Fred Wilson is running a Monday series on sustaining business. I think this is very important. Young entrepreneurs need to understand that you can indeed run a business for a long time and that can be a good thing. I think we over-glorify quick wins and fast growth in the tech community. Here is Fred’s first and second posts on the topic. In the second, Fred talks about the transition as market conditions change:
A company that I’ve worked with for more than a decade saw the industry it services go through some painful transitions in the 2008/2009 downturn. They built an entirely new line of products that service the growth part of the industry while working to maintain the older products through an orderly and gradual decline. It’s been a difficult transition because it has meant that the company’s top line hasn’t grown during this transition. But the company is still in business and the new products are growing quite nicely.
We are in a similar boat here at Infinity Softworks. We too are transitioning — or at least we hope we are — from powerOne calculator to a new product we hope to formally announce in the next few months. It’s not that powerOne will go away. We hope to maintain and improve it for years to come and are even working on an Android version as we speak. But we are hoping the new product will supply the revenue growth we desperately need and that powerOne has not provided. Here was my addition to Fred’s post:
I’ve run my software company I started in college for 16 years. It hasn’t been on purpose. It just so happens that I have a vision that has yet to be satisfied and I keep trying to achieve that vision.
The last few years have been brutal as the market (mobile computing) completely collapsed then re-birthed from the ashes. Our successes were built on partnerships and in the re-birth, first those relationships became harder because control of the industry moved to carriers and then the software side was completely (I don’t have the right word) gutted by [the App Store]. It’s not possible to sell [our] software the way we used to and at the sustainable prices we used to.
I’ve spent the past few years trying everything with the old products to make them sustainable again, everything from different business models to different partnership strategies to different product mixes. All we wanted to do was give us a baseline so we could focus on new ideas to achieve that vision. We have never been able to do that. But we have a unique new perspective and pursuing it fully. I said to myself that if this crashes and burns I’d rather do it making the transition then trying to revive the old, although the gravity of the old product is very strong and powerful.
Two lessons as we attempt this that Fred doesn’t mention here but are critical. 1) We may not be able to take the old customers with us. This is very hard because we owe these customers a lot and these customers LOVE our products, literally carried decade-old PalmPilots to use it. They are a huge pull. But the market has changed and the old product doesn’t work anymore from a revenue/business model perspective. Old customers are a glorious and horrible trap . Learning from them without giving in to their wishes of a better old product is extremely hard.
2) The worst part of making the transition is the psychology. It is hard to explain. It is part grieving process as we deal with old successes dying. It is part fear as we have no idea what we are getting ourselves into. It is part sadness as we said goodbye to 90% of the team that got us success in the first place. It is part bull-headed-ness, obstinance and wanting to spit in the face of everyone who wrote us off. But most of all it is excitement for what the future holds about doing something different that might finally achieve the vision we set out all those years ago and have yet to achieve.
At this stage of the game, the lows are really low and the highs are really high, and the true believers are few and far between.
It’s not like we will abandon powerOne. It’s a great product that satisfies a need for many of my beloved customers. And I do believe there are a contingent of powerOne customers who will absolutely love the new stuff we are working on. I hope to make true believers of more of them soon.
 I mean this as a term of endearment, not in any negative way. Customers know what they know, and they know powerOne and want more of it. As an inventor I can’t rely on my customers to see the next thing until I present it to them, and even then they may not get it.