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Cofounder, Fog Creek Software
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Joel Spolsky founded Fog Creek Software with his friend Michael Pryor in 2000. They didn t have a specific product in mind, but were motivated to start the kind of software company where they would want to work one where programmers were the stars. Around the same time, Spolsky began writing Joel on Software now one of the most widely read programming blogs to share his thoughts about software development, management, business, and the Internet. Joel on Software was one of the first examples of a now common (though rarely achievable) strategy for software startups: create a popular blog to get attention. With its popular software, including FogBugz and Fog Creek Copilot, Fog Creek Software has doubled its sales every year, even during the post-Bubble meltdown. The company never took any outside investment, and continues to operate as a profitable, privately held company.
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Livingston: How you did you come up with the idea How did Fog Creek Software get started Spolsky: There was no idea, in the sense that the only thing I thought was, There s a bunch of people out there doing certain types of things and they seem to be pretty incompetent, but they re getting huge valuations. Surely if I did those same things, knowing that I am less incompetent merely semiincompetent as opposed to extremely incompetent I should be able to achieve at least their level of success. There was a period in the late 90s when starting companies was just a slamdunk, no-brainer kind of thing. The people that were going public with $100 million valuations were punk kids [who] just graduated from college and knew nothing about anything. There were some really bad implementations of very pedestrian ideas, and we thought we could do a lot better.
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Probably the key inspiration what actually made me take the leap into starting Fog Creek was Philip Greenspun of ArsDigita, who had a particular business plan that seemed to be working at the time. In the long run, it didn t work, because they took venture capital for a consulting business and the consulting market disappeared. But we looked at ArsDigita and said, Wow! They re doing all this great stuff. But there are a couple of things that I would do differently. They had this weird, religious fear of everything Microsoft, which I thought came from something of a position of ignorance. I don t want to say that Microsoft is great, but they said, We are successful because we don t use Microsoft technology. I thought they were just kind of randomly being anti-Microsoft. So that was one small thing I was going to change. A larger thing was that they were developing this product. They had this idea; they got the consulting and they got the product which was the ArsDigita Community System that they were developing alongside it. The theory was that the product they created would support the consulting, and the consulting would support the product. But they thought the product needed to be open source, and we thought, That s nice, but consulting is a business where your revenue is just a multiple of the number of people you can hire. Software is a business where your revenue can grow much faster than the people you hire. If you can make licensing fees by selling software using the same model as ArsDigita in every way, but just charging for the ACS, we thought that you would have a steady growth of the consulting side of the business. So the idea was that the consulting would grow linearly with the number of people as you hired more good people that you could rent out as consultants, and the software business would grow like the hockey curve because, at some point when it took off, you wouldn t actually have to hire new people. You could just make more copies of the software you were selling. That was the theory. Realistically, it didn t work, but we were able to suspend disbelief for long enough to start the company.
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Livingston: Who were the founders Spolsky: Michael Pryor and I (we were friends from Juno Online Services) cofounded it in 2000, which was a good move. Probably starting it by myself, I never would have really had people to bounce ideas off of. I don t know if it would have gotten off the ground, really. So it didn t work for ArsDigita, and I think they probably think that it didn t work for them because the VCs came in and mismanaged it, but actually all the other businesses that looked like their business failed at the same time. Even with good management, it s likely that their consulting business would have collapsed as ours did at the time. Luckily, we hadn t grown very much and didn t have much consulting business to lose, so we could survive that. We had, for all intents and purposes, three consulting clients when we started in September 2000. By February or March, we had none. Other firms that were building web stuff lost something like 90 percent of their business in the course of 1 or 2 months. There was a huge dropoff; the consulting market completely disappeared.
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