Startups and U2

After watching the fantastic ride of Facebook, LinkedIn, and many others, we have to question whether a bubble is going to burst or do these startups have something U2 software companies need to do? The overall differentiator is those startups are that their programming departments are functioning at or near 60 to 80% R&D. The overall percentage as report in 2009 for software companies on the internet is around 13.6% and we can safely say U2 shops are no where near that figure.

Think about this for a minute if we have 1,000,000 in sales we need to spend 136,000 in R&D to be just on the industry average.  So those companies you are doing business with spending that kind of money?  Sorry people, they are not!

For a while U2logic R&D percentage was around 4% until around 2009 when the economy and our business tanked.  From that point on our R&D percentage went to 40% or 60% depending on what we need done for the next 18 months.  This was like throwing out the software baby with bath water and expecting that the software baby was still working which was not always the case.  However, it was not until about 10 months into the spending level that our products started to reflect the changes we had made to them.

Demos that had been ho hum turned out to be much better received at the same companies we had given them a few years ago.  The new companies we showed our wares to were suitable impressed with our new look and capabilities that sales started to increase.

We learned that besides spending 40% or more on R&D in a bad economy is very risky, is that our products needed the boost and the little time and money we spent on them showed every time we attempted to sell to a current customers or a new one. We need to have the drag-and-drop, contextual menus, multiple skin support, and a consistent look and feel for all our plethora of products such CRM, SMB Accounting, Payroll, Public Warehousing, Distribution, and our transportation packages called MoveNet.

Even our tools division that runs on Eclipse IDE has been reworked, re-engineered, refocused for our Unidata and Universe users.  Our XLr8Editor, XLr8Resizer, XLr8Installer internet sales that were tiny took off.

Take it from a U2 boutique software company: improve your software by investing in it.