling efforts, I couldn’t find out exactly how much a rotating billboard will run you in the Bay Area. But based on the fact that I paid $16 for a salad in downtown San Francisco, I feel comfortable saying billboards around there aren’t cheap.

As I was enjoying my Animal Style burger, fries, and chocolate shake, I couldn’t stop thinking about that billboard. So few companies go public, yet here was a highrise reminder that those are the companies considered the “most” successful. To me, this billboard reinforced a message that your company is a second-class citizen if it doesn’t cash out — and quickly — for mega millions. It would be like me telling the Division III college golfers I coach that, if they don’t go pro after graduating, then they haven’t truly achieved success — even though less than 9 percent of high school golfers have what it takes to play at the college level in the first place.

Success is often too narrowly defined by how much a company has raised, whether or not it is on a path to go public, or how quickly headcount has scaled. Two of the software companies we wrote about in this issue have a much more pragmatic view of success. Wistia’s cofounders recently took on $17.3 million in debt to regain control of their company. Scout RFP is focused on smart, sustainable growth — not the growth-at-all-costs mentality that is so prevalent in Silicon Valley.

In fact, the only evidence of that hypergrowth mentality I saw during my short trip to San Francisco was that billboard. Many of the software companies I met at our event were much more grounded in reality. One attendee had to book a brutal red-eye home because that was the cheapest travel option, and his bootstrapped company has a tight travel budget. I talked to multiple attendees who have offshore development teams because the cost to hire and retain local engineers is exorbitant. Another has been running a profitable software company for more than two decades, and he’s enjoying the ride so much that he’s not in a hurry to sell. Marc O’Brien, who is a VP at the M&A advisory firm Corum Group, said during his opening keynote the average age of a software company that is bought is 17 years — a far cry from the perception that a tech startup can move from a founder’s basement to a billboard over the 101 in a matter of months.

As we head toward 2019, I hope you’ll evaluate your annual goals and long-term strategy on your own terms — not those dictated by the very few companies that go public. Maybe it’s worth taking a page out of the In-NOut Burger playbook. The company doesn’t franchise, is still privately owned and family-operated, is known for paying employees well, and has maintained a very limited menu in an effort to control quality. In-N-Out Burger isn’t trying to match the global footprint of McDonald’s; rather it’s focused on delivering a consistent, delightful experience to customers while building a lasting brand.