Micro ISVs are the Garage Bands of technology

Balsamiq (see prior post) bills itself as a Micro ISV. Until a couple of weeks ago, I had never heard the term "Micro ISV" so I decided to dig a bit deeper. My findings in a nutshell: Micro ISVs are a very interesting concept and are viable because of the seismic changes that we are experiencing in marketing and technology.

Here's a basic definition: "A Micro ISV is an Independent Software Vendor (ISV) that has just a handful of employees and is bootstrapped. Typically the software is distributed online and has a Freemium or Try-Then-Buy business model". The appeal of Micro ISVs is pretty much like being part of a Garage Band. You work on your songs, get a couple of gigs a month, and next thing you know, Rolling Stones is calling for interviews.

The cost of being a Micro ISV is now lower than ever before. Rather than spending a lot of $$s upfront, it is possible to deliver great software using a combination of open-source plus SaaS offerings. Here are some of the components, by function, that a Micro ISV can draw upon:

Product Development

• Open Source development stack (Linux, MySQL, etc.). Free
• Source control, issue tracking, roadmap management, test automation, etc. (Altassian)  $10 a month.

Operations:

• Virtual Instances of the application on Amazon (EC2, S3, SQS, RDS). There is no upfront hardware to buy and it covers both website hosting and operations. Nominal fee. Usage based.

Support:

• Community driven support forums, wikis, peer2peer support (GetSatisfacition + ZenDesk) <$30 a month.

Finance

• Online sales and subscription management (Spreedly). $20 a month + 1 to 3% of billings

Sales & Marketing:
Lastly, but most importantly is marketing and sales. Most Micro ISVs sell either single user software or SaaS, and have either a Freemium (ie. basic app is free, but premium features cost more) or Try-Then-Buy (ie. get 30 days free and then start paying) business model. So, the basic marketing and sales strategy is to (1) connect online with high volumes of users, and (2) get them to try the software. There are no sales teams out in the field, and marketing needs to leverage inbound interest, rather than traditional (read costly) outbound lead generation. To accomplish this, Inbound Marketing is key. By using social media (eg. blogs, SEM, Facebook groups, Twitter, etc.), viral marketing (eg. tell a friend options in the app, etc.), and online advertising (eg. PPC), it is possible to get tremendous exposure and generate revenues on a shoestring budget.

Balsamiq is a poster child of Micro ISVs. They have embraced system thinking and have generated tremendous online exposure. Within 12 months, they were generating over $1m in revenue with just 4 employees. Pretty impressive.

BTW: [I am currently advising a Micro ISV on their go to market strategy and product marketing approach. Expect to hear a lot more about them, and our Social Media techniques over the next few months.]