Thoughts on Business Models

After the recent presentation, I was surprised how many questions I heard about our choice of business model or application. There also seems to be no shortage of people debating between native mobile and web applications. For me, there are a variety of reasons that I chose a hosted web application and why I’d make the same choice today.

Why hosted and subscription-based?

  1. Income Consistency - With subscription-based software, the amount of fluctuation in income from month-to-month is minimal. As long as churn stays low, you’re almost never going to see your income disappear overnight. With a native app, if people stop buying, you stop seeing income.
  2. No Versioning - Everyone gets the same application and you never have to worry about someone seeing a bug on an older version of your software.
  3. No Middle Men - With a hosted application, there are no app store approvals or waiting periods. Nobody takes a cut of our profits, and there’s nobody preventing us from interacting directly with customers if they’re unhappy.
  4. Relationships - With a one-time purchase, someone can buy today, switch to a new application tomorrow, and you’d never even know. With subscription-based, we have an obligation to keep customers happy every day. We’re able to build better relationships with our customers. It’s less of a one-and-done situation, and more of a “How can we help you today?” situation.
  5. Technology Longevity & Reach - With a native application, you can only reach people that use the associated platform. A web application can reach anyone in the world. While today’s web applications can’t compete on every front with native apps, that gap is narrowing, and for what we do, there’s nothing that we need that’s only available in native apps.
  6. Experience - While this isn’t a huge deal, it doesn’t hurt that I’ve spent my entire career working with web technologies. I’m someone that believes in focusing on what you’re good at. I’d rather support an API and let others develop an iOS application than get into a space that we’re not deeply experienced in.
  7. Collaboration - While possible, it’s incredibly challenging to build a team-based collaboration application without having a web interface. Similarly, if everyone on the team had to buy a native application to participate, you can guess what would happen to participation rates.

Why a bug tracker?

  1. Longevity - Like time-tracking or project management, there are some spaces that won’t be disappearing anytime soon. While bug tracking is sure to evolve in the future, people simply aren’t going to stop developing software or having bugs any time soon.
  2. Passion - For some reason, over the years, I’ve become fascinated with tools for crafting and managing the software development process. There are so many facets, and the space is so young and changing rapidly, it’s an exciting time to be a software developer.

There are downsides to our choice as well. For instance, with a hosted web app, if Sifter goes down, all of our customers are affected. Similarly, we have full responsibility for managing data and performance. The upside is that with a few exceptions, all of this is completely under our control. I’d much rather have risks that we can control than be facing unknowns that we can’t control. i.e. The App Store. That’s not to say the App Store is bad, but given all of our other considerations, I’d rather avoid the associated challenges there.