The cash flow for creating software is a lot like building a spec house. Income only happens when the project is finished, so the builder needs some way to finance labor and materials along the way.
TurtleSoft started out very, very easily. The first estimating template only took a month or two to write, during a slow winter spell in early 1986. Sitting at the computer was a welcome relief from swinging a hammer. Turtle Creek Carpentry made enough extra profits the rest of the year to pay for the time. In March 1987 we ran an ad in Fine Homebuilding to sell it, and the software business rocket-launched from there. You might say that the initial development costs were almost free.
As we expanded, each new MacNail module took about 1 year of programmer time. HyperEstimator took a year. BidMagic took 2 or 3. Those were good times, when a small investment in programming could create a massive amount of income. It wasn’t hard at all to finance new product development. The hardest part was dealing with exponential growth, and then, dealing with the plateau when it ended.
We wrote the first prototypes for Goldenseal in 1993, and started writing C++ code in earnest two years later. It was our first ‘real’ app, and a much bigger project than anything we had done before. The first estimates were 5 or 6 programmer-years. It eventually took almost twice that to get to version 1.0.
The first half went smoothly, with plenty of income from our older software to pay for the work. Then, in early 1997, Apple announced a $708 million-dollar quarterly loss. There was speculation the company would be swallowed by IBM or Sun, and Macintosh sales dropped almost to zero. More than half our sales were on Mac, and those disappeared.
The good times were over, and the second half of the Goldenseal programming happened on a shoestring. We couldn’t have finished it without loyal MacNail users who purchased pre-release versions (plus a lot of credit card debt).
Cash flow was tight at Turtlesoft until the release of Goldenseal for Windows in 2002. Then, for the next five years, net income became rosier than ever. Sales were better than the MacNail days, and support costs were smaller. Those were boom years for construction, and it flowed down to construction software.
However, we had learned a lesson about sudden loss of cash flow, and decided in 2005 to start a ‘backup’ business with steadier income, to offset the ups and downs of construction software. The result was SmartKnives, which sells Swiss Army knives and Leatherman tools (mostly purchased from airport auctions). It started out mostly as entertainment for the programmers, but as software sales declined post-recession, we ramped up knife sales.
Right now, SmartKnives is paying most of the bills, and funding the programming work on Goldenseal Pro. Running a second business does slow things down. However, programming work can be very draining (and fattening). There’s a lot to be said for doing it part-time. Cleaning and photographing vintage knives is a pleasant break from hours at the computer.
Ever since the beginnings 30 years ago, our programming efforts have been very seasonal. October to April is the main programming season. We usually slack off or take a full break in the summer, and do outdoor things. Difficult problems often become so much easier after a couple months of being ignored.
As we did with the original Goldenseal, we have an option to pre-order Goldenseal Pro. It’s cheaper than the final upgrade price, and it helps prod us (and finance us) to work slightly faster. Most likely we will publicize it more (and probably raise the price) as we get closer to completion.