Mode of operation

MSP is intended to be a ``tightly coupled'' business venture. It is not a front for marketing individual products and funneling royalties back to implementors. It is a partnership where partnership profits are distributed to partners based on their percentage ownership regardless of their source. Why? First of all, one of the major reasons to form a partnership rather than just going off on your own is the potential synergy of the various partners and the work they develop. We hope to offer software components which can be used together in meaningful ways, and as we go, to accumulate a ``bag of tricks'' (e.g. screen formatting routines, database access utilities, etc.) which make development of new products by all partners easier. If each partner were essentially on his own, we could easily spend more time figuring out cross licensing and royalties for shared components than in actual development. It would force any partner to evaluate, for each potential component used, the tradeoff of paying for it or doing it over. This is silly and counterproductive.

Secondly, it enables us to cut the risk to each partner while remaining able to swing our resources behind those products which ``take off''. Assume we develop five products and four are losers or barely break even but one becomes the ``next Visi-Calc''. In the ``royalty payback'' company we would have four unhappy implementors and one fellow with a rapidly increasing bank balance but the inability to adequately follow up the initial product with follow-on enhancements and adaptations. With the true partnership, we can commit our resources to a successful product as its success requires so that we can not only make a splash with it, but aggressively follow up the initial success with the new versions, new machine implementations, and additional features needed to expand and preserve market share.

I view the difference between the lone wolf implementor and the software marketing partnership as the difference between gambling and business. The lone wolf has the possibility of a higher return, but far less probability of realizing it. What matters in business is to be able to fail a large percentage of the time and still come out ahead. Having had several blockbuster products and having watched them diddled away by insufficient promotion and inability to concentrate resources on them as they showed promise convinces me of the truth of this statement.

Once MSP commences operations, we will select a set of products to develop and formulate, in advance, a development schedule, marketing plan, marketing budget, and cash flow projection per product. MSP accounting will be structured so as to produce actual figures on a monthly basis which update the projection. We will have partnership meetings on a monthly basis (or more frequently) in which each active project is reviewed from a technical and marketing standpoint and a decision will be made to continue, drop, or increase commitment to the project. Each new product we choose to undertake will be formulated and managed this way, so we are constantly forced to target the very limited resources we have on the segments of our business which are developing well.

Partners in MSP will prosper as the company as a whole does. This may help them to better evaluate products and projects based on their actual prospects rather than an attachment to something based on the amount of work that has gone into it or an attraction to an idea because it seems good. Our goal is to be able to react rapidly when a product takes off and build other products around it.

It doesn't take a lengthy look at the computer industry to conclude that the products that succeed are not always the best ones. Arguing with the marketplace may make you feel good, but it's about as productive as standing on the tracks and arguing with the Twentieth Century Limited. One of our chief goals in structuring the company is to promote rapid feedback of real-world information into the decision making process. I know how important this is--any reasonably dispassionate analysis of Marinchip's business would have concluded as early as 1979 that the 9900 was a dead end. Yet the seductive lure of the ``previous   investment trap'' was such that two more years of effort were poured down a hole whose prospects of return were very limited.

That's not to say that having long term goals isn't important or that you should have no time horizon beyond the next month. There's nothing wrong with a slowly developing business with a large prospect of deferred return as long as it doesn't bleed your resources and result in your going under just when the world realizes that it needs what you've been selling for the last five years. What we have to guard against is blindness to a competitive idea (for example, screen-oriented word processors) which is sewing up the market while we still try to push something time has left behind.