Home > In the News > A Tough Turnaround for Software A Tough Turnaround for Software Eugenia Loli 2002-07-27 In the News 6 Comments Ailing software companies have the highest hurdles to clear to get back in business–a McKinsey study found that only 13 percent of the 492 firms examined were successful. Why is it so difficult? The study can be found at News.com. About The Author Eugenia Loli Ex-programmer, ex-editor in chief at OSNews.com, now a visual artist/filmmaker. Follow me on Twitter @EugeniaLoli 6 Comments 2002-07-27 11:24 pm Back before the bubble, somewhere between 5% and 10% of VC-backed software companies were successful. Software as a business is actually quite resilient. You can scale the company up or down in size, change the focus, change the market much more easily than other companies. If more than 1/10 software companies are able to effect a recovery from a death spiral, good deal. Any business is difficult. You need good people, a real market, and tremendous drive, focus, and commitment. And luck. I think the bubble mentality still infects many minds. Back before the bubble, people realized business was a challenge and success and riches weren’t a given. #m 2002-07-28 4:10 am Well said Michael. 2002-07-28 5:56 am You need good people, a real market, and tremendous drive, focus, and commitment. And luck. Good people depends on who you choose (doesn’t matter if they have a degree or not, just matters if they provide solutions), a real market depends on your clarity, focus is a matter of leadership and personality, like commitement; *BUT* luck is important and it’s a variable you don’t control, God will help you, if He wants to … 2002-07-28 3:13 pm *BUT* luck is important and it’s a variable you don’t control, God will help you, if He wants to … ——— The devil helps more than god. 😉 (assuming you believe in either) 2002-07-28 4:52 pm You would think that a software company, once firmly established, would be able to diversify so that it was better protected from the booms & busts. 2002-07-28 7:42 pm If companies better handled their growth and didn’t assume that a few good years mean that all years will be as good then they might survive. Otherwise, they over spend during the boom and when the bust comes they don’t survive because of the debt. If they handled the good times more intelligently they could ride out the storm better. Another point: make good software. A lot of booming companies made software that sucked but people bought it during the boom years because then people where just buying everything. There was some report recently about how a lot of purchased software (by corporations) is just never used or even installed!!! Finally, I think a return to the “old” days when companies didn’t go public UNTIL they were profit generating would help. Using funds from a public offering as venture capital didn’t help anyone. Too many bad ideas got funded by people who shouldn’t have been involved in new ventures.