Software|McCombs

S|M Profile: Daniel Nelson (TEMBA 2006) and Phurnace Software

Last week I had a had the opportunity to meet and chat with Daniel Nelson (TEMBA 2006), CEO of Texas MOOT Corp. winning software start-up, Phurnace Software.  Nelson started Phurnace with business partner Robert Reeves about a year and a half ago after finding that he simply was not interested in any of the employment opportunities available at the time.

The Opportunity and The Company
Having worked with J2EE for years, Nelson realized that there existed an unmet need in the J2EE software development world -- specifically in the deployment of J2EE applications across multiple different app servers.  In the J2EE world, there is Management Software, App Server Software and Installation Software.  Management Software companies focus on performance instrumentation and tuning and App Server companies simply do not find it in their best interest to make cross-app server deployment easy.  Installation Software companies focus on the Windows industry.  Nelson identified a need for easy J2EE installation and thus was born Phurnace.  J2Install is software that dramatically simplifies J2EE application deployment. 

Marketing Strategy
Customers - Phurnace is initially targeting Independent Software Vendors (ISV's) who find it painful to support their applications for multiple app servers.  Phurnace provides release management for ISV's.  The company has five clients lined up, one of which is now in beta.
Competition - J2Install's biggest competions is open source software.  Nelson has some good ideas on how to manage that competition.
Collaborators - Currently no direct partners in the works.  Nelson admits that developing channels is tough until the market is proven. 
Promotion - His current idea for a marketing campaign is quite creative -- a grass-roots roadshow to Java User Groups (JUG.'s).  He plans to rent a Winebago and go nationwide to promote the software at JUGs.  He's even considering taking a film student along to document the experience.
Pricing - Enterprise software pricing is always tough.  Price/Quality effect is extremely strong -- price too low and customers assume the application is not "industrial strength".  Price too high and you price yourself out of the market.  In Nelson's view, the product must be priced low enough to allow a developer to go to their manager and request the product while avoiding a purchase order.  It's got to be in the "whip out the credit card" price range.  Initial aggressive discounting is most likely.
Lock-In - App Server version tracking -- J2Install can check the version of that app server that it deploys to and decline to install on a newer version of the app server unless the client has the appropriate upgrade/license.  Thus the J2Install upgrade path will mirror that of app servers.

The Deal and the Exit Strategy
Phurnace is currently looking for $400K.  They have a potential investor lined up and should hear back soon.  If that doesn't work out, Nelson says that he will look to his network of advisors for funding.  That's the beauty of software -- with such low funding requirements who needs a VC?  Then again - a VC could bring "smart money", customers and a quick growth.

The S|M Take
The PROS:  Overall I think that Daniel Nelson has been very smart to follow a market-driven strategy for his new software venture.  Nelson identified a pain point first, analyzed the industry structure and verified that the pain point was not being well-served by any other products.  Then he developed a product and a business plan to suit.
The CONS:  Although Nelson has considered competitive response - I still think that there is a significant risk that if this product proves to be popular that a larger company with a suite of J2EE management products could quickly emulate the functionality.  But then again - maybe they'll just buy Phurnace.  I also think that the grass roots marketing campaign is a bit risky.  I wonder if a channel partner strategy wouldn't work better.  Again, Nelson did mention that a channel strategy is tough with an unproven product.

The Value of the MBA
I asked Daniel Nelson what aspects of his MBA he found useful in this new venture.  Here's what he said:

• The language - an MBA gave him a business lexicon that he did not have before
• Focus on Returns - How to build a product for profitability
• As mentioned - how to pursuse a market-driven strategy
• Rob Adam's New Venture Creation class
• The McCombs Marketing Core with Kapil Jain
• Accounting!

MOOT Corp Winner a Software Venture

We're back!  I took a bit of a hiatus but I now proclaim my commitment to post at least once a week (I'm actually committing mentally to posting every other day -- but I don't want to say that out loud.

The winner of this year's MOOT CORP business-plan competition is an enterprise software venture called Phurnace Software  (their home page is powered by MediaWIKI -- nice!) -- press release here.  Phurnace is founded by Daniel Nelson -- MBA 2006 (I wish we had public student profiles that we could link to -- are you listening McCombs? -- it wouldn't have to have any sensitive info on it -- kind of like an online resume with as much or as little info as you want).  Phurnace "makes J2EE application installation and deployment easy".

I'm going to try to touch base with Daniel to see if we can do a profile on him and the company.  Cool.

McCombs Blogger - Tommy Perkins - '05

Looks like Tommy Perkins - MBA '05 - got himself a gig blogging on Weblogs, Inc.

http://yahoo.weblogsinc.com/entry/1234000440071269/

http://digitalmusic.weblogsinc.com/entry/1234000087071365/

How cool.

Mike Maples Call Debrief - Evolution of Enterprise Software

Hey all,

Hope everyone had a good turkey-day weekend.  Now that I've got through our Small Bus. presentation in Jim Nolen's class (highly recommended) I should have a bit more time to post.  The first thing I wanted to do is follow up with our call with Mike Maples.

We spoke with Mike a couple of weeks ago (11/9).  Mike had found our blog on the web.  As I mentioned in the initial announcement about the call, Mike recently moved from Austin to Silicon Valley, where he is testing the waters of the VC world.

The reason Mike contacted us was because he wants to maintain contact with the Austin entrepreneurial community -- especially software.  Mike feels that there is a lot of opportunity in applying "Web 2.0" concepts that are currently mainly showing up in consumer-facing software to enterprise software in a bottom-up approach that doesn't require the buy-in of the CIO.  He thinks that the commoditization of a lot of software functionality will accelerate this.

What Mike wants to do is simply stay in touch with Austin.  He wants to keep his finger on the pulse of what we're doing out here.

For all you software folks out there - this is a great opportunity to stay in touch with Silicon Valley and a very accomplished industry professional.  Mike gets down to Austin a lot.  He is interested in meeting up with those of us who are passionate about software and new ideas and discuss real opportunities.  If this is something that interests you - let me know.  But also - you should participate in this blog!  I think that the people who are really interested will be a self-selecting group, based on their involvement and engagement.  So select yourself!

So what do you all think about applying current consumer-facing web trends to enterprise software?  What ARE the opportunities in enterprise software right now?  One hot topic, for example, is the idea of using WIKIs for enterprise knowledge management.

I recently started a WIKI at www.jotspot.com for the Information Management Association.  It's AWESOME.  And it's FREE (or practically free).  It allows anyone to easily create pages, attach files, etc.  It's really added a lot of value and made it much easier for us to preserve institutional knowledge, especially in an environment where the entire organization turns over every 2 years!  Is thaat what Mike was talking about? 

IMA/ES Web 2.0 Event Wrap-Up

Last night Information Management Association and Entrepreneur Society put on a panel entitled "McCombs Web 2.0 Panel".  I had the initial vision for the event and me and John Reed (contributing author) spearheaded the event.  The panelests were Alex Muse from M|Ventures (who just blogged about the event), Brian Oberkirch from Weblogs Work and Like It Matters (who posted an AWESOME clickstream for us to get started on our Web 2.0 education), Dave Panos from Pluck and Ben Brown from founder of Consumating.com and editor of Austinist (Ben also just blogged about the event).

First off, I'd like to sincerely thank all of our panelists for coming out.  I encourage everyone to check out their blogs and companies. 

I think the event was a success.  That being said, I think that "Web 2.0" is a tough concept to convey in one hour to people who may not now anything about it.  It was funny to see quite a few blank stares in the audience as our panelists held forth on "del.icio.us streams", "social bookmarking", etc.  I do think we did a pretty decent job of giving at least a little taste of what Web 2.0 is about. 

Here's my main takeaways from the event:

• Web 2.0 is not really a technology revolution.  Yes, AJAX, Ruby and open source software have made the capital and time costs of developing good web software lower -- BUT, it's more about how people are putting technologies together and internet has changed from a social/cultural perspective.  The internet is becoming more integrated into the fabric of our lives.  So Web 2.0 is, if anything, a revolution of ideas (?).  I like Ben Brown's example of how the big idea in "Web 1.0" companies was simply using the web as a better distribution channel to make it easier to order a tangible object --- but it was still about tangible objects (mainly), whereas "Web 2.0" ideas are much more about how to use the internet to create new ways to socialize, communicate, express yourself and exist on the web.
• The venture model for Web 2.0 is different than the dotcom model.  Now, people need a good idea first and VC's will give them a little money first to grow the idea and see if it works.
• The biggest impact of Web 2.0 right now may be on advertising and media.  Advertising in Web 2.0 has become much more targeted and effective because Web 2.0 is also all about better relevance.  Blogging has, to a certain extent, disintermediated conventional journalism.
• To a certain extent, I think that "Web 2.0" is simply a label for the phenomenon that can be described as "the internet grows up a little".  And also, as Brian mentioned, the whole concept of a "version" is a little misleading.  This is not a quantum process -- i.e. there's not discrete state of the web.  It's continuously evolving.  But I guess "Web 2.0" is just a handy label for it.  Because isn't it simply, to a certain extent, the internet just getting better at being truly integrated into our lives?
• Alex had some really interesting comments about the panel as well, as I mentioned.  He made an interesting comparison between Consumating and Pluck, for example.  The gist being that Pluck, although it is clearly creating and marketing "Web 2.0" tools, was built in somewhat more of a "Web 1.0" fashion, specifically with regards to the venture model.  Whereas Consumating was started in more of what Alex would call the "Web 2.0" style, with a very small capital outlay, doing something cool for a very, very small segment of users but doing it in a way that creates a lot of value for them.  His off-the-cuff guess of a valuation for Consumating is $1-9MM....  thoughts?

Again -- thanks to the Panelists and thanks to YOU who attended!

I encourage people to subscribe to this blog, read all the blogs mentioned in this post, check out Brian's clickstream, check out the WIKI that we creataed for the Web 2.0 event and START BLOGGING. :)  Remember, it's a great way to network.  A lot of corporate recruiters blog!

Interviewing with Microsoft? Some Info for You.

Hey y'all,

For those interviewing with Microsoft next week - here is a bunch of useful info.  Feel free to forward this URL:

Microsoft

• MS MBA Home

MS Recruiter Blog Posts about recruiting:

• 9/28/2005: MBA Opportunities at Microsoft
• 10/26/2004: What we look for: Inbound Product Management
• 11/10/2004: What we look for: Outbound Product Marketing
• 3/22/2004: The day of the Microsoft Interview

MS Blogs:

• Don Dodge on the Next Big Thing
• Steve Sinofsky's TechTalk
• Heather's "Marketing and Finance at Microsoft" Blog
• Scobleizer: MIcrosoft Geek Blogger
• Dare Obasanjo

Analysis (hope I don't get in trouble for this --- I assume we're only McCombs students looking at this and we all have the license... :)

• Restructuring
• Microsoft Office
• PC Market
• Mid-Market

Hope this helps.

Hello World (First Post, Our Foray into the Blogosphere)

We have to do the "Hello World" post.  It is software, after all.  I'm very excited to kick off this weblog and this group -- Software|McCombs  This group and blog was born out of our desire to create a presence and a community place for MBA students at McCombs who, like myself, are passionate about creating and marketing software.

The blog is still somewhat of an "alpha" -- but that's OK since these days, you can be in "perpetual beta" so we actually don't have that far to go. The goal of this blog is to be a place for us to have discussions, stay in the loop about career opportunities and create a virtual presence for our group.

I may re-map the domain name - and I'll flesh out this first post a bit more and really lay out our goals and mission in detail.

Just to start discussion - my first question would be - is this blog a good idea?  Is a blog the best (or a good) way to achieve our goals of having discussions, staying the loop about career opportunities and creating a virtual presence for Software|McCombs? 

One of the reasons that I chose a blog over a static website is the simple reason that I manage the websites of three different student organizations at McCombs (now four, if you include this one) and there were two things that frustrated me about that :

1. That with all the great Content Management Systems out there (CMS), that we were still using static web pages.  It seems that MBA students shouldn't be spending a lot of time coding HTML.  And it also meant that any content that needs to go up has to go through one person -- me!!  With a CMS (in this case, TypePad) we can have multiple contributors who do not need to know anything about HTML/CSS, etc.
2. A static web page is just that -- static - there's not real opportunity for interaction.  And that's what I thought that a student organization website should be about, more than anything else.

So - is a blog the way to go?