Facebook sucks you in because everyone you know is using it. You go to eBay to find something because you know someone is selling what you want to buy. Oracle wins in the enterprise because there are tons of experts and plenty of auxiliary software available. All these business rely heavily on the network effect: Their product is more attractive than the competition because of their market share.
Do you know what kind of software doesn’t have the advantages of the network effect? Ours. One Highrise user doesn’t give a hoot whether we have 10,000 or 100,000 customers. Jane Doe doesn’t benefit if we sign up any other customers this year. As long as there’s a sound business behind the product, she doesn’t care about anyone else. In other words, there are no network effects.
Bug tracking has no network effects
Do you know what other kind of software isn’t affected by the network effect? Bug tracking. I don’t care who else is using Trac as long as it’s great software. It doesn’t benefit us to know that the Shopify guys are using it too (short of just sharing tips and tricks). Again, no network effects.
I don’t think Spolsky notices a difference. In Does Slow Growth Equal Slow Death, he’s freaking out that a competitor (Atlassian, it seems) is growing faster than Fog Bugz and decides he has to get into market-share mode or face extinction. That unless he puts the turbo on growth, he’s going to be WordPerfect.
Bad decisions come from fear
Fear is ugly because it makes you irrational. Fear makes you jump to conclusions. Fear makes you reactionary. Spolsky’s reaction to the imaginary threat of extinction is all fear:
1) Build every feature any customer would ever want: Apparently, by having all the features anyone can ever imagine, Fog Bugz will “eliminate any possible reason that customers might buy our competitors’ junk”. That’s a faulty conclusion and a terrible idea. Software that tries to be everything to everyone generally sucks. It becomes bloated, hard to use, and in need of big up-front training. (Actually, that’s a pretty good definition of enterprise software right there).
2) Become a sales force-driven company: Hire a bunch of sales people and make them convince people to buy our software. This is even more enterprisey thinking. Side step the actual users, the developers, and go straight to management with steak and strippers. I’ve worked at sales force-driven software companies and they suck. The sales people will invariably promise more than you have and drive you even deeper into “build everything for everyone”.
Companies in non-network-effects businesses don’t become extinct because they only have 50% y/y growth. They become extinct because they fuck up a good thing and become their own worst enemy. They take a successful product and ruin it trying to reach for the moon. Joel, please don’t do that.